The pyramid performance and bsc are two excellent methods of. Introduction the first article on the balanced scorecard was published in 1992 by kaplan and norton kaplan and norton, 1992. It improves the internal functions and external results of the business. The balanced scorecard has emerged as a proven and effective tool in our quest to capture, describe, and translate intangible assets into real value for all of an organizations stakeholders and, in the process, to allow. Balanced scorecard is used by many successful businesses all around the world. Main aim of the paper is to present the results of primary research focused on detecting the current state of the knowledge and use of the balanced scorecard method in businesses in the slovak republic. Theres a lot that goes into explaining this topic, but lets begin with the balanced scorecard definition and basics. Definition balanced scorecard is a performance based metric which companies used for strategic management. Provides a clear picture proponents for the application of the balanced scorecard posit that this is a systematic and methodological tool. If you continue browsing the site, you agree to the use of cookies on this website. David norton and i introduced the balanced scorecard in a 1992 harvard business. A balanced scorecard approach is proposed to evaluate these measures and metrics for scm in the section that follows.
You dont have to start from scratchuse what you have in your organization as it results to your goals, key measures, and projects. A practitioners guide to the balanced scorecard cima. Using the balanced scorecard to align your organization. A balanced scorecard looks at your organization from four different perspectives to measure its health.
The real value of a scorecard system comes from the continuous selfinquiry and indepth process of discovery and analysis that is at the heart of the process. The balanced scorecard should be adapted to suit the priorities of each organization. The balanced scorecard is a strategic planning and performance management framework used by business, government, and nonprofits to align daytoday activities with enterprise vision, mission. Much more than a measurement exercise, the balanced scorecard is a management system that can. The balanced scorecard is a set of performance targets and results relating to four dimensions of performancefinancial, customer, internal process and innovation.
Since then, use of the balanced scorecard has grown dramatically as a key strategic management system and is now widely recognised internationally. Limitations of balanced scorecard marko rillo tallinn. What is unique about the balanced scorecard approach, in contrast to. The balanced scorecard perspectives can easily be mapped out into a onepage visual map. The role of the balanced scorecard as a tool of strategic management and control article pdf available june 2017 with 9,369 reads how we measure reads. Additionally he examined several alternative performance measurement methods to verify whether some of their aspects could be used in managing balanced scorecard. Origins of the balance scorecard method the balanced scorecard was developed by robert kaplan and david norton 1992. Each of these perspectives focuses on a different side of your company, creating a balanced view of your organization.
Introduction to the balanced scorecard and performance. Benchmarking procedures are yet another technique companies use to. This article also contains a downloadable and editable balanced scorecard template. Applying the scorecard approach to staff groups has been even more eyeopening than our. The balanced scorecard philosophy need not apply only at the organizational level. Norton introduced the balanced scorecard, a set of measures that allow for a holistic, integrated view of business performance. Developing a balanced scorecard is a journey, not a project. Get a consensus around your strategy map or key goals, and then start using the bsc in your leadership team meetings as you build out the rest. Balanced scorecard is a management system that enables organizations to translate the vision and strategy into action.
As such, it is able to provide visual means of how the goals of the organization are being met and the plan of action necessary to achieve these goals. The balanced scorecardmeasures that drive performance. In addition the author also used his practical experience in balanced scorecard projects, during his lectures and using his internet. A new approach to strategic management was developed in the early 1990s by drs. Start your balanced scorecard with the idea that you are in it for the long term, and that you will. Companies have found that there are advantages and disadvantages of a balanced scorecard. Pdf the role of the balanced scorecard as a tool of.
The development of the balanced scorecard as a strategic. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. The balanced scorecard retains traditional financial measures. The bsc method of kaplan and norton is a strategic approach and performance management system that enables organizations to translate a companys vision and strategy into implementation, working from. At one extreme, a measurementbased balanced scorecard is simply a performance measurement framework for grouping existing measures into categories, and displaying the measures graphically, usually as a dashboard. The balanced scorecard includes financial measures that tell the results of actions. Balanced scorecard is a strategy performance management tool a semistandard structured report, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions. Moreover, the balanced scorecard pdf aids you in developing your business to the next level and increases your customer base. The balanced scorecard 2017 an approach to performance measurement for nonprofit organisations nejra mandzic meutia widodo rasheeda wilson. Balanced scorecard method as one of the most respected integrated approach to measurement and performance management of organization, and at the same time one of the most transparent system in employees remuneration.
The concept of balanced scorecard has evolved beyond the simple use of perspectives and it is now a holistic system for managing strategy. The important thing is to stick to one easytounderstand page. Theyre using the scorecard to measure performance and set strategy. Large firms as well as small and medium sized enterprises smes tend to use multidimensional bsc instead of relying on traditional performance measurement. Balanced scorecard means different things to different people.
Anytown hospital has just finished a twoday retreat where they revised and updated their mission and vision statements and drafted a strategic plan. Balanced scorecard the balanced scorecard method developed by robert kaplan and david norton in 1990 is a strategic. Balanced scorecard basics balanced scorecard institute. The name balanced scorecard comes from the idea of looking at strategic measures in addition to traditional financial measures to get a more balanced view of performance. The information included is fictional and is provided to simply demonstrate the process. Performance measurement and management program guide. Consultants wont do the balanced scorecard for you. The bsc expands the traditional financial measures into three other dimensions to capture a balanced approach to measure performance in an organization. Balanced scorecard example the following is an example of how one might develop a balanced scorecard. The balanced scorecard was developed 12 years ago and has grown in popularity and is used by more than 50% of the fortune 500 companies as a performance measurement and strategic management tool. The pmp is intended to facilitate an epawide collaborative approach to ensure that business systems effectively support epas mission. The scorecard was originally created to supplement traditional. Kaplan and norton describe the innovation of the balanced scorecard as follows. The latest business management research and ideas from hbs faculty.
In 1990, kaplan and norton led a research study of a lot of companies with the purpose of exploring the new methods of performance measurement. Or you can use a different non balanced scorecard method if you prefer. A balanced approach to employee performance appraisal is an effective way of getting a complete look at an employees work performance, not just a partial view. Positive results of using the balanced scorecard template. In simple terms, the balanced scorecard is used to measure performance in an organization or track progress. Balanced scorecard bsc has been used in different businesses with different sizes. What is balanced scorecard in performance management system. The balanced scorecard 2017 victoria university, australia. Read articles about balanced scorecard hbs working knowledge. It is used to measure and provide feedback to organizations. Using the balanced scorecard to measure government. The balanced scorecard requires specific measures of what customers getin terms of time, quality, performance and service, and cost. Despite the best intentions of those at the top, lofty statements about becoming best in class, the. Balanced scorecard definition of balanced scorecard by robert s.
Application of balanced scorecard as a tool for strategy. Review of the use of the balanced scorecard in healthcare 1 1. However, in order to arrive at the benefits of a balanced scorecard approach, companies need to understand how to efficiently implement and use the tool studying best practices, but also keeping in mind that they have to focus on what matters mostly for them, and to ensure that all employees have a clear picture of the whole performance system. Meaning balanced scorecard basically connects dot between the strategic part of the organization and the operational elements. Using a balanced scorecard approach to measure performance. This system provides feedback on internal business processes and external outco mes to continually improve organizational perfor mance and results.
The main purpose of this article is to analyze the balanced scorecard method theory and practice. David norton developed the balanced scorecard so that companies could manage according to performance measures other than shortterm sales and profit. Balanced scorecard, might conjure up an initial impression of a table of measurements or key performance indicators, it is in fact a process comprising of a number of carefully interlinked steps. Pdf since the last decades, the performance management has become a. Research has shown that organisations that use a balanced scorecard approach tend to outperform organisations without a formal approach to strategic performance management. Balanced scorecard implementation as a measurement of the ub hotel performance assessment.
Its this focus on both highlevel strategy and lowlevel measures that sets the balanced scorecard apart from other performance management methodologies. The key problem that kaplan and norton identified in the business of the day was that many companies tended to manage their businesses based solely on financial measures. Conceptual foundations of the balanced scorecard 3. Balanced scorecard basics communicat business systems. Using the balanced scorecard as a strategic management system. The balanced scorecard is a widely adopted performance management framework first described in the early 1990s. A balanced scorecard is a performance metric used in strategic management to identify and improve various internal functions of a business and their resulting external outcomes. Balanced scorecard stepbystep volta river authority. Mba presentation explaining kaplan and nortons balanced scorecard approach. There are several techniques available to realize the strategic vision or plan, but balanced scorecard makes the process much simpler and quicker. Performance measurement of supply chain management.
The balanced scorecard was developed in the early 1990s by two guys at the harvard business school. The real power of a properly developed balanced scorecard is that it links the performance measures to the organisations strategy. Introduction to the balanced scorecard and performance measurement systems 5 as a result of continued research and innovations over the last 15 years, the bsc has gone through an evolutionary process of improvement, from performance measurement 19901996 to performance management 19962000, to becoming a globally. The reason is simple the balanced scorecard is about strategy, and your strategy is unique. As a result, oam is implementing a balanced scorecard bsc performance measurement and performance management program pmp as the methodology for assessing the agencys acquisition related business functions. Using the balanced scorecard to measure government performance presentation to the world bank washington, dc april 2002. After reading you will understand the basics of this powerful strategy and performance management tool. You can hire a consultant who will teach your team the method, help your team to create a balanced scorecard, but dont expect to outsource it 100% to external consultants. More recently it has been proposed as the basis for a strategic management system. Conceptual foundations of the balanced scorecard robert s. The following paragraphs attempt to clarify some of these issues.
Developed by robert kaplan and david norton, the balanced scorecard method translates an organisations strategy into performance objectives, measures. But financial measures tell the story of past events, an. This article explains the balanced scorecard, developed by robert kaplan and david norton, in a practical way. Balanced scorecard, performance management systems, social. Assessment using the balanced scorecard bsc method is effective and efficient for the ub hotel at this time.
The balanced scorecard bsc is a business framework used for tracking and managing an organizations strategy. The bsc method of kaplan and norton is a strategic approach and performance management system that enables organizations to translate a companys vision and strategy into implementation, working from 4 perspectives. The balanced scorecard has emerged as a proven and effective tool in our quest to capture, describe, and translate intangible assets into real value for all of an. This article also contains a downloadable and editable balanced scorecard template what is a balanced scorecard. But in general the literature endorses the utility of the approach epstein et al, 1997 but. Knowledge and use of the balanced scorecard method in the. In this paper, a model for assessing the organizations safety based on the integration of the balanced scorecard approach with hierarchical analysis method is presented. With the rapid expansion in the implementation and use of balanced scorecards, it has become necessary to determine just how this approach to performance. The balanced scorecard tracks all the important elements of a companys strategyfrom continuous improvement and partnerships to teamwork and global scale.