The document discusses the balanced scorecard approach to performance measurement and management, including its key perspectives of financial, customer, internal processes, and learning and growth. It describes how to develop a balanced scorecard by assessing strategy and stakeholders, compiling a strategy map, defining key performance measures, and cascading the strategy. The balanced scorecard framework aims to provide a more holistic view of organizational performance beyond just financial measures.
The document discusses the balanced scorecard approach to performance measurement and management, including its key perspectives of financial, customer, internal processes, and learning and growth. It describes how to develop a balanced scorecard by assessing strategy and stakeholders, compiling a strategy map, defining key performance measures, and cascading the strategy. The balanced scorecard framework aims to provide a more holistic view of organizational performance beyond just financial measures.
The document discusses the balanced scorecard approach to performance measurement and management, including its key perspectives of financial, customer, internal processes, and learning and growth. It describes how to develop a balanced scorecard by assessing strategy and stakeholders, compiling a strategy map, defining key performance measures, and cascading the strategy. The balanced scorecard framework aims to provide a more holistic view of organizational performance beyond just financial measures.
The document discusses the balanced scorecard approach to performance measurement and management, including its key perspectives of financial, customer, internal processes, and learning and growth. It describes how to develop a balanced scorecard by assessing strategy and stakeholders, compiling a strategy map, defining key performance measures, and cascading the strategy. The balanced scorecard framework aims to provide a more holistic view of organizational performance beyond just financial measures.
EVALUATION AND IMPROVEMENT TOOLS: BALANCED SCORECARD Ares, Mary Yvonne Carumba, Jaela Mer Dela Fuente, Ann Marie Deligero, Kyle Joyce Dorohum, Hazel Faith Enconado, James Gantuangco, Tiffany Shane Pilo, Bea Dominique OBJECTIVES YOU SHOULD BE ABLE TO:
To describe management by objectives. To describe the Balanced Scorecard. To align Employees around Department's Mission. Understand the evolution of performance measurement systems. BASIC CONCEPTS A balanced scorecard is a strategic A balanced scorecard requires specific management performance metric that measures of what customers get—in helps companies identify and improve terms of time, quality, performance and their internal operations to help their service, and cost. external outcomes. They demonstrate where training, Performance evaluations are the basis development and motivational on which managers make decisions programs are needed and later help to about compensation, promotion, and assess whether these have been dismissal. effective. FOUR 1. FINANCIAL PERSPECTIVE PERSPECTIVES OF THE Under the financial perspective, the goal of a company is to ensure that it earns a return on the BALANCED investments made and manages key risks involved
SCORECARD in running the business.
2. CUSTOMER PERSPECTIVE The customer perspective monitors how the entity is providing value to its customers and determines the level of customer satisfaction with the company’s products or services. 3. INTERNAL BUSINESS PROCESSESS FOUR PERSPECTIVE PERSPECTIVES A business’ internal processes determine how well OF THE BALANCED the entity runs a balanced scorecard puts into perspective the measures and objectives that can help the business run more effectively. SCORECARD 4. ORGANIZATIONAL CAPACITY PERSPECTIVE
Organizational capacity is important in optimizing goals
and objectives with favorable results. The personnel in the organization’s departments are required to demonstrate high performance in terms of leadership, the entity’s culture, application of knowledge, and skill sets. BALANCED SCORECARD AS STRATEGIC MANAGEMENT The balanced scorecard was introduced as one of the newest management tools.
The balanced scorecard is to be used as a supplement to
traditional financial measures.
The scorecard can help top-level management link the long-
term strategy with the short-term actions. BALANCED SCORECARD AS STRATEGIC MANAGEMENT THE SCORECARD ALLOWS MANAGERS TO INTRODUCE FOUR NEW PROCESSES:
1. TRANSLATING 2. COMMUNICATING AND
THE VISION LINKINGNSLATING THE VISION 4. FEEDBACK Communicating and educating is achieved by maintaining policies that ensure all employees are aware of the strategies of the organization. AND LEARNING. 3. BUSINESS Setting goals alone is not sufficient to change employee’s mind-set. Linking rewards to performance is an important incentive to help an
PLANNING organization achieve its purpose.
ESSENTIAL ITEMS TO STRATEGIC LEARNING THE BALANCED SCORECARD SUPPLIES THREE ESSENTIAL ITEMS TO STRATEGIC LEARNING:
2. THE SCORECARD SUPPLIES A 3. THE BALANCED SCORECARD
1. IT ARTICULATES THE VISION. STRATEGIC FEEDBACK SYSTEM. FACILITATES STRATEGY REVIEW. STEPS IN DEVELOPING SCORECARD It is critical that before an organization STEP 1. ASSESS THE maps out its future there is some ORGANISATION’S consensus around where things STRATEGY currently stand.
The development of the strategy in this
stage includes developing or clarifying your STEP 2. ASSESS THE customer value proposition, visualizing ORGANISATIONS strategy using a Strategy Profile and STAKEHOLDERS decomposing the high-level strategic direction into three to four Strategic Themes (or goals). STEPS IN DEVELOPING SCORECARD
STEP 3. COMPILE STRATEGY MAP In the Strategy Mapping step, cause-and-effect links are developed between the Strategic Objectives, creating a “value chain” of how customers and stakeholders are satisfied by the organization’s products and services. STEPS IN DEVELOPING SCORECARD STEP 4. DEFINE THE KEY PERFORMANCE Performance Measures (KPIs) MEASURES AND SMART TARGETS FOR are critical to tracking progress EACH OF THE FOUR BSC PERSPECTIVES of an organization’s strategy. STEPS IN DEVELOPING SCORECARD
STEP 5. CASCADE THE BSC In this step, strategy is transformed from something only executives worry about to something everyone supports by cascading high- level enterprise strategy to first business and support units and then to individual employees. TYPES OF INFORMATION REQUIRED IN BALANCED SCORECARD 1. FINANCIAL STATEMENTS 2. VALUE OF INVOICES FOR EACH Financial statements are required to INDIVIDUAL SALE determine if the firm is meeting its financial For a company to continue prosper, it needs to objectives. Such as operational income, return value its customers and habitually ask if the on assets, sales, growth, cash flows, etc. company meets the customer expectations.
3. STATISTICAL ANALYSIS OF 4. NUMBER OF NEW CONTRACTS
CUSTOMER SERVICE REPORTS VS. STAFF TERMINATIONS Monitoring the percentage of the company’s Organizational capacity is critical in achieving sales is significant to know if the company is favorable results through maximizing goals and improving in its critical internal processes. objectives. PERFORMANCE MEASUREMENT UNDER BALANCED SCORECARD APPROACH USING A BALANCED SCORECARD BALANCING MEASURES APPROACH TO MEASURE PERFORMANCE
Many agencies have measured their
It explains that balancing measures organizational performance by focusing on is a strategic management system internal or process performance, looking for achieving long-term goals. at factors such as the number of full-time equivalents (FTE) allotted. PERFORMANCE MEASUREMENT UNDER BALANCED SCORECARD APPROACH HOW DO YOU MEASURE PERFORMANCE USING A BALANCED SCORECARD? The balanced scorecard requires specific measures of what customers get in terms of time, quality, performance and service, and cost.
MEASURES THAT MOVE COMPANIES FORWARD
As companies have applied the balanced scorecard, we have begun to recognize that the scorecard represents a fundamental change in the underlying assumptions about performance measurement. The balanced scorecard, on the other hand, is well suited to the kind of organization many companies are trying to become. The scorecard puts strategy and vision, not control, at the center. IMPLEMENTATION METHOD OF BALANCED SCORECARD APPROACH Method 1: Using Focus Areas
This methodology essentially involves
orienting your whole strategic plan around the Balanced Scorecard. IMPLEMENTATION METHOD OF BALANCED SCORECARD APPROACH Method 2: Using Goal Types This methodology gives the flexibility to define focus areas separately from the balanced scorecard, using a custom field for each of the organization's Objectives, Projects and KPIs. BENEFITS & LIMITATIONS OF THE BALANCED SCORECARD BENEFITS LIMITATIONS It summarizes complex information. It focuses management attention on the most Difficult to find a true balance between important variables. different performance measures It enables management by exception and The causality relationships between the manages areas of underperformance. areas of measurement in the BSC are It balances the need for short-term unidirectional and too simplistic. performance with sustainable performance. It limits the number of performance measures used. Kaplan, R. S., & Norton, D. P. (1992). The Balanced Scorecard—Measures that Drive Performance. Harvard Business Review. REFERENCES https://hbr.org/1992/01/the-balanced- scorecard-measures-that-drive-performance-2 https://www.facebook.com/thebalancecom. (2018). How to Develop a Balanced Scorecard as a Performance Management Tool. The Balance Careers. https://www.thebalancecareers.com/balanced- scorecards-as-performance-management-tools- 4164627 Maher Akwan. (2014). Introduction to Balanced Scorecard and Measurement tools. In YouTube. https://www.youtube.com/watch? v=SV7FDpPdPVQ QUESTIONS 1. For you as a student, how can you assess the 4 perspective of a balance scorecard to and relate it to this online setup? QUESTIONS
2. How is developing a scorecard
relevant in your daily routine/ task? QUESTIONS 3. How important performance evaluation is on business entities? QUESTIONS 4. Why do balance scorecard limit performance measures used? QUESTIONS 5. What is the relevant contribution of the scorecard in strategic management? Nothing Follows. OUR CLASS TIME
