Balanced Scorecard

Balanced scorecard is a tool used for strategic management and performance evaluation. Performance evaluation takes place when the strategic improvement takes place. Balanced scorecard was invented by Robert S Kaplan and David P. Norton. Balance scorecard helps to understand the overall performance of the company. The four perspectives of the balanced scorecard are financial perspective, customer perspective, Internal business process perspective and the learning and growth perspective. All companies business and operational management revolves around the financial targets. Developing proper strategy so that company may excel is very important. How balance scorecard helps to develop the strategy and make it to work out well: ·        To interpret the vision of the company to everyone. This process includes the vision to all and makes everybody conscious to it. ·         To render the vision and strategy needed to communicate...

The four step process given by Kaplan and Norton used across organizations are: ·  Define the measurement architecture- this is the initial level of balance scorecard implementation. The focus areas are strategic business units. ·        Specify strategic objectives-The potential measure of each perspective should be identified and this would make the strategic objective more focused and strong. ·        Choose strategic measures- The parameters of measuring should be related to the actual performance drivers. This would enable to evaluate the progress done towards achieving the objectives. ·       Develop the implementation plan-the targets should clearly defined in balance scorecard . The information system of the organization sould be clearly developed and it should be linked with the top level metrics to lower level of operational activities.

Four perspective of balance scorecard ·           Financial perspective ·           Customer perspective ·           Internal-business process perspective ·           The learning and growth perspective Financial perspective: The financial perspective is the most important aspect of  balance scorecard . It contributes to the bottom line improvement of the company. Finances are critical for companies to monitor and measure. The financial perspective to create balance scorecard are as follows: ·           Company’s turnover ·           Profit and loss margins ·           Fixed cost, variable cost and other costs ·     ...