Balanced
Scorecard Framework
A Balanced
Scorecard Framework which translates a company's vision and strategy
into a coherent set of performance measures. Developed by Robert
Kaplan and David Norton (published in the Harvard Business Review in
1993), a balanced business scorecard helps businesses evaluate how
well they meet their strategic objectives. It typically has four to
six components, each with a series of sub-measures. Each component
highlights one aspect of the business. The Balanced Scorecard
Framework includes measures of performance that are lagging (return
on capital, profit), medium-term indicators (like customer
satisfaction indices) and leading indicators (such as adoption rates
for, or revenue from, new products).
Balanced
Scorecard Framework is useful in the value-negotiation process
because they provide a structure for the conversation. There are many established
frameworks for discussing business strategy – for example, Treacy
and Wiersema’s Discipline of Market Leaders (Addison Wesley) and the
Foundation report, Chains, Shops and Networks: the Role of IS in New Models
of Value Creation.
Facets of the
Balanced Scorecard Framework: The three underlying principles
dictate a holistic, multi-faceted approach to a Balanced Scorecard
Framework initiative—an approach that facilitates education,
communication, collaboration, analysis, and integration with daily
work activities. The Balanced Scorecard Framework leverages the
expertise of Balanced Scorecard practitioners and moves beyond the
restrictive capabilities of much early scorecard automation software
to address the issues organizations commonly confront. Six facets
describe the Balanced Scorecard
Framework:
·
Personalized
Portal
·
Best Practices
·
Strategy and Metric
Management
·
Business
Intelligence
·
Actionable and Operational
Tools
·
Knowledge
Management
A Balanced
Scorecard Framework for your organization based on its specific
strategy, critical success factors and customer-value propositions.
This is knowledge you can take back and utilize in your company
right away.
Recent survey
results show that most organizations use a Balanced Scorecard
Framework to "align their organization to their strategy." Many
organizations also link compensation to the results of the balanced
scorecard. Other reasons cited for implementing a balanced scorecard
approach were to build organizational strategy, link strategy to
planning and budgeting, set strategic targets, and build a strategic
management system.
Since
the introduction of the term by Kaplan and Norton, many
organizations worldwide have used some version of the "balanced
scorecard" approach to measure performance. The Balanced Scorecard
Framework helps align performance measures with organizational
objectives through strategic performance management. A Balanced
Scorecard Framework for Internal Auditing Departments, recently
published by The Institute of Internal Auditors Research Foundation,
provides expert guidance for using balanced scorecards to measure
and manage performance of the internal audit function.
