Week 5 DQ
Introduction to Balanced Scorecard
Balanced scorecard was developed originally by Robert Kaplan and David Norton and is used most often as a measurement basis. The main focus of the concept was to counter organizational tendencies of concentrating on only short –term financial reporting. Their opinion was that ‘’what you measure is what you get’’ and as a result, they placed huge emphasis on the fact that ‘’no single measure can provide a clear performance target or focus attention on the critical areas of the business. Managers want a balanced presentation of both financial and operational measures’’ (Armstrong, Michael. 2007, pp. 42).
A balanced scorecard is that measurement tool that is used to translate the mission and strategy of an organization into classified performance measures for the provision of a framework for strategy implementation. This strategy is then communicated in operating terms in order to get people to execute it. Kumari, N. (2011) intimated that the balanced scorecard serves as conceptual framework for the translation of organizational vision into a set of performance indicators ranging from four major perspectives namely: Financial perspective, customer perspective, business processes within the organization and learning and growth.
Financial Perspective: share holder will be interested to know percentage of sales in revenue growth, the profit margin for operation and return on capital employed. The emphasis here is on how the organization looks at shareholders.
Customer Perspective: This seeks to specify customer kinds and scope of market to render services, to ensure optimum customer satisfaction and growth of new customers. The question as to how the business appears to customers is very key here.
Internal business process: Organizational processes like types of operation, innovation and after-sales-services become critical for organizational success. Establishment of product cycle times, turnaround times for customer...