The Balanced Scorecard management system
Introduction:
Strategic management is a set of administrative decisions and systems that define the vision and mission of the organization in the long term in light of its competitive advantage and seeks to implement it by studying, monitoring and evaluating environmental opportunities and threats, threats and opportunities and its relationships with organizational strength and weakness, and achieving a balance between interests different parties are stakeholders. The topic will be discussed is Balanced Scorecard, that written by Alice C. Stewart and Julie Carpenter-Hubin and its published at Beyond Reports and Rankings. Furthermore, Balanced Scorecard, which is a measure used to measure the results of the strategic planning of the department, and takes into account the non-material aspects that concern the performance of companies such as customer satisfaction, for example. The Balanced Scorecard is used to determine and improve business performance levels and the final results issued by it, with the aim of creating a clear picture of how the company will perform in the future.
Summary:
The Balanced Scorecard is a management system that aims to help the organization translate its vision and strategies into a set of interconnected strategic goals and measurements. Also, balanced scorecard is known to help assess the management team in the company, to show their ability to achieve the company’s goals. frequently, bad strategic decisions were made in a potential, to raise the base line at the expenditure of other organizational goals. (Stewart & Carpenter-Hubin, 2001). Other employees within the company can rely on Balanced Performance in order to know the extent of their contribution to business growth, or their suitability for job promotions, furthermore, the Balanced Scorecard approach permit managers to more easily play on sides of the business that they need to closely monitor, highlighting On areas of work that need development and improvement. However, In order for the company to use the Balanced Scorecard in its business, it must have a goal that it seeks to achieve and reach it, without the presence of any goal the company will not be able to know what it wants to achieve and will not be able to make accurate measurements of its business.
Discussion:
A balanced scorecard is a strategic management and planning system used to align the activities of a business with its vision and strategy, enhance internal and external communication and monitor the business’s strategic goals. The balanced scorecard concept first featured in the Harvard Business Review by Robert Kaplan and David Norton who researched twelve leading performance measurement companies and derived the “balanced scorecard” (Kaplan, & Norton, 2005). It was invented from the need to include non-financial indicators to measure performance (Stewart & Carpenter-Hubin, 2001).
Kaplan and Norton changed the corporate performance management system from financial measures to a comprehensive performance management system. According to Stewart & Carpenter-Hubin, (2001), the balanced scorecard uses four perspectives to measure performance: Customer perspective (CP), internal business perspective (IBP), financial performance perspective (FPP), and learning and growth perspective (LGP). According to Kaplan & Norton (1996), these perspectives provide a balanced picture of current and future performance.
A balanced scorecard strives to develop a similar and comprehensive reference point for all employee and company business units. Additionally, according to Kaplan & Norton (2001), many organizations are utilizing the balanced scorecard as a strategic management tool to design asymmetry for effective control and for consideration of all essential perspectives to achieve sustainable success in an efficiently balanced manner. Further, the BSC has evolved over the years to be regarded as a strategic linkage model (Cobbold, & Lawrie, 2002), or rather a strategy map. This map assists businesses to clarify their strategies and creating their balanced scorecard measures and framework.
For strategic decision making, strategies should be aligned towards objectives. The BSC measures whether a company is aligned with its strategy and vision (Kaplan & Norton, 2000). Therefore, according to Stewart & Carpenter-Hubin (2001), colleges and universities should benchmark and decide performance measures based on the set mission and vision statements. The vision and mission statements should be designed as integrated objectives and measure sets that describe the organization’s long-term success drivers. These measures and objectives should be agreed upon by executives since they understand their organization’s measurement system (Kaplan & Norton, 2005). Since universities and colleges various organizational areas designed to achieve their visions, they can develop an academic scorecard by identifying long-term strategic objectives for each organizational area. Therefore, each objective will then have specific performance measures indicating the progress of the improvement in the allocated performance area.
The balanced scorecard may be utilized to identify vital areas that have a significant impact on a business. Well-defined measurement criteria can be used to identify each perspective’s critical success factors (De Waal, 2003). A university is faced with a dilemma regarding how student support demands, possibility outreach, revenue change and the new population diversity impacts academic excellence. Through this, various possible performance gains or losses arise attached to any decision taken and institutions likely to be affected based on implemented strategies. Therefore, appropriate evaluation and performance mechanisms linked to those strategies should be integrated into the balanced scorecard. The BSC will provide a common frame reference frame to all institutions that are privy to the decision. A generally accepted performance and organizational goals model enhances decision making, communication and implementation of many strategic decisions.
Additionally, the BSC, not just a measurement system but also a management system which assists businesses in clarifying their strategy and vision to the employees while translating them into action plans (Kaplan, & Norton, 2001). Additionally, the balanced scorecard emphasis on integrative tradeoffs and analysis can improve internal institutional effectiveness through performance management (Stewart & Carpenter-Hubin, 2001). The BSC evolution from being a simple performance measurement framework to being used as strategic management and planning is gradual.
Conclusion:
Finally, Balanced Scorecard, is a measure used to measure the results of the strategic planning of the department, and takes into account the non-material aspects that concern the performance of companies such as customer satisfaction, for example. The Balanced Scorecard is used to determine and improve business performance levels and the final results issued by it, with the aim of creating a clear picture of how the company will perform in the future. The balanced scorecard is not the solution to all problems, nor is it a way to develop companies, but it is an aid that defines performance indicators and thus helps us achieve the strategy. As is the norm in every administrative system, the one who commercializes the system tries to portray it as the basis of all development and that all other policies are part of it. This sometimes happens with a balanced goal card. These cards are a means of setting balanced goals only. Therefore, if they are not accompanied by the application of administrative policies for development, they fail.
References
Cobbold, I., & Lawrie, G. (2002). The development of the balanced scorecard as a strategic management tool. Performance measurement association.
De Waal, A. A. (2003). The future of the balanced scorecard: an interview with Professor Dr Robert S. Kaplan. Measuring Business Excellence.
Kaplan, R. S., & Norton, D. P. (1996). Linking the balanced scorecard to strategy. California management review, 39(1), 53-79.
Kaplan, R. S., & Norton, D. P. (1996). Using the balanced scorecard as a strategic management system.
Kaplan, R. S., & Norton, D. P. (1998). Putting the balanced scorecard to work. The economic impact of knowledge, 27(4), 315-324.
Kaplan, R. S., & Norton, D. P. (2001). Transforming the balanced scorecard from performance measurement to strategic management: Part II. Accounting horizons, 15(2), 147-160.
Kaplan, R. S., & Norton, D. P. (2005). The balanced scorecard: measures that drive performance. Harvard business review, 83(7), 172.
Stewart, A. C., & Carpenter-Hubin, J. (2001). The Balanced Scorecard. Planning for higher education, 37-42.