Questions and Answers about 'Develop a Balanced Scorecard'

 



 

what is balanced scorecard?

Answer:

A new approach to strategic management was developed in the early 1990's by Drs. Robert Kaplan (Harvard Business School) and David Norton. They named this system the 'balanced scorecard'. Recognizing some of the weaknesses and vagueness of previous management approaches, the balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective. The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise. Kaplan and Norton describe the innovation of the balanced scorecard as follows: "The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation." The balanced scorecard methodology builds on some key concepts of previous management ideas such as Total Quality Management (TQM), including customer-defined quality, continuous improvement, employee empowerment, and -- primarily -- measurement-based management and feedback.

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Balance scorecard?

Answer:

This, I believe, has to do with a corporate structure that tries to extract the best out of it's employees, and further increasing the profit margin. I worked at a company that was a few years into implementing this radical approach to large corporate entities. I am now involved in a corporation that has initiated a similar approach called LEAN. Here is the official definition: A new approach to strategic management was developed in the early 1990's by Drs. Robert Kaplan (Harvard Business School) and David Norton. They named this system the 'balanced scorecard'. Recognizing some of the weaknesses and vagueness of previous management approaches, the balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective.

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What are the principles of creating a balanced scorecard?

Question:
What are the principles of creating a balanced scorecard? (if this helps) ------ for technology-related projects

Answer:

A new approach to strategic management was developed in the early 1990's by Drs. Robert Kaplan (Harvard Business School) and David Norton. They named this system the 'balanced scorecard'. Recognizing some of the weaknesses and vagueness of previous management approaches, the balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective. The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise. Kaplan and Norton describe the innovation of the balanced scorecard as follows: "The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation." The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives: The Learning and Growth Perspective The Business Process Perspective The Customer Perspective The Financial Perspective CC

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What are the four perspectives of a balance score card? and what does each do?

Question:
Accounting

Answer:

The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives: The Learning & Growth Perspective This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. In a knowledge-worker organization, people -- the only repository of knowledge -- are the main resource. In the current climate of rapid technological change, it is becoming necessary for knowledge workers to be in a continuous learning mode. Metrics can be put into place to guide managers in focusing training funds where they can help the most. In any case, learning and growth constitute the essential foundation for success of any knowledge-worker organization. Kaplan and Norton emphasize that 'learning' is more than 'training'; it also includes things like mentors and tutors within the organization, as well as that ease of communication among workers that allows them to readily get help on a problem when it is needed. It also includes technological tools; what the Baldrige criteria call "high performance work systems." The Business Process Perspective This perspective refers to internal business processes. Metrics based on this perspective allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission). These metrics have to be carefully designed by those who know these processes most intimately; with our unique missions these are not something that can be developed by outside consultants. The Customer Perspective Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any business. These are leading indicators: if customers are not satisfied, they will eventually find other suppliers that will meet their needs. Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look good. In developing metrics for satisfaction, customers should be analyzed in terms of kinds of customers and the kinds of processes for which we are providing a product or service to those customer groups. The Financial Perspective Kaplan and Norton do not disregard the traditional need for financial data. Timely and accurate funding data will always be a priority, and managers will do whatever necessary to provide it. In fact, often there is more than enough handling and processing of financial data. With the implementation of a corporate database, it is hoped that more of the processing can be centralized and automated. But the point is that the current emphasis on financials leads to the "unbalanced" situation with regard to other perspectives. There is perhaps a need to include additional financial-related data, such as risk assessment and cost-benefit data, in this category. http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx

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Does Starbucks successfully implement Balanced Scorecard?

Question:
I would like to know how to evulate this. Also, where can I find more information on how starbucks introduces BSC and when starbucks starts to use BSC. Thank you very much.

Answer:

Perhaps one of the most significant features in Starbucks is the job title ‘Director Customer Feedback Systems’ Wendy Collie has the job of ensuring that the customer piece has to be integrated into everything that Starbucks does. This has helped them shift from a product driven to a service driven company. Howard Behar, who runs the retail operations has stated that "We’re not in the coffee business serving people. We’re in the people business serving coffee." Deborah Hauck, Vice President Markets and Products, stresses that partners have to do whatever it takes to make customers happy –just say yes! In the past, partners were rewarded for financial results but they have now developed a balanced scorecard to include the customer focus elements. Bradley Honeycutt, Vice President HR Services International, looks for new employees with a customer service bent or passionate with vitality and drive – the ability to get excited. To make certain that they understand the product that they are offering, the partners are each given a pound of free coffee every week.

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What are major differences between portfolio analysis and balanced scorecard?

Question:
The difference should be in relation to developing an effective organizational strategy

Answer:

Portfolio analysis deals only with financial performance The Balanced Scorecard seeks to measure a business from the following perspectives: * Financial perspective - measures reflecting financial performance, for example number of debtors, cash flow or return on investment. The financial performance of an organization is fundamental to its success. Even non-profit organizations must make the books balance. Financial figures suffer from two major drawbacks: o They are historical. Whilst they tell us what has happened to the organization they may not tell us what is currently happening, or be a good indicator of future performance. o It is common for the current market value of an organization to exceed the market value of its assets. Tobin's-q measures the ratio of the value of a company's assets to its market value. The excess value can be thought of as intangible assets. These figures are not measured by normal financial reporting. * Customer perspective - measures having a direct impact on customers, for example time taken to process a phone call, results of customer surveys, number of complaints or competitive rankings. * Business process perspective - measures reflecting the performance of key business processes, for example the time spent prospecting, number of units that required rework or process cost. * Learning and growth perspective - measures describing the company's learning curve -- for example, number of employee suggestions or total hours spent on staff training. Purpose of the Balanced Scorecard Kaplan and Norton found that companies are using the scorecard to: * Clarify and update strategy * Communicate strategy throughout the company * Align unit and individual goals with strategy * Link strategic objectives to long term targets and annual budgets * Identify and align strategic initiatives * Conduct periodic performance reviews to learn about and improve strategy

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how can the balanced scorecard be used to create innovation and manage intangible assets?

Question:
how can the balance scorecard be used tocreate innovation and manage intangible assets in order to gain a competitive advantage how can the balance scorecard be used tocreate innovation and manage intangible assets in order to gain a competitive advantage in respects to the 4 perspectives on which the balance scorecard is based

Answer:

In the first major indicator of the balanced scorecard is the Financial Perspective. This section is what you will use to monitor how your finances within the company are affected by the innovations your company has been using. In the first sub-indicator it shows "Finances Saved With Innovations." This is basically for you to measure how much money you are saving, by using innovations. This is basically for you to measure how much money you are saving, by using innovations. For instance, in the example shown in the scorecard, it shows that 30% of savings is due to the innovations you are using. This can seem like a large amount, until you glance down, and see in the second sub-indicator, "Finances Spent On New Innovations." It shows that approximately 60% of finances in the hypothetical company are being spent on innovations. If your situation is anything like that shown in this example, it might be a good idea to relax your spending on new innovations, and allow some of the ones you already have in the works to develop further. In the second major indicator of this balanced scorecard is the Customer Perspective. This section is used to monitor how customers are reacting to your company's use of its current innovations. In the first sub-indicator, it shows "Customer Satisfaction." You can measure how satisfied your customers and clients are more easily than you think, by using friendly surveys and more in-depth customer service techniques. In the second sub-indicator, showing "Percentage of Innovations For Customer Use," you can measure how many innovations your company has, or uses that are solely customer oriented, or directly affect the sales process, or customer's experience. By directly monitoring your customer's experience with innovations, you can decide how to cut back, or which innovations must be improved to make a more positive experience for customers. In the third major indicator of the scorecard, is the Internal Process Perspective. This section is used to measure and monitor what internal processes must be improved upon, or developed more intuitively to retain and satisfy staff, customers, and shareholders. In the first of the sub-indicators is "[Hours] Saved With Innovations," which is used to measure whether or not the innovations you are introducing into your company are actually saving time and energy. You can measure in this sub-indicator what the percentage of hours per employee per department are saved by using an innovative feature(s). In the second sub-indicator is "Satisfaction With Innovations", which is used to measure how satisfied management, and general staff are with the innovations you are using within your organization. In the third sub-indicator, is "Problems Solved With Innovative Processes", which is fairly self-explanatory, and is used to measure just what it says; the amount of issues resolved internally through the use of innovative processes. In the fourth sub-indicator is "Hours Spent Developing New Innovations" which is also fairly self-explanatory and is used to measure how many hours your staff are spending trying to learn the new innovative processes and features in your company. The idea is to find a maximum amount of time per each employee, and encourage participation in learning these new techniques. In the fourth major indicator of the balanced scorecard is the Education and Growth Perspective. This section contains techniques for how you can measure how your company is changing and evolving through the use of innovative features. In the first sub-indicator is "Time [Hours] Reserved For Innovations Training", where you can measure how many hours are being set aside as a part of staff's daily or weekly routine, for specifically training just to learn new innovations. In the example shown, five hours is the maximum and preferred time to be used to learn the new innovations, however, as shown, the average employee is only spending three hours. Try to think what you would do in this situation, to encourage more time to be taken for the learning process. The second sub-indicator is also fairly self-explanatory; "Courses Taken For Innovation Training." This is used to measure out of the maximum courses for training that your company offers for learning innovative processes, how many on average, are actually being taken by staff. You want employees to be as educated as possible about these new techniques, so try to modify the amount, if it is less than satisfactory, by encouraging participation in courses, or giving incentives to employees and staff.

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How does a "BALANCED SCORECARD" work?

Answer:

It's a management system that enables the effective strategic management of a company, based on four key aspects: 1. People creativity 2. Process control 3. Customer satisfaction 3. Financial performance How does it work? Imagine you're starting a new company. First, you need people who have talent, energy, creativity. Next, you need processes to channel all that talent, energy and creativity into products and services that are wanted by customers. Then, you need to ensure that customers are HAPPY with your products and services. If they return to you (i.e. repeat customers), then they are satisfied. Finally, as more and more customers return to you, then your business will be doing fine financially (and your banker will definitely be happy that you learned and mastered the Balanced Scorecard concept!). Note: the balanced scorecard can apply to a career as well. You need to have knowledge, talent and creativity -- and continually develop them. You need to have processes for ensuring the high quality of your services to your boss and other employees and external customers. You need to make sure your "customer" (boss) is happy with your work.

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What is Balance Score card in HR ?

Answer:

Balanced Scorecard One of the hallmarks of leading-edge organizations - be they public or private - has been the successful application of performance measurement to gain insight into, and make judgments about, the organization and the effectiveness and efficiency of its programs, processes, and people. However, leading organizations do not stop at the gathering and analysis of performance data. Rather, these organizations use performance to drive improvements and successfully translate strategy into action. In other words, they use performance measurement for managing their organizations. Organizations that distinguish themselves usually: Have agreed-upon measures that managers understand Balance financial and non-financial measurements of performance Link strategic measures to operational ones Update their "scorecard" regularly; and Clearly communicate measures and progress to all employees. A major measurement system that has gained in importance over the past few years is the Balanced Score Card (BSC). What is the Balanced Scorecard The Balanced Scorecard (BSC) is a tool that translates an organization's mission and strategy into a comprehensive set of performance measures that provide the framework for a strategic measurement and management system. It is basically a visual representation of an organization's strategy. The BSC is designed to focus an organization's efforts to deliver results. The BSC is a way of: Measuring organizational, business unit or department success Balancing long-term and short-term actions Balancing different measures of success - Financial, Customer, Internal Business Processes, Human Resources Systems & Development (learning and growth), and A way of tying strategy to action measures The role of the Human Resources Department in a measurement organization should be to indicate how much each employee contributes to the organization - such as revenue generated minus the cost of salary, benefits and training. The HR department needs to look at the rest of the enterprise as its customer. It can achieve this by developing the human capital within the organization, which it can measure by setting up its own balanced scorecard strategy. People management is an important function of the HR Department and can play an important role in an organizations' financial performance as well as the service it offers its customers. People management includes managing recruitment & selection, turnover issues, employee benefits, and acting as an information resource in HR issues for the organization. The HR department can also respond proactively to the organizations needs by evaluating the strategies of the different departments as well as what their goals are and evaluating how the HR department can help the different departments meet their goals particularly as they relate to employee issues. There are five characteristics that distinguish truly effective approaches to measuring human performance: Lead from the front - Leaders exercise a kind of gravitational pull on behavior. Use integrated measures - A measurement approach that does not touch employees at all levels on a day-to-day basis is not likely to be effective. Keep it simple and personal - e.g. individual performance assessment. Build measurement into culture - Integrate measurement into the organization's culture. Be honest - Keep promises made to employees. In implementing a balanced scorecard system an organization goes through four-phases: Strategic Focus - Refine and commit to the organizations' strategy Assessment - 4 steps are involved in this phase a) Audit measures b) Develop new measures as needed c) Apply new measures d) Analyze and report Change Planning and Implementation - Implement improvement plans Continuous Improvement - a) Track metrics b) Continue improvement c) revisit scorecard cascade. There are several barriers to establishing an effective measurement system: Unclear objectives Unjustified trust in informal feedback systems Entrenched management systems Too many measurement systems within an organization The Balanced Scorecard system is an important tool for organizations because a strong measurement foundation, leads to a better managed, disciplined, and more successful organization.

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what is the different between management by objectives and the balanced scorecard?

Answer:

Management by Objectives (MBO) is a process in which a manager and an employee agree upon a set of specific performance goals, or objectives, and jointly develop a plan for reaching them. The objectives must be clear and achievable, and the plan must include a time frame and evaluation criteria. For example, a salesperson might set a goal of increasing customer orders by 15 percent in dollar terms over the course of a year. MBO is primarily used as a tool for strategic planning, employee motivation, and performance enhancement. It is intended to improve communication between employees and management, increase employee understanding of company goals, focus employee efforts upon organizational objectives, and provide a concrete link between pay and performance. An important factor in an MBO system is its emphasis on the results achieved by employees rather than the activities performed in their jobs. An approach to performance measurement that also focuses on what managers are doing today to create future shareholder value. A balanced scorecard is a set of performance measures constructed for four dimensions of performance. The dimensions are financial, customer, internal processes, and learning and growth. Having financial measures is critical even if they are backward looking. After all, they have a great effect on the evaluation of the company by shareholders and creditors. Customer measures examine the company's success in meeting customer expectations. Internal process measures examine the company's success in improving critical business processes. And learning and growth measures examine the company's success in improving its ability to adapt, innovate, and grow. The customer, internal processes, and learning and growth measures are generally thought to be predictive of future success (i.e., they are not backward looking). After reviewing these measures, note how "balance" is achieved: (1) performance is assessed across a balanced set of dimensions (financial, customer, internal processes, and innovation); (2) quantitative measures (e.g., number of defects) are balanced with qualitative measures (e.g., ratings of customer satisfaction); and (3) there is a balance of backward-looking measures (e.g., financial measures like growth in sales) and forward-looking measures (e.g., number of new patents as an innovation measure).

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