Explain should be answerable to a query, “How do

Explain
and evaluate the contribution of ‘Balanced Scorecards’ to organizational
performance management

Introduction:

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Balanced
scorecard refers to a production management tool used by a management team. It
is a partly standard structured report, reinforced by Architectural methods and
robotic tools. To keep trace of the accomplishments of activities by the team
to remote and  monitor the outcomes
emerging from these operations, managers use this report. The uniqueness that
define a balanced scorecard are: It mainly concentrates on the strategic plan
of the organization concerned, it scans a small number of data items and it is
a club of financial data items and non-financial data items.

Development
of balanced scorecards:

The first generation scorecard
identifies what measures are used to track the implementation of strategy to
layout a balanced scorecard which is comprehended in Kaplan and Norton’s
writing. This is done by using a “four perspective” approach and they were as
follows:

The
Financial perspective: This perspective throws a limelight on the earnings and merchandise
share in the private sector whereas in the public sector, fiscal standards
involve the production related actions necessary for  the Government Performance and Results Act of
1993 (GPRA). Managers should be answerable to a query, “How do we look to
Congress, the President, and other stakeholders”?

The
Customer’s perspective: Here the managers should evaluate whether their company  is gratifying the customer wants or not. They
should  be able to answer to a query,
“How do customers see us”?

Internal
business process perspective: To satisfy the user needs, managers have to focus on the critical
operations. They should be able to answer to a query, “What must we excel at”?

Organizational
learning and growth perspective: The value of a company depends upon its dexterity to pioneer,
develop, and discern. Managers must pose a question to themselves, “Can we
continue to improve and create the value for our services”?

 

 

 

 

For
example, consider Senior executives at ECI. They have deep rooted goals to
better consumer consummation  i.e. get accepted
goods to merchandise quickly, enhance consumer time to market, become consumers
victualer of choice through collaboration with them, and evolve creative according
to consumer needs. The executives converted these general goals into four
specific targets and describes a suitable method for each. 

In order to check whether the particular purpose
of supplying a  unceased flow of
agreeable solutions is met or not. ECI calculated the proportion of sales from
new goods and the proportion of sales from the existing products. This data was
accessible  inwardly. Some  other calculations impelled  the company to obtain information externally.
To determine whether the company was accomplishing its goals of implementing
trustworthy and susceptible supply, ECI collected response from its consumers.
The response from users defined “trustworthy, and approachable supply” adversely.
ECI developed a database of the determinants as defined by each of its major
consumers.

The
second generation scorecard is based on strategy map or strategic linkage model.
This scorecard allows the individuals and the teams to define a set of
strategic objectives. These strategic objectives are plotted on a strategy map.
The second generation scorecard was expurgated by the third generation balanced
scorecard to provide more patience and operative to strategic objectives. Here
testing of business model is done by acquiring larger distinctness between the
pretended non-commercial factors of performance and the pecuniary resources.

Implementation
of  balanced scorecard:

For the successful
development and implementation of a strategic scorecard Kaplan and Norton distinguished
five key principles. They were:
(i)Explicate strategy in to practical work (ii)Align the organization according to strategy (iii)Accomplish strategy each
one’s responsibility (iv)Making
strategy a continuous process (v)Adopt
change through managerial leadership.

Why
does a business need a balanced scorecard? :

 

The advantages of choosing a balanced scorecard approach
to the performance management may includes: It creates a strategic analysis of
performance in the long run. It stretches the outlook of divisional executives
in concluding what symbolizes fine performance away from the merely financially
oriented outlook. Organizations can enroot performance methods that are
specifically allienated to the corporate strategy. Consumer view point is
considered, which is an important factor in any business. Using a balanced
scorecard can help answerability as each performance method could be the
capacity of individuals. The application of balanced score card should be
clear, easy, and acceptable.

 

“source:
Adapted from Kaplan and Norton, (2000)”

Measurement:

The balanced scorecard comprises of leading
and lagging standards that an organization, even the departments and
individuals can be judged   to decide
whether they are on path. The managers are forced to have more concentration on
performance management as the strategy map solves the performance dilemma
between the financial objectives and the performance management goals to meet
up the mission and vision of the organization. If a scorecard is ready to
estimate the performance, employees can be able to know how does their tasks
take part in achieving departmental goals. This ultimately leads to commercial
fulfillments that push the organization towards its vision. The scorecard helps
the employees to know where they stand efficiently dispose in which areas they
can take part for the success of the company strategy.

           

Limitations:      

Lots of subjectivity is
involved. So, it is not easy to implement.
The
usage of this
tool is more complex when compared to the other tools. It is a difficult task
in creating a balanced scorecard for an entire organization. The whole organization
should accept the approach for the use of balanced score card for good
productivity.

 

.”Conclusion:

The balanced scorecard is a
very important administrative tool for organizations in identifying the
pressure points, set-up of objectives, planning and budgeting. It helps to
scale the performance as well as to decide the strategies that are required to
adopt, to achieve goals of an organization. Its application guarantees the
regularity of vision and action which are the important factors for the growth
of a profitable organization. The proper implementation of the tool ensures the
development of competencies of an organization which finally leads to the
competitive advantage.