The Impact Of Traditional Performance Measurement On The Business World

The use of a balanced scorecard when gauging the performance of executives at Paradigm Toys is useful because it measures several key areas that measure past and real time performance that directly affects the company. A balance scorecard can contain both financial and nonfinancial measures as well as both quantitative and qualitative performance measures. Additionally because a balance scorecard can be tailored to the business’s specific targets it can measure the substance of performance better that basic financial indicators that are usually considered the basis of performance ratings. It is important to use more than just financial indicators, because other factors, those qualitative in nature, measure how an employee does their job and gives a larger picture of how well an employee performs. For example, in the case of sales concerning installation of home improvement products one might be measured by repeat buyers or customer satisfaction of how well the salesman followed up with their sale and installation. This kind of non-financial factor can be used to measure the company’s goal of repeat buyer and customer satisfaction which can translate into future sales and growth. Financial indicators are used in similar ways, but are more quantitative in nature. The main reason to use financial indicators is because they can provide a clear picture

The balanced scorecard now plays an important role in organization management. It has been further identified and used as an important tool in today 's business processes. According to Eric W. Noreen et al. (2002), "a balanced scorecard consists of an integrated set of performance measures that are derived from and support a company’s strategy. A strategy is essentially a theory about how to achieve the organization’s goals" (p. 551). Previously, management had been overwhelmed with data for a long

The Cambridge Performance Measurement Design Process proposed by Neely (1996), serves as tool to improve the design of performance measurement systems. This model aims to develop a coherent and balanced system that utilizes financial and non-financial indicators and considers both, internal and external measures. Balancing performance measurements depends on to the huge extent on the successful identification of conflicting or counter-productive performance measures and their elimination.

The purpose of this business report is to identify and analyse the benefit and usefulness of Newcroft hospital’s Trust Board on the concept of Kaplan’s and Norton’s (1996) Balanced Scorecard which was created almost 20 years ago in order to provide managers with a better performance measurement system of the organisation’s strategy. Furthermore, this business report will focus on a variety of secondary information sources and my knowledge based on the four Balanced Scorecard processes. Lastly, it will critically evaluate the benefit of the hospital’s Trust Board on the concept of Balanced Scorecard.

The balanced scorecard (BSC), the index system is based on the strategic requirements of enterprise organizations and meticulous design. According to Kaplan and Norton's opinion, "The Balanced Scorecard is a performance management implement. It will decompose strategic goals step by step into a mixture of specific mutual balance of performance evaluation index system, and accomplish the status of these indicators assessment at different times, thus the completion of strategic objectives for the enterprise to establish a dependable implementation of the foundation. "

Balanced Scorecard is a strategic performance management framework that helps organizations to align strategies with both financial and non-financial measures to monitor progress, measure performance, prioritize and reveal improvement opportunities (Henderson, Gary & Mittl). BSC is generally implemented at the corporate level, but it is useful for all levels of the organization. It should not only act as an information system for corporate management, but form a basis for encouraging behavioral change in the organization in order to conform to the vision and

Kaplan and Norton (1996c) defined Balanced Scorecard as a framework that helps organizations translates strategy into operational objectives that drive both behaviour and performance. They realized that although traditional financial performance measures worked well for the industrial era, but were proving to be insufficient in measuring the abilities and competencies essential for survival in changing economic environment. Traditional performance indicators tend to measure financial and accounting aspects, impacting long-term productivity and profits, whereas, Balanced Scorecard provides the measures of synthetic indicators which companies should focus on, such as customer reactions, profits, quality and flexible production selection (Martin,

For managers, BSC identify a comprehensive vision of their company's strategic objectives and a set of measures to improve the its strategic performance. The BSC is either a complex management tool (Ahn, 2001) or a strategic management tool (Hueng, 2000; Pforsich, 2005). BSC's specialized articles analyze and promote the Balanced Scorecard as a performance measurement tool, as a performance management system,

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

A Balanced Scorecard gives managers and executives a more “balanced” view of organizational performance. Today, the balanced scorecard has evolved into a full strategic planning and management system from the earlier primitive performance measurement system. This novel system is able to change a company’s strategic plan from a passive document into direct orders for the company on a daily basis. It is not only able to provide a measurement for performance and productivity, but also helps to identify what affairs should be executed and measured. A good balanced scorecard is clear-cut and doesn’t have ambiguous underpinnings like its forerunners; it enables companies to clarify their vision and strategy and transform them into action. It also offers opinion and feedback around both internal and external activities so as to consistently improve strategic performance and results. When a balanced scorecard is fully adopted by a company, it

To bridge the gap between strategy and action, organizations use the Balanced Scorecard, BSC. This tool aligns business activities to the organization’s strategy and vision thereby boosting the internal and external communications as well as monitoring its performance against strategic objectives by incorporating financial and non-financial elements from various perspectives into a single framework. Therefore, the BSC is essential in steering an organization to focus on its most relevant areas that push the organization to success by clarifying performance in relation to the business strategy. An organization can thus use BSC to achieve customer satisfaction through innovation thereby strengthening its financial position, achieve a competitive advantage and retain clients.

2. While the BSC gives you an overall view of the four areas for concern in business growth and development, these four areas do not paint the whole picture. The financial information included on the scorecard is limited. Instead, to be successfully implemented, the balanced scorecard must be part of a bigger strategy for company growth that includes meticulous accounting methods.

The BSC was originally developed as a performance measurement system in 1992 by Dr. Robert Kaplan and Dr. David Norton at the Harvard Business School. Unlike earlier performance measurement systems, the BSC measures performance across a number of different perspectives—a financial perspective, a customer perspective, an internal business process perspective, and an innovation and

It was originated by Drs. Robert Kaplan (HBS) and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance. The balanced scorecard has evolved from its early use as a simple performance measurement framework to a full strategic planning and management system. The “new” balanced scorecard transforms an organization’s strategic plan from an attractive but passive document into the "marching orders" for the organization on a daily basis. BSC provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. The BSC suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives:

Performance measurement systems was developed as a means of monitoring and maintaining organisational control, which is the process of ensuring that an organisation pursues strategies that lead to the achievement of overall goals and objectives (Nanni, et al 1990). Neely, Adams & Kennerly (2002) has defined performance measurement as the following: “The process of quantifying the efficiency and effectiveness of past actions.” Within this definition is a reference to non-financial measures, defined by Moulin (2002) as: “The process of evaluating how well organisations are managed and the value they deliver for customers and other stakeholders.” According to United States General Accounting Office (GAO) , “ Performance measurement is the ongoing monitoring and reporting of programme accomplishment, particularly progress towards pre