Techno Finance and Executive Diary...

Monday, November 10, 2008

Balance Score Card - a Performance Management Tool

What is the balanced scorecard?

The balanced scorecard is a strategic planning and management system that is widely applicable to organizations regardless of size or type of business. The system, extensively used in business and industry, government, and nonprofit organizations worldwide, provides a method of aligning business activities to the vision and strategy of the organization, improving internal and external communications, and monitoring organization performance against strategic goals. It was originated by Robert Kaplan and David Norton of Harvard University in about 1990, but the roots of the balanced scorecard are deep, and include the pioneering work of General Electric on performance measurement reporting in the 1950’s and the work of French process engineers (who created the Tableau de Bord – literally, an instrument panel or dashboard of performance measures) in the early part of the 20th century in France. Additional details on the balanced scorecard can be found here.

Because the balanced scorecard is a generic term, it means different things to different people, and in practice, there are wide variations in both understanding and implementation. To some, the balanced scorecard is a simple dashboard of performance measures, while to others it is a comprehensive planning and management system covering the whole organization and designed to focus efforts on organization strategy and, more importantly, on performance and results.

What are the benefits of the balanced scorecard approach?
The benefits of the balanced scorecard have been identified by many organizations:

• Improved organization alignment
• Improved communications, both internally and externally
• Linked strategy and operations
• More emphasis on strategy and organizational results
• Integrated strategic planning and management

What challenges will I encounter trying to develop and deploy a balanced scorecard system?

There are several major challenges to developing and sustaining the balanced scorecard:
• Engaged leadership
• Maintaining momentum
• Measuring what matters
• Not using a disciplined framework to build the system
• Mistakenly thinking a scorecard system is a short-term project (it’s not….it’s a journey)
• Not involving a cross-section of the organization in developing the system
• Not thinking strategically enough
• Not incentivizing desired behavior changes

Labels: Balance score card, Consulting, Performance Management, Robert Kaplan, Tools and softwares

Posted by "CPerformance" :: 9:27 AM :: 0 comments