Elements of Balance Score Card - Approach to evaluate Performance

Overview

Introduction Purpose Elements of Balance Scorecard Methodology and Measurements

Pitfalls & Issues Summary

What is a Balanced Scorecard?

The Balanced Scorecard is a strategic planning and management system used to align business activities to the vision and strategy of the organization by monitoring performance against strategic goals.

Why Use a Balanced Scorecard?

Improve organizational performance by evaluation across verticals. Increase focus on strategy and results Align organization strategy with workers on a day-to-day basis Improve communication of the organizations Vision and Strategy Prioritize Projects / Initiatives

4 Perspectives

The Balanced Scorecard model suggests that we view the organization from 4 perspectives. Then Develop metrics, collect data and analyze it relative to each of these perspectives

4 Business Perspectives Questions

Financial

What must we do to create sustainable economic value? To satisfy our stakeholders, what must be our levels of productivity, efficiency, and quality? How does our employee performance management system, including feedback to employees, support high performance? What do our customers require from us and how are we doing according to those requirements?

Internal Business Process

Learning and Growth

Customer

Balanced Scorecard Financial Measurements Perspective

Goals Survive Succeed Measures Cash flow Sales growth Goals

Customer Perspective Measures

New products Sales Responsive supply On time delivery

Internal Business Perspective Goals Technology Measures Competition

Learning Perspective Goals Technology Measures innovation

Manufacturing Cycle time

Product focus sales

Scorecard Potential Pitfalls & Issues

Too much focus on the lagging measures

Focusing on only the lagging measures may cause a lack of priority or opportunity for the leading measures. Dont just copy metrics from another firm. Identify the measures that apply to your strategy and competitive position . Managers whose goal is to achieve a desired result in order to obtain a bonus or other self reward.

Use of Generic Metrics

Self-serving managers

Balanced Scorecard Benefit Re-Cap performance measures with strategy at all levels of Helps align key

an organization The methodology facilitates communication and understanding of business goals and strategies at all levels of an organization Strategic initiatives that follow "best practices" methodologies that cascade through the entire organization Transforms an organizations mission statement and strategic plan from a passive document into the "marching orders" for the organization on a daily basis. It enables executives to truly execute their strategies by identifying what should be done and measured.

Thank You!