Although in recent years few managers will have managed to avoid a discussion of the balanced scorecard, many will not have a full understanding of the balanced scorecard process, how it. My experiences as a balanced scorecard practitioner with a large canadian company taught me that tremendous results are possible with the tool, but to attain. Think of a balanced scorecard as the instrument panel in the cockpit of an airplane. These articles look at the various perspectives, explain their use and help you avoid the most common mistakes when using balanced scorecard perspectives. I want you to know, the distraught manager said, that i believe in the mission statement. In 1997, kurtzman found that 64 percent of the companies questioned were measuring performance from a number of perspectives in a similar way to the balanced scorecard. Or you can use a different nonbalanced scorecard method if you prefer. The learning and growth, businesss process, customer, and financial perspectives. A balanced scorecard is a strategic planning and management system that is used to align business activities to the vision and strategy of the organisation, improve internal and external communications, and monitor organisation performance against strategic goalsbalanced scorecard institute, unknown. 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 learning and growth perspective the business process perspective the customer perspective. It is a system that integrates a firms strategy with a purposely limited number of key metrics. The population of the study comprised 21 banks operating in gombe state, nigeria.
But the trick is getting everyone in an organization to see and fully understand how these areas are. Balanced scorecard financial measurement of organizational performance. The balanced scorecard bsc was published in 1992 by robert kaplan and david norton. Jun 25, 2016 the four perspectives in a balanced scorecard bsc 1. Using the balanced scorecard to measure government performance presentation to the world bank washington, dc april 2002. The four pillars of balanced scorecard bsc are as a encouraging reference to the same size perfekstif usage, financial performance. Hansen and mowen have referred to balanced scorecard as strategicbased responsibility accounting system which translates the mission and strategy of an organisation into operational objectives and measures for four different perspectives. Each of these perspectives focuses on a different side of your company, creating a balanced view of your organization. Using the balanced scorecard as a strategic management. The perspectives of the balanced scorecard are not just the visual containers for the goals they help to explain the causeandeffect logic of the strategy. The bsc retains financial metrics as the ultimate outcome measures for company success, but supplements these with metrics from three additional perspectives. The balanced scorecard perspectives can easily be mapped out into a onepage visual map. It has the ability to show the connections between all four perspectives in a onepage picture. Balanced scorecard means different things to different people.
There must be a balance between the shortterm and the longterm objectives, financial and nonfinancial criteria, leading and lagging indicators and external and internal perspectives. A balanced scorecard is a performance metric used in strategic management to identify and improve various internal functions of a. The balanced scorecard 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 term scorecard signifies quantified performance. The balanced scorecard is more than a collection of measures used to identify problems. The balanced scorecard model is conceptualised on four business perspectives the balanced scorecard model allows managers to look at an organisation by focusing on four perspectives that are linked to the corporate vision and strategy for better performance. Dec 19, 2015 4 elements within key performance indicators and balanced scorecard for it operational management.
Pdf role of balanced scorecard in strategic hr a case. Using the balanced scorecard to measure government performance. Comparative significance of the four perspectives of balanced. The perspectives of the balanced scorecard help to establish a causeandeffect logic for the strategy map.
However, the performance of the college based on output performance measures was rated as good. Over time, the concept of a strategy map was created. If you want some examples in your industry, download one of our free ebooks. Full length research paper an evaluation of performance. 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.
Balanced scorecard basics balanced scorecard institute. The perspectives of the balanced scorecard were different from the ones given in the original balanced scorecard. Theoretical perspectives and public management implications article pdf available in managerial auditing journal 166. Introduction the balanced scorecard bsc is a strategic performance management tool, which can measure productivity of an organization in a positive manner. Stawar t 2002 studied kaplans famous book balanced scorecard.
This system provides feedback on internal business processes and external outcomes to continually improve organizational performance and results. The list of the most popular kpis divided into 5 categories. The balanced scorecardmeasures that drive performance. The balanced scorecard is a management system that enables organizations to clarify their vision and strategy, and translate them into action. Learn how to properly map business goals into the finance, customer, internal processes, and learning and growth perspectives. Simply adding new metrics to the financial ones could result in hundreds of. The four perspectives in a balanced scorecard bsc 1. The four perspectives of the balanced scorecard balanced. The balanced scorecard approach provides a clear prescription as to what companies should measure in order to balance the financial perspective. Although in recent years few managers will have managed to avoid a discussion of the balanced scorecard, many will not have a full understanding of the balanced scorecard process, how it works, what resources are required and whether it. The balanced scorecard framework is readily adapted to nonprofit and government organizations the mission, rather than the financial shareholder objectives. The development of the balanced scorecard ukessays. The results have also shown that the internal processes and innovation, and learning processes showed a strong correlation to performance measures. 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 allows managers to look at the business from four important perspectives. Kaplan and norton balanced scorecard 4 perspectives and its. The balanced scorecard perspectives create the cause and effect relationship that tells the story of the strategy. Measures that drive performance and concluded that balanced scorecard was. Usually it is employed in both small scale and large scale businesses for measurement. Make sure that you have read the article before applying them to your business. Full length research paper an evaluation of performance using. The balanced scorecard approach provides a clear prescription as to what companies should measure in order to. As the name suggests, the equilibrium or balance is an important principle in the balanced scorecard model. Using the balanced scorecard to align your organization. This study aims to determine the main goals under four balanced scorecard bsc perspectives and investigates the relationship between the perspectives for luxury summer hotels in turkey. This paper explores the use of bsc as technique for assessing performance in the nigerian banking industry. The balanced scorecard is a set of performance targets and results relating to four dimensions of performancefinancial, customer, internal process and.
The bsc retains financial metrics as the ultimate outcome measures for company success, but supplements these with metrics from three additional perspectives customer, internal process, and learning and. Kaplan and norton balanced scorecard 4 perspectives and. Or browse the kpi library to find the metrics that matter most to you. Role of balanced scorecard in strategic hr a case study.
This portion describes the management system of the balanced scorecard measurement. Balanced scorecard 4 perspectives of the balanced scorecard the balanced scorecard concept is a management and measurement system which enables organizations to clarify their vision and strategy and translate them into action. Balanced scorecard and its four 4 perspectives helps in dealing with strategic planning and performance management. A purposive sampling technique was adopted to arrive at the. A balanced scorecard strategy map is a onepage visual depiction of an organizations scorecard. Business balanced scorecard approach four perspectives. Balanced scorecard an overview sciencedirect topics. The balanced scorecard suggests that we view the organisation from 4 perspectives, and to develop metrics, collect data and analyse it relative to each of these perspectives. It recognises that organisations are responsible to different stakeholder groups, such as employees, suppliers, customers, community and shareholders.
Using the balanced scorecard to measure government. The four perspectives of the balanced scorecard 10 part 5. The four perspectives in a balanced scorecard sensei ndlovu mba director. Everything youve wanted to know about the four balanced scorecard perspectivesand their variationsis in this article. Balanced scorecard 4 perspectives of the balanced scorecard. Determination of goals under four perspectives of balanced.
Balanced scorecard bsc is an important and prime tool used for measuring performance invented by kaplan and norton. The aim here is to precisely monitor how the company is delivering value to its customers, using indicators of satisfaction and outcomes such as surveys and always taking into account the deadline, quality, cost and the performance of the products or services. A balanced scorecard looks at your organization from four different perspectives to measure its health. Like a laser beam, strategy now has a clear path to everyone in the organization. Introduction to the balanced scorecard and performance.
It provides a diagram indicating the four areas of score card. There are many benefits and challenges to the balanced scorecard. Balanced scorecards have been implemented by government agencies, military units, business units and corporations as a whole, nonprofit organizations, and schools. What balanced scorecard perspectives should a private sector organization use. 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 the phrase balanced scorecard primarily refers to a performance management report used by a management team, and typically. See the exhibit the balanced scorecard links performance. Throughout the entire process of building and implementing a balanced. Comparative significance of the four perspectives of. 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. Robert kaplan and david norton created the balanced scorecard approach in the.
The balanced scorecard model allows managers to look at an organisation by focusing on four perspectives that are linked to the corporate vision and strategy for. Strategy maps and balanced scorecards constitute the measurement technology for managing in a knowledgebased economy. The bsc retains financial metrics as the ultimate outcome measures for company success, but supplements these with metrics from three additional perspectives customer, internal process, and learning and growth that we. The causal relationship may not be guaranteed if a new perspective is added. Conceptual foundations of the balanced scorecard 3. It is about cohesion in which an improvement in one. Balanced scorecard framework 4 perspectives kaizen. The balanced scorecard should be adapted to suit the priorities of each organization. Each of those bullet points makes up one of the four balanced scorecard perspectives a term mentioned for the first time in robert s. Robert kaplan and david nortons balanced scorecard the four perspectives of bsc i n its original version, the balanced scorecard sets out the principles of performance management by balancing four components or perspectives. The balanced scorecard methodology includes four perspectives on performance, financial, customer, process, and learning and growth.
Balanced scorecard is a management system that enables organizations to translate the vision and strategy into action. Developed by robert kaplan and david norton, the balanced scorecard is an extremely influential management tool that remains enduringly popular with companies around the world. Dahiru department of accountancy,university of maiduguri nigeria abstract. The perspectives included in this balanced scorecard were operational, staff, citizen and resources. The four key perspectives of balanced scorecard business. This portion of the web site also discusses how the balanced scorecard builds to the total quality management ideas. Balanced scorecard financial measurement of organizational. The core performance measurement approach, strategic objectives, core measures, and national. In addition to measuring current performance in financial terms, the balanced scorecard evaluates the firms efforts for future improvement using process, customer, and learning and growth metrics. The result might be a useful scorecard, but it would not, by definition, be a balanced scorecard. Perspective application of four pillars balance scorecard. Sample balanced scorecard for a government financial perspective organizational learning perspective customer perspective mission perspective example prompt service, knowledgeable professionals performance indicators targets competent, adaptable.
Understanding the perspectives in a balanced scorecard is fundamental to their correct use. When i work with clients, i help them create what i call a planonapage. Balanced scorecard basics communicat business systems. The four perspectives of a traditional balanced scorecard are financial, customer, internal process, and learning and growth. The four perspectives in a balanced scorecard financial performance customer knowledge internal business processes learning and growth 3. Pdf investigating the use of the four perspectives of. The goal of the balanced scorecard is to tie business performance to organizational strategy by measuring results in four areas. 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. Financial, customer, internal process, learning and growth. The balanced scorecard is a set of performance targets and results relating to four dimensions of performancefinancial, customer, internal process and innovation. The four perspectives in a balanced scorecard bernard marr. By translating their strategy into the logical architecture of a strategy map and balanced scorecard, organizations create a common understandable point of reference for all their units and employees. Oct 29, 2018 understanding the perspectives in a balanced scorecard is fundamental to their correct use.