Essential Perspectives and Strategic Goals
The Balanced Scorecard is considered to be one of the most extensively used new generation performance measurement methods. The first generations of the Balanced Scorecard as a result, does the proposing of new avenues in respect of measurement methods via a planned combination regarding financial as well as non-financial metrics having strategic propositions. A Balanced Scorecard will be identifying the essential perspectives required for providing a comprehensive view regarding the performance of the organization (Corbetta 2015). It will also do the identification of the strategic goals regarding each of those perceptions as well as doing the selection of the indicators as well as targets in respect of each of the goals. The objective of the Balanced Scorecard is associated with the aspect of addressing the problems in relation to the measurement of the performance regarding the organization (Anaboldi 2015). Majority of the organizations at present are facing the challenges of taking a 360 degree view of performance through the concentration on reporting, reviewing as well as acting in respect of a limited number of Key Performance Indicators (KPIs) that will be impacting mostly upon the organizational performance (Burstein 2014). A major area of study in relation to holistic organizational performance management is considered to be the Balance Scorecard (Goble 2014). This was primarily introduced by Kaplan as well as Norton to be a better way to view the performance of an organization.
It has been stated that majority of the companies do the adoption of a myopic short termed as well as financially supported view regarding performance as stated in traditional performance measures like sales, profit, return on capital employed, gross margin, return on investment, net margin as well as residual income (Awadh 2013). By agreeing to the fact that the financial performance of a company is an essential consideration, Kaplan and Norton also provided the argument that this narrow performance evaluation detracted from the long-term strategic organizational development (Ferguson 2013).
It was also advocated by them that there should occur the achievement of more balance in ways by which there occurs the viewing of performance amongst financial and non-financial measures as well as long-term and short-term measures (Ates 2013). For achieving this balance, Kaplan and Norton advocated that there should occur the consideration of performance from four different perspectives such as customers, shareholders, learning and innovation as well as internal business methods (Upadhay 2014). Regarding the customers, it can be stated in what ways the company will perform in the eyes of consumers. In respect of learning & innovation, it is required considering the performance necessary for ensuring the long-term organizational growth (Lin 2013). The shareholders are concerned with the financial performance measures and the internal business methods will be explaining in what ways the organization performs in carrying out daily methods in an effective as well as efficient manner (Person 2013).
Benefits of Using the Balanced Scorecard
It is necessary to advice clients in what ways the Balance Scorecard approach will get implemented regarding performance management as well as suggesting what Key Performance Indicators needs to be taken into consideration in respect of the specific industry of the client (Matthews 2015).
It needs to be noted here that the suggested scorecard will be concentrating on a finite number of industry specific KPIs (Peters 2013).
The advantages associated with the adoption of a Balanced Scorecard approach regarding performance management might be including the following aspects such as, creating a longer term strategic performance view in comparison to a myopic short-term view (Tjader 2014). Also, organizations will be developing performance measures that are having an explicit alignment to the corporate strategy and in support thereof (Sainaghi 2013). It is required considering the viewpoint of the customer that is essential regarding business. It widens the divisional manager’s view as to what will be representing better performance away from an exclusively financially oriented view. A Balanced Scorecard can do the promotion of accountability as each measure of performance could be the responsibility regarding a nominated individual (Perkins 2014). Moreover, the aspect of implementing the balanced scorecard should be comparatively simple as well as understandable.
Along with any performance management system, the Balanced Scorecard is having multiple uses. It will be getting used, for instance, towards the facilitation of the managerial decision-making, either in an individual manner or as a team, by putting emphasis on planning, policy focus, detecting the signs relating to warning or scopes, or to monitor remedial actions and so on (Jelsma 2015). Balanced Scorecard might be used as well for ensuring comparison of goals amongst the levels of management, by concentrating on factors like accountability, assessment as well as incentive processes (Keyes 2016).
It is often stated that the Balanced Scorecard needs to be used for pursuing both objectives in a simultaneous manner. Also, when the Balanced Scorecard is utilised to plan as well as facilitate the making of decisions, it would be considered coherent in extending its use regarding the setting of goal as well, and to do the tying of the evaluation of the managers as well as compensating their degree of success in actualizing those objectives (Grant 2016). While doing the implementation of the Balanced Scorecard, a company is required assessing the significance of these considerations in their specific context (Hoque 2014). Whenever there will occur the implementation of a Balanced Scorecard, it is essential in noting that the Balanced Scorecard might get used both in facilitating the making of decisions and as a source to evaluate as well as fix the incentives.
Multiple Uses of the Balanced Scorecard
The performance measurement is considered being an intrinsic objective of the Balanced Scorecard. Therefore, it is necessary to do the utilization of the pertinent indicators. The Balanced Scorecard, as a result is having the requirement for being specifically susceptible regarding two issues such as the significance as well as availability of indicators (Burstein 2014). The relevance of an indicator is having the concern regarding issues stating if it is amply sensitive as well as specific towards the measurement of performance (Morone 2014).
To take into consideration the implementation of the Balanced Scorecard as a tool of management in an organization, it is necessary for taking into account the particularities of the sector. The Balanced Scorecard did subsequent evolving toward the aspect of incorporating the strategy maps such as the shared mental maps relating to the cause-effect order doing the representation of the company’s business model.
Reference
Arnaboldi, M., Lapsley, I. and Steccolini, I., 2015. Performance management in the public sector: The ultimate challenge. Financial Accountability & Management, 31(1), pp.1-22.
Ates, A., Garengo, P., Cocca, P. and Bititci, U., 2013. The development of SME managerial practice for effective performance management. Journal of Small Business and Enterprise Development, 20(1), pp.28-54.
Awadh, A.M. and Alyahya, M.S., 2013. Impact of organizational culture on employee performance. International Review of Management and Business Research, 2(1), p.168.
Burstein, R. ed., 2014. The IEA study of mathematics III: Student growth and classroom processes. Elsevier.
Corbetta, D., Imeri, F. and Gatti, R., 2015. Rehabilitation that incorporates virtual reality is more effective than standard rehabilitation for improving walking speed, balance and mobility after stroke: a systematic review. Journal of physiotherapy, 61(3), pp.117-124.
Ferguson, C., Green, P., Vaswani, R. and Wu, G.H., 2013. Determinants of effective information technology governance. International Journal of Auditing, 17(1), pp.75-99.
Goble, D.J., Cone, B.L. and Fling, B.W., 2014. Using the Wii Fit as a tool for balance assessment and neurorehabilitation: the first half decade of “Wii-search”. Journal of neuroengineering and rehabilitation, 11(1), p.12.
Grant, R.M., 2016. Contemporary Strategy Analysis Text Only. John Wiley & Sons.
Hoque, Z., 2014. 20 years of studies on the balanced scorecard: Trends, accomplishments, gaps and opportunities for future research. The British accounting review, 46(1), pp.33-59.
Jelsma, D., Geuze, R.H., Mombarg, R. and Smits-Engelsman, B.C., 2014. The impact of Wii Fit intervention on dynamic balance control in children with probable Developmental Coordination Disorder and balance problems. Human movement science, 33, pp.404-418.
Keyes, J., 2016. Implementing the IT balanced scorecard: Aligning IT with corporate strategy. CRC Press.
Lin, Q.L., Liu, L., Liu, H.C. and Wang, D.J., 2013. Integrating hierarchical balanced scorecard with fuzzy linguistic for evaluating operating room performance in hospitals. Expert Systems with Applications, 40(6), pp.1917-1924.
Matthews, J.R., 2015. Assessing organizational effectiveness: the role of performance measures. The Library Quarterly.
Morone, G., Tramontano, M., Iosa, M., Shofany, J., Iemma, A., Musicco, M., Paolucci, S. and Caltagirone, C., 2014. The efficacy of balance training with video game-based therapy in subacute stroke patients: a randomized controlled trial. BioMed research international, 2014.
Perkins, M., Grey, A. and Remmers, H., 2014. What do we really mean by “Balanced Scorecard”?. International Journal of Productivity and Performance Management, 63(2), pp.148-169.
Person, R., 2013. Balanced scorecards and operational dashboards with Microsoft Excel. John Wiley & Sons.
Peters, D.H., Adam, T., Alonge, O., Agyepong, I.A. and Tran, N., 2013. Implementation research: what it is and how to do it. Bmj, 347, p.f6753.
Sainaghi, R., Phillips, P. and Corti, V., 2013. Measuring hotel performance: Using a balanced scorecard perspectives’ approach. International Journal of Hospitality Management, 34, pp.150-159.
Tjader, Y., May, J.H., Shang, J., Vargas, L.G. and Gao, N., 2014. Firm-level outsourcing decision making: A balanced scorecard-based analytic network process model. International Journal of Production Economics, 147, pp.614-623.
Upadhaya, B., Munir, R. and Blount, Y., 2014. Association between performance measurement systems and organisational effectiveness. International Journal of Operations & Production Management, 34(7), pp.853-875.