The Business World : Advantages And Limitations Of The Traditional Financial View On Organization Performance

Balanced scorecard is a methodological tool that businesses use to get a measure by which someone can determine whether the set goals have been met or exceeded. It adds non-financial metrics to traditional financial metrics to give a well-rounded view of the performance in an organization. Balanced scorecards also help organizations to predict their success in meeting their overall strategic goals.

The balanced scorecard is a strategic planning and management system that was developed by Dr. Robert S. Kaplan and Dr. David P. Norton in the early 1990's. Their goal was to provide organizations with a clear understanding of what to measure in order to improve performance and results (Balanced Scorecard Institute 2014). The balanced scorecard is a framework that allows an organization to measure performance and compare it to the organization’s strategic objectives and goals (Kinney and Raiborn 2013, 10).

"This system should be tailored to suit the company’s corporate culture, capabilities, information system, technological level of development etc" (Malvutova, 2013) because it is a framework that is aligned throughout the entire organization. The balance scorecard is so vital that in order to produce the best quality performance, it has no limits and reaches down to a hospital department level (Pane, 2011). Pane gives an example in his article of how the balanced scorecard "can be used to determine whether an

The balanced scorecard shows the innovation, finance, learning and customers as well to gain the goals associated with this paradigm. In the second column the, measures are there to achieve the goals set in the first column. It extracted through management information knowledge and the environment scanning after research (Whitaker, 2016, pg 131).

The Balanced Scorecard Institute reports that in the 1950’s General Electric was the first to use the Balanced Scorecard approach, but it was not until the 1990’s when Dr. Robert Kaplan a Harvard Business School professor and Dr. David Norton officially titled it the Balanced Scorecard. Once used as only a measurement tool for organizations, it is now a complete strategic planning and management system (Balanced Scorecard Institute, n.d.). Originally, businesses looked at the financial reports to distinguish whether it was a quality company or not. Kaplan and Norton however believed the financial reports only showed past history and an organization must also track how it is performing currently and look at ways to constantly improve future performance. Kaplan and Norton established there are four business segments or perspectives to measure and make improvements on. The four segments

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

Balanced Scorecard is a general methodology that is being used to improve performance within strategic

Regardless of the many advantages that an organization can make use of by adopting the balanced scorecard while planning its organizational strategies, it is seen that its adoption in the health care industry and even by the Crandon Hospital has been slow. The reason for this has been the few problems which are been faced by the non-profit health care organizations while adopting the BSC, they can be listed as:-

One of the most popular measures is the balanced scorecard (BSC). The BSC “strikes a balance between financial and nonfinancial measures (Horngren, Sundem, Stratton, 2008, p. 401)” and is used by about 50% of the top 1,000 United States firms. To develop this system, Guillermo needs to decide what the responsibility centers are and how performance is measured and acknowledged. He will also need to define the key performance indicators; financials, customers, internal processes, and employee growth and learning.

Resulting from the constantly changing environment, the accounting information systems transform and renovate continuously, for instance, the development from traditional costing system to activity-based costing or the Balanced Scorecard (BSC) which is an up-to-date system that connects non-financial and financial performance measures to a company 's overall strategy (Kaplan and Norton 1996). The article aims at demonstrating the specific purposes for which managers use the Balanced Scorecard, instead of simply measuring the adoption rates or the degree of BSC usage. Therefore, BSC usage at the individual management level is emphasized by the author.

The Balanced Scorecard is a model used to align business activities to the organisation’s vision and strategy, improve internal as well as external communications, and monitor the organisation’s actual performance against its strategic goals. It combines financial and non-financial performance measures, such as the satisfaction of customers/stakeholders, the efficiency of internal business processes and organisational capacity in terms of knowledge and innovation. (Balanced Scorecard Institute, n.d.).

The Balanced Scorecard is a strategic performance management framework that has been designed to help an organisation monitor its performance and manage the execution of its strategy. Kaplan and Norton (1996a, 1996b) pointed out that the implementation of the Balance Score Card is to attain the following goals clarify and translate vision and strategy, communicate and link objectives and measures, plan, set targets, and align strategic initiatives; and enhance strategic feedback and learning.

As suggested by the biggest proponents of the Balance Scorecard, Robert S. Kaplan and David P. Norton, “What you measure is what you get. Senior executives understand that their organization’s measurement system strongly affects the behavior of managers and employees.” Hence, after a year-long research with many companies, they devised the Balance Scorecard (BSC) measure which revolutionized the traditional thinking about performance measures. By looking beyond the traditional financial performance measures, the managers were able to better understand the strategy, positioning and performance of their company. The underlying reason behind getting this comprehensive view of the business was BSC approach focused on predicting future

Balanced scorecards have been around since the 1990’s and was developed by Robert Kaplan and David Norton (Edwards (2011) and is used by many organizations of all types all over the world, non-profit, for-profit, governmental agencies, ect., in order to develop a strategic planning and improve strategies within their organizational structures. It pertains to many different aspects from financial aspects, employee retention, and customer satisfaction, internal and external perspectives, to employee morale, as well as accountability. A balanced scorecard will indicate weaknesses and strengths of all aspects within an organization such as finances, the business prospective, short and long term goals, customer satisfaction, knowledgeable concepts, as well as the organization’s mission and vision statements.

The Balanced Scorecard is the most popular approach used to measure performance. The balance scorecard was developed by Kaplan and Norton in 1992 to help the weak and vague performance management strategies (Kaplan & Norton, 1992). The balanced scorecard looks at measures and objectives of the organizational performance from four aspects: Financial, customer, internal processes, and learning and growth (12 Manage, 2009).