Balanced Scorecard and Benchmarking

Question 1

What is the balanced scorecard?

Answer 1

Measurement tool to help an organization identify and evaluate success factors within the context of overall strategy

Integrates financial and non-financial factors

Categories:

1) Financial- Specific measure of financial performance
2) Customer- Performance to market segments
3) Internal business process- internal operations
4) Learning, innovation, growth- personnel growth, employee empowerment

Within each of the four categories include:

• Strategic goals
• Critical success factors
• Tactics
• Performance measures

Question 2

How do you create a balanced scorecard?

Answer 2

1) Identify the strategic objectives of the organization
2) do SWOT analysis (strategic management)
3) Develop operational tactics (courses of actions)
4) Develop performance measures for each tactic

Question 3

What are the features of a good balanced scorecard? 1

Answer 3

1) Articulate a company’s strategy by trying to map a sequence of cause-and-effect relationships through metrics
2) Assist in communicating the strategy to all members of the organization
3) Limit the number of measures used by identifying only the most critical ones (15 to 20 metrics)
4) highlight suboptimal trade-offs made by managers

Question 4

What are things to avoid when for balanced scorecards?

Answer 4

Assuming cause-and-effect linkages are precise

Seeking improvements across all measures all the time

Using only objective measures on the scorecard

Failing to consider both cost and benefits of initiatives

Ignore non-financial metrics when evaluating employees

Question 5

What is benchmarking?

Answer 5

A process in which organizations compare their own processes and performance wit the processes and performances of business leaders within or across competing industries

Best practices:

• Most efficient and effective means of accomplishing a task
• identify best practices, an organization observes the practices of leading companies
• Compares own processes and procedures to identify improvement

Results:

• Improvements in efficiency and performance
• Benchmarking should be ongoing process
• Supports continuous learning and improvement