Implementation Of A Strategic Management System

A balanced scorecard is a method company’s use to measure their performance. It includes objectives, strategies, and tactics. This paper will contain two strategic objectives for each of the four balanced scorecard areas (shareholder value or financial perspective, customer value perspective, process or internal perspective, and learning and growth perspective) for H & R Block. It will also have two strategies for every objective, one tactic for each strategy, and two methods to monitor and control the overall strategic plan for H&R Block.

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.

The balanced scorecard is a strategic measurement strategy used in business and government as a measurement tool. The balanced scorecard should reflect businesses plans and strategic goals. The balance scorecard “was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton (n.n October 8th, 2015). Balanced scorecard is used by managers not only to measure performance but to align their goals and execute the visions and missions of any agency. The balanced scorecard include metrics in different perspective views, these include “The learning and growth perspective, the business process perspective, the customer perspective and the financial perspective”.

A theory and management approach of the Balanced Scorecard was first “proposed in the Harvard Business Review by Robert S. Kaplan & David P. Norton (1995)” (Knapp, 2001). In the book called ‘The Balances Scorecard’ Kaplan and Norton (1996) translated organization’s mission and strategy into comprehensive set of performance measures. That

Purpose – The purpose of this paper is to create a model called “Balanced score for the balanced score card” and to provide an objective benchmarking indicator for evaluating the achievement of the strategic goals of the company.

The use of balanced scorecard has been developed from the early use as a simple performance measurement framework, a complete strategic planning and management systems. The "new"

The balanced scorecard was brought into attention by Robert Kaplan and David Norton (Kaplan and Norton 1992). In 1990, the Naplan Norton institute sponsored a one year study, “Measuring Performance in the Organization of the Future” (Robertson 2005). This was organised due to concerns that quantitative financial tools were becoming less useful. David Norton was the study leader whilst Robert Kaplan was the academic consultant. Many companies, from varying industries, took part in this study in an effort to establish a more effective performance strategy tool. This led to the creation of the balanced scorecard and a Harvard Business Review article on the balanced scorecard in 1992 by Kaplan and Norton (Cobbold and Lawrie 2002). In 1996, a book was published by Kaplan and Norton where a modified version, the second generation, of the scorecard was introduced as it did not give a more distinct definition of what a balanced scorecard was and how to apply it (Ahmadgourabi, Efteghar and Poureisa 2013). Using strategy maps, cause-effect chains were added to provide more contextual reasoning behind decisions to make it

Balanced scorecard is a measurement system that takes into financial as well as non-financial information into account. This system strongly affects the behaviour of managers and employees by aligning their goals to the company’s vision. Kaplan and Norton argues in ‘The Balanced Scorecard- Measures That Drives Performance, 1992’ that no single measure can provide a clear performance target or focus attention on critical areas, and by observing and working with many companies they found that senior executives do not rely on one set of measures.

This essay examines how balanced scorecard is developed and acts as an increasingly important factor in balancing strategic objectives and measure/KPIs tools used in businesses, industry, organizations and government to integrated and aligned business vision and strategy of the organization. The balanced scorecard has changed from simple performance measurement tool to performance strategy, strategic planning and to management system that fit into current rapid change in business environment. However, this essay will only illustrate specifically in performance measurement framework using balanced scorecard and mainly focus on advantages it’s contributed to business activities. The limitation and criticism of balanced scorecard as a

Organisations, in order to increase performance, profitability, efficiency and to gain a competitive advantage, will benefit from a good strategic performance measurement system to ensure that lower-level managers are acting in a way that is consistent with top managers’ goals and whole organisation’s strategy. One the dominant system is the balanced scorecard framework (Hill, Jones & Schilling, 2015, p.376). The Balanced Scorecard (BSC) is defined as “a tool that translates an organisation’s mission, objectives and strategies into performance measures. It is used to implement strategy and to monitor and manage performance, and may form part of the organisation’s planning cycle” (Smith et al, 2015, p.621). The BSC allows managers to look at an organisation from four important perspectives, financial, customer, internal business, and employee learning and growth, which are critical for running the organisation and creating value (Smith et al, 2015, p.621).

As mentioned in the earlier part, there are four perspectives in the balanced scorecard, which include: Financial, Customer, Internal business process as well as learning and growth. It is vital in every business to measure the outcomes after carrying out certain strategies in order to improve businesses. Often there are sayings, for eg: “if you don’t measure results, you can’t tell success from failure and thus you can’t claim or reward success or avoid unintentionally rewarding failure.” After all, in balanced scorecard, it is needed to measure the performances of the business.

Developed by Kaplan and Norton, the balanced scorecard or the BSC is a management tool which enables organisations to clarify their goals and strategies and translate these strategies into action. Relying on financial measures become obsolete, hinders companies to create value, and may give misleading signals for improvement. (Kaplan and Norton, 1992) The main purpose of the BSC is to overcome the reliance on financial performance. Kaplan and Norton developed this approach to emphasizes that both financial and non-financial measures should be the part of the organisation. The balanced scorecard is not only a performance measurement system but also strategic planning and management system that

Benchmarks are set with respect to critical areas of strategic and operational significance that influence an organization’s performance. “These could be well-known problem areas in an organization that could be clearly defined or activities/processes where improvements result in maximum benefits” (Sekhar, 2010). In order for a new strategic management strategy to be implemented, the idea must be first presented to management, and then management must understand the benefits and value of benchmarking, and then get the organization to percieve this value as well.

The scorecard addresses a serious deficiency in traditional management systems: their inability to link a company’s long term strategy with its short-term actions. Managers using the balance scorecard do not rely on short-term financial measures as the sole indicators of the company’s performance. The scorecard introduces four new management processes that, separately & in combination, contribute to linking long-term strategic objectives with short term actions.

The balance scorecard refers to a component within a comprehensive management system that integrates strategy and operations (Kaplan, 2009, pp. 1265). The balanced scorecard has been a multi-dimensional performance measurement system (Kaplan and Norton, 1992), which over the years has upgraded versions with much interest not only in academic fields (Hoque, 2014); but also as a management tool (Rigby & Bilodeau, 2013). The upgraded versions contain outcome measures and also the performance drivers of each outcome which have been linked together in cause-and-effect relationships thus making the performance measurement system to be a feed-forward control system.