As business becomes more complex and competitive, traditional financial measures of performance fail to give managers all the information they need to make intelligent strategic and day to day decisions.
A powerful new means of delivering this information is called the balanced scorecard, a mix of financial and non-financial indicators, about customers, internal processes, organisational learning, shareholder value, quality, community relations and so on. The Balanced scorecard enables managers to accelerate continuous performance improvement, facilitate strategic formulation and execution, and strengthen internal and external accountability for creating value.
This guideline describes how to create a balanced scorecard and apply it to corporate advantage
Since the late 1980s, a growing number of managers have concluded that traditional management and financial accounting fails to give them adequate information to manage their companies.
In particular they are calling for more measures of quality, customer satisfaction, turnaround times, pollution control and other non financial indicators. The result of these calls for change has been a new management innovation: the balanced scorecard.
The new system's power and utility as articulated by Robert Kaplan and David Norton has been widely embraced by managers around the world. They presented the scorecard as an organizational scheme. The concept breaks out the critical categories of performance measurement into four 'perspectives': financial, customer, internal business and innovation and learning. The four perspectives also connect in a chain of cause and effect.
Kaplan and Norton's most significant contribution was to stress that executives should use the measures to translate corporate vision and strategy into concrete directions for action by people throughout the firm.
The steps in implementing the balanced scorecard are explained and can be used as a work plan. The scorecard should be seen as flexible with managers able to use it as a starting point and add a broader array of measures, however care need to be exercised to ensure that not too many measures are used thereby reducing its effectiveness.
Once top managers have devised a scorecard for the organisation as a whole, their next job is to help each unit devise complementary scorecards.
Barriers to implementation and how to overcome them are covered in the guideline.
Using the balanced scorecard as a strategic management system is another feature of the concept explained by case studies in the guideline.
Centre of Excellence comments
Gives a run through of the history of the Balanced Scorecard and also brings in the Skandia Navigator and some good case study examples. It combines some good theoretical analysis with practical implementation examples. I think the target audience is anyone working on performance measures and balanced scorecard implementations.
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http://www.cpaaustralia.com.au/cps/rde/xchg/cpa/hs.xsl/722_7191_ENA_HTML.htm
