BALANCED SCORECARD Flashcards
Define balanced scorecard.
a strategic performance management framework that allows organisations to manage and measure the delivery of their strategy.
Balanced scorecard focuses not only on financial information, but non-financial information too.
How is the balanced scorecard used?
To align business activities to the vision and strategy of the organisation by monitoring performance against strategic goals.
What are the generic measurements for the FINANCIAL PERSPECTIVE?
(i) Return on capital
(ii) Cash flow
(iii) Sales growth
(iv) Economic value added
What are the generic measurements for the CUSTOMER PERSPECTIVE?
(i) Customer satisfaction (survey data)
(ii) Retention
(iii) Acquisition
(iv) Profitability
(v) Market share
What are the generic measurements for the INTERNAL PROCESS PERSPECTIVE?
INNOVATION: Measures of how well the company identifies future customer needs.
OPERATIONS: Measures of quality, cycle time, costs…
POST SALES SERVICE: Measures for warrantee, repairs, treatment of defects…
What are the generic measurements for the LEARNING & GROWTH PERSPECTIVE?
PEOPLE: Training, skills, morale, retention
SYSTEMS: Measure of availability of critical real time information for front line employees.
Key implementation success factors:
- Getting management on board and committed.
- Need interactive (two-way) communication
- Long-term view.
What is a strategy map?
A step on the way to balanced scorecard.
Strategy maps help to describe strategy in operational terms. Takes the broad level strategy and finds objectives, measures, targets, and initiatives in order to achieve strategy.
What are the potential pitfalls and criticisms of balanced scorecards?
- Lack of a well defined strategy.
- Too much focus on lagging measures
- Use of generic metrics
- Self-serving managers
Key benefit of BS
Transforms something intangible into a tangible, measurable, roadmap to fulfillment of strategy and vision. Transforms mission statement into a strategic plan.
