The Balanced
Scorecard
The Balanced
Scorecard is a tool that was developed to help organizations to
translate strategies into action. The Balanced Scorecard enables
organizations to clarify their vision and identify what they need to
do to achieve that vision. The Balanced Scorecard can then be used
to communicate objectives and monitor how successfully they are
being achieved.
The Balanced
Scorecard has emerged as a proven tool in meeting the many
challenges faced by the modern organization. The remainder of the
chapter introduces you to this dynamic tool. Using The Balanced
Scorecard framework is a good place to start — allowing you to align
and support key processes — and to translate strategy into
operational objectives, measures, targets and initiatives.
There are three
keys to making an implementation of The Balanced Scorecard
successful:
·
Get Buy-In at All Levels: They know you've
got those at the top signed on. Here's an easy way to get everyone
else on board: Tie Scorecard objectives to individual compensation.
Works like a charm – and gets employees to think strategically about
their jobs.
·
Follow Through: Don't let the Scorecard
metrics languish. Update them as major company goals shift with the
times.
·
Use the Right Tools: You can buy or build an
application that will help you track metrics. The Balanced Scorecard
Collaborative certifies vendor offerings, which you can check out on
their website.
The Balanced
Scorecard is a new management concept which helps managers at all
levels monitor results in their key areas. An article by Robert
Kaplan and David Norton entitled "The Balanced Scorecard - Measures
that Drive Performance" in the Harvard Business Review in 1992
sparked interest in the method, and led to their business
bestseller, "The Balanced Scorecard: Translating Strategy into
Action", published in 1996.
Companies that
use The Balanced Scorecard methodology get a more accurate,
comprehensive view of their business performance. Balanced Scorecard
approach relies on the monitoring of critical
business-strategy-oriented metrics, such as quality, customer
satisfaction, innovation, and market share—measurements that can
often reflect a company’s economic conditions and growth prospects
better than its reported earnings.
The Balanced
Scorecard methodology is more than a set of metrics; it is a system
of linked objectives, measurements, targets, and initiatives that
collectively communicate and measure an organization’s business
strategy. When you implement it effectively, this methodology can
help your company face both internal and external challenges—such as
responding to increased competition and more demanding customers,
translating your vision into measurable objectives, prioritizing
initiatives and allocating resources, and communicating business
strategies.
