Effective Performance Management With The Balanced Scorecard Technical Report

“The balanced scorecard should translate a business unit’s mission and strategy into tangible objectives and measures. The measures represent a balance between external measures for shareholders and customers and internal measures of critical business processes, innovation and learning and growth. The measures are balance between outcome measures, the results of past efforts, and the measures that drive future performance. And the scorecard is balanced between objective, easily quantified outcome measures and subjective, somewhat judgmental, performance…”

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A balanced scorecard is a tool to provide management a way to bridge the gap between the organization’s strategy and vision and the operational processes used to do business. It enables the company to look at more than just the financial targets, but to include nonfinancial measures such as customer service, internal business processes and more. These intangible measures provide better focus on the organization’s long-term strategies. This paper is an attempt to analyze Frieda Fizz decision to utilize a balanced scorecard as they expand into new geographic areas. The strengths and weaknesses of each perspective are discussed along with the pros and cons of using

Introduction- To be competitive, organizations must be both strategic and tactical to the nth degree, must be proactive rather than reactive, and must find a way to measure this easily and accurately. One way to accomplish this is through a Balanced Scorecard approach; a tool often viewed as one of the best tools that helps organizations translate strategy into performance. In general the BSA (Balanced Scorecard Approach) allows for a clear strategic and tactical directions for the organization, retains financial measurements in a summation along with their links to performance, and highlights an important and robust measurement system that links and integrates customers, stakeholders, processes, resources, and performance into single measurement strategy.

Merriam Webster defines quality as a degree of excellence, or a distinguishing attribute. Managers strive for excellence in the workplace to improve customer satisfaction, increase the output in manufacturing while minimizing defects, as well as making the company more profitable. There are several different management systems or methodologies available for businesses to use, but the Balanced Scorecard and the Malcolm Baldrige Performance Excellence Program is the most common and widely used in the United States.

A scorecard has several measurement perspectives, with the original scorecard having financial, customer, internal business and innovation and learning perspectives. Balanced scorecards are normally a key output from the strategy formulation process. The key goals that are identified as being critical to the success of the business,

A balanced scorecard is the comprehensive collection of ongoing activities and processes that organizations use to systematically coordinate and align resources and actions with mission, vision and strategy throughout an organization making it a strategic planning and management system. (Balanced Scorecard Institute, 1998-2010). The scorecard exposes financial, customer, employee learning and growth, and internal business process objectives crucial to attaining goals of the vision and mission statements. When establishing such objectives, an evaluation of the company’s vision statement, mission statement, and furthermore, core values is

The foundation of effective strategic planning framework is the inclusion of goals and objectives that capture shareholder value, customer value, process and internal operations, and learning & growth objectives for employees. All of these factors must be orchestrated around a compelling vision and mission for the business. An effective balanced scorecard can transform a diverse enterprise into a single, unified organization that strives to attain the most challenging goals and objectives together (Abernathy, 1997). For companies including We Do Your Proposal, the potential exists for delivering transformational value to customers through the use of a balanced scorecard strategy planning and management process. Balanced scorecards have been shown to continually improve the clarity of vision and probability of long-term success for even the most compel of enterprises that adopt them (Jennings, 2010).

Section 1: Introduction The theme of this paper is to formulate an effective performance management system, incorporate the HR concepts needed to manage that system, identify any strengths or weaknesses with the plan provide recommendations to implement the performance management plan. The references used will come from Chapter 8-10 of the textbook and several other web based sources.

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This article describes the benefits and concerns of adopting balanced scorecards as a performance management tool to meet organisational missions and strategies. It discusses the areas of: financial, customer, internal business, and learning and growth perspectives and how they relate to balanced scorecards; the principles involved in using balanced scorecards; how balanced scorecards are beneficial for an organisation; the administrative support required; and the outcomes that can be achieved from employing balanced scorecards as a performance management tool.

The balanced scorecard is a strategic management system that helps guide corporate strategy to meet a number of disparate objectives (BSI, 2011). It does this by highlighting for managers the key objectives in a number of areas in order to find the strategy that best meets all of the objectives. These areas are the financial, customer, learning and growth, and internal business processes. Kaplan and Norton (2004) make the case that in order to create value, three behaviors are important focusing on the customer, being creative and innovative and delivering results. Most of the measures in the balanced scorecard will relate to this underlying philosophy.

In the modern business and organizational environment, particularly as a result of globalization, competition equates performance. To be competitive, organizations must be both strategic and tactical to the nth degree, must be proactive rather than reactive, and must find a way to measure this easily and accurately. One way to accomplish this is through a Balanced Scorecard approach; a tool often viewed as one of the best tools that helps organizations translate strategy into performance. In general the BSA (Balanced Scorecard Approach) allows for a clear strategic and tactical directions for the organization, retains financial measurements in a summation along with their links to performance, and highlights an important and robust measurement system that links and integrates customers, stakeholders, processes, resources, and performance into single measurement strategy. This tool also provides the organization with a tool that takes vision and moves it to strategy, and the conversely, strategy into tactics. BSA supports planning and unites the organization into a more singular vision and common goal. It also allows for both internal and external feedback so that performances and results continue to evolve and improve.

Since an organization is composed of multiple levels, a scorecard must support different levels and perspectives from strategic business units and divisions, to departments, teams and individuals. To accommodate this architecture, the scorecard is structured as multiple, aggregated cubes. Each layer a nesting of the ones below. In general, the highest level cube defines the measures and dimensions that apply to the corporate level, and these drill through to divisional and departmental cubes that have a more detailed level of information (Nickols, 1999). This “artery” of the cubes lets the strategy communicate down the organization, while performance is aggregated up through the organization like blood through vein.

A balanced scorecard is a popular management tool that evaluates a company’s performance with both financial and nonfinancial measures (Hendricks). This concept was developed after the realization that a company could not determine its success by one factor (Manzoni 193). Organizations are complex, often consisting of multiple departments which have different goals and measures of success. Choosing one factor to explain the organization’s achievement as a whole is near impossible. “Financial indicators, for example, are typically considered to be ‘lagging indicators of performance,’ because they record