Balanced scorecard and strategic performance management Flashcards
Who developed the balanced scorecard
Kaplan and Norton 1996
What is the purpose of the BS
Provision of information for management to assist with strategic policy formulation. Helps management measure performance.
What is the need for the BS
To provide the user with information addressing all relevant areas of performance objectively
What are the elements of the BS
Financial, customer, learning and growth, internal business processes
What are the measures of the BS
Objectives (overall what do they want to achieve)
Measurement (How is it measured)
Targets (what does success look like)
Initiatives (How to achieve)
How does the balanced scorecard use cause and effect
Links strategy formulation with financial outcomes. Shows how strategy can have an effect on other elements which ultimately communicates the effect of the strategy on profits.
Balanced scorecard pros
Translates strategic goals to performance measures
Helps with a more holistic view to see overall improvement of a corporation
Improves decision making to enhance internal and external decision making
Balanced scorecard cons
Complex cause and effect relationships - hard to establish causality, not well specified relationships
Only as reliable as the data it is derived off
Difficulty with implementation - employees may not be enthusiastic for change
Who developed strategic performance management
Ferreira and Otley 2009
What was the purpose of SPM
To identify the main issues which need to be addressed in developing a framework of managing organisational performance
What are the steps of SPM
- What is the vision
- What factors are central to the organisations success
- What is the structure
- What current strategies
- What are the key performance measures
- What level of performance will meet these KPM
- How is performance measured
- What reward systems are in place
- What information flows
- How strong are the links between SPM
What is contemporary performance management
The balanced scorecard aims to integrate financial and non-financial measures to build strategy
What are lag indicators
Financial measure which examines outputs. The consequence of managerial decisions
What are lead indicators
Measures what drives the creation of wealth e.g employee satisfactions effect on profits
Definition of the balances scorecard
A strategic planning and management system used to align business activities to the vision statement of an organisation
