BALANCED SCORECARD

BSC is a measurement system , a devise

created by Kaplan & Norton
•A strategic management system
•A balance between one perspective & another
•Balance between financial & nonfinancial perspective
•A balance between Internal & external success
factors
• Balance between short term Financial Data with
Long term Operational Drivers
Why we need a balanced Scorecard?

- to reflect the involvement of each departmental

managers’ participation in translating VISION , GOAL
& STRATEGY.
 Balanced Scorecard perspectives

Financial

VISION
& Business Processes
Customer satisfaction
MISSION

Learning & Growth

What is a Balanced Scorecard (BSC)?

It is a comprehensive set of performance measures that

provides the framework for a strategic measurement &
management system. BSC retains emphasis on
achieving financial objectives, but also includes the
performance drivers of these financial objective
through four balanced perspectives.
An organizations ability to learn, and to translate
that learning into action rapidly , is the ultimate
competitive advantage.
JACK WELCH
Balanced Scorecard perspectives

State of the Art Products &

Products & Services services increases customer &
in turn revenue base

Improved processes lead to improved

Customer satisfaction
products for the customers

Skilled creative employees improve

Business Processes
the existing process

Learning & growth of employees is the

Learning & Growth foundation for innovation & creativity

All the above lead to improvement for

Financial shareholders value
 Cause- and – Effect Relationships

Financial ROCE/EVA

Customer Customer loyalty

On-time Delivery

Internal Business Process Process Quality

Process Cycle Time

Learning & Growth Employee skills

 CEO Strategies for success
A survey:

Critical Success Factor % choosing this factor

Customer service 27%

Product /Quality Service 25
Operating Efficiency 18
Communication & information
Technology 9
Flexibility & Adaptability 9
Innovation 7
Speed to Market 2
Don’t know 3
Limitations:
• Some non financial measures are still
subjective
• Managers tend to concentrate on measures
they are being measured ignoring others
• All the information cannot be shared
• Reports should be prepared as per BSC
requirement and therefore probably to be
changed
 Balanced Scorecard perspectives
Financial
To succeed financially,how should we appear to
our shareholders

Customer satisfaction Business Processes

To achieve our vision To satisfy

VISION
How should we appear shareholders
&
To our customers & customers,what
MISSION
Business process
Must we excel at

Learning & Growth

To achieve our vision,how will we sustain our ability
To change & improve
Frequently Cited Balanced Scorecard Measures
Financial Perspective:
Operating Income, revenue growth, revenues from new products,
gross margin percentage, cost reduction in key areas, EVA,ROI

Customer Perspectives:
Customer satisfaction,Customer retention%, new customer
acquisition, time taken to fulfill customers orders
Market share in target segments.
Internal Process perspective
Innovation Process: new product development times,
manufacturing capabilities
Operations Process: Yield, defect rates, time taken to deliver
product to customers, % age of on time deliveries, average time
taken to manufacture orders
Post Sales Service: Time taken to replace / repair defective
products

Learning & Growth Perspective :

Employee Education & Skill Levels, Employee satisfaction,

employee turnover rates, percentage of employee suggestions
implemented