Tata Institute of Social Sciences

Performance Management & Development

Article Review: The Balanced Scorecard- Measures that Drive Performance

By Robert S. Kaplan and David P. Norton Reviewed by Ravi Chand (2012HR039) OBJECTIVE Executives know that a company's measurement systems strongly affect employee behaviour. But the traditional financial performance measures that worked for the industrial era are out of sync with the skills organizations are trying to master. In this classic article from January 1992, authors Robert Kaplan and David Norton propose an innovative solution. During a year-long research project with 12 companies at the leading edge of performance management, the authors developed a "Balanced Scorecard," a new performance measurement system that gives top managers a fast but comprehensive view of their business. | | Harvard Business Review Jan- Feb 1992 March 06th, 2013

CONTRIBUTION TO THE KNOWLEDGE

The Balanced Scorecard includes financial measures that tell the results of actions already taken. And it complements those financial measures with three sets of operational measures related to customer satisfaction, internal processes, and the organization's ability to learn and improve--the activities that drive future financial performance. The Balanced Scorecard helps managers look at their businesses from four essential perspectives and answer some important questions: How do customers see us? What must we excel at? Can we continue to improve and create value? How do we appear to shareholders? By looking at all of these parameters, managers can determine whether improvements in one area have come at the expense of another. Armed with that knowledge, the authors say, executives can glean a complete picture of where the company stands--and where it's headed.

CONCEPTUAL CLARITY AND LOGIC OF ANALYSIS

The concepts used were very well linked and structured take for instance the part where this paper explores the other measures for the internal business perspective through the examples of TQM (Total Quality Management) in one company and at the same time they mentioned the significance of BET (Breakeven Time) at Hewlett Packard.

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Ravi Chand (2012HR039)

Tata Institute of Social Sciences

Performance Management & Development

The problem being addressed here by the authors is the frustration faced by inadequacies; some managers have abandoned financial measures like return on equity and earnings per share. "Make operational improvements, and the numbers will follow," the argument goes. But managers want a balanced presentation of measures that allow them to view the company from several perspectives at once. ORIGINALITY The fact that this article appeared in the coveted Harvard Business Review in itself is testimony of the fact that the content presented were genuine and trustworthy. With whatever limited exposure I have gathered so far among the readings I have gone through one thing I can say that the authors have presented the basic concept of the Balanced Scorecard with a different perspective specially the live examples taken from different companies across functions. LANGUAGE AND PRESENTATION If we look at the flow of the article, it is evident that the two authors have discussed the topic keeping in mind the fact that they are exploring a concept which is new in the industry. The pedagogy used is very structured starting with introduction to the need of the article, the basic premise and the purpose to know the facts revealed in it.

APPLICABILITY TO INDIAN CONTEXT

This new approach to performance measurement is consistent with the initiatives under way in many Indian companies: cross functional integration, customer supplier partnerships, global scale, continuous improvement, and team rather than individual accountability. By combining the financial, customer, internal process and innovation, and organizational learning perspectives, the balanced scorecard helps managers understand, at least implicitly, many interrelationships. This understanding can help managers transcend traditional notions about functional barriers and ultimately lead to improved decision making and problem solving. The balanced scorecard keeps companies looking - and moving - forward instead of backward.

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Ravi Chand (2012HR039)

Tata Institute of Social Sciences ANY OTHER COMMENTS

Performance Management & Development

A totally gripping article from start to finish and this is yet another classic Harvard article that I can honestly say that I couldn't put down. Being a student of Human Resource Management I have

enjoyed reading this article and conceptualized the model. I enjoyed reviewing this article equally.

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Ravi Chand (2012HR039)