The Balanced Scorecard
Thesis
A balanced scorecard is a management tool that supports conventional financial measurements. It uses a method that measures customer performance, internal business process, and learning and growth. In their article “Using the Balanced Scorecard as a Strategic Management System,” Robert Kaplan and David Norton state that Companies trace the financial results and, at the same time, develop their employees and build the potential for future growth. The authors state that the traditional financial measurements fail to reconcile the short term and the firm’s long-term goals. The old measures stress on short term goals leaving out the long term strategy. The article affirms that the balanced scorecard contains four processes. The first process is called translating the vision, which involves defining the top management’s long-term strategies in a manner simple enough for everyone to understand. The second one is the communication and linking” that entails disseminating the strategy information to all member staffs. Business planning is their process managing financial plans for the various programs in the order of priority relevance. The last one is the feedback and the learning process. It is about progress evaluation to ascertain whether the company is achieving short-term and long-term objectives. It also recommends necessary restructuring.
Central Pillars
Translating the mission is a central pillar of a balanced scorecard. The article gives a scenario of a manager of an engineering firm and his employees. They call the CEO to enquire about the mission statement of the company with a customer on sight. The authors are trying to show the lack of connection of what the employees do that contribute to the mission statement. Translating the mission is the initial stage of the whole process, and taking the first move in the right direction is crucial. The article asserts that being on the same page about the mission’s meaning is vital, and the opposite is hazardous. Robert and David further illustrate a 25 member executive of a bank who had to agree on the importance of strategy statement first before proceeding with the other processes. This scenario indicates how much different understanding the staff could have about the mission, making it challenging to work toward the same goals.
Communication and linkage is another prominent feature of a balanced scorecard. The article asserts that it involves exploiting the various communication channels in an organization to align individual employees to tasks leading to long term goals. This process, therefore, involves three other critical activities to align employees. These activities are communicating and educating, setting goals, and linking rewards to performance. Communication and education, the authors explain, involves actual sharing of the information with staff members. The company uses methods such as issuing brochures and newsletters, holding town meetings, and posting bulletin boards. It may also use electronic means such as electronic bulletin boards. The authors stress that the same media also allows employees’ opinions on how they can best attain their targets. This statement means that the card is also communicated upward to the top management. Therefore, communication is a complete two-way process. The author ascertains that the transmission of the scorecard to external shareholders depends on the management experience in using the card. The experience will enable the management to extend communication to the outside without exposing the firm’s competitive secrets.
Setting goals involve translating the set objective and measure for individuals and operating units. The author affirms that organizations introduce personal scorecards. In these scorecards, the individuals and teams suggest their own goals but consistent with the organizational goals. The scorecards facilitate an easier understanding of objectives by the employees. The third activity is linking rewards to performance. The balanced scorecard is structured in such a way that it connects the employee performance with their remuneration. The authors state that some companies that have adopted this have seen a high degree of alignment.
Business planning is another pillar of a balanced scorecard. The authors use the phrase “where the rubber meets the sky,” referring to an executive staff explaining their long-term planning. The article points out that such inability to state long-range planning is due to applying the wrong procedures to come up with and communicate these plans. Authors lament that long-term business planning is done in “off-site meetings” with consultants and kept in executives’ desks until the next meeting. The management ought to discuss the business plans during the general periodic reviews. The balanced scorecard via the business planning section ensures the integration of strategic plans and budgeting. This provides that the programs prioritized for budgeting are aligned with the long term goals. The article asserts that the process of building a balanced scorecard of stating the objectives and selecting critical drivers provides a blueprint to run other organizational plans. The balanced scorecard role helps determine the most useful programs since they compete for the resources, including the manager’s attention.
Obtaining feedback and learning from a balanced scorecard is an equally important pillar. The authors confirm that managers who have applied a balanced scorecard say that it’s beneficial. The managers also describe it as “real time research” where they can obtain information about the long term achievement at any time. The scorecard evaluates whether the business is achieving both long-term and short-term goals on a real-time basis. The article explains that a balanced scorecard’s feedback mechanism is enhanced by its nature of a framework that focuses on many critical management processes. The framework includes departmental and individual goal setting, business planning, capital allocation, strategic initiatives, and feedback and learning.
This article has a significant impact on a future manager. It presents itself as the ultimate tool for performance measurement. I think it will make the manager’s work easier since it involves employees in structuring the long-termlong-term and short term objectives. Therefore,The Balanced Scorecard
Thesis
A balanced scorecard is a management tool that supports conventional financial measurements. It uses a method that measures customer performance, internal business process, and learning and growth. In their article “Using the Balanced Scorecard as a Strategic Management System,” Robert Kaplan and David Norton state that Companies trace the financial results and, at the same time, develop their employees and build the potential for future growth. The authors state that the traditional financial measurements fail to reconcile the short term and the firm’s long-term goals. The old measures stress on short term goals leaving out the long term strategy. The article affirms that the balanced scorecard contains four processes. The first process is called translating the vision, which involves defining the top management’s long-term strategies in a manner simple enough for everyone to understand. The second one is the communication and linking” that entails disseminating the strategy information to all member staffs. Business planning is their process managing financial plans for the various programs in the order of priority relevance. The last one is the feedback and the learning process. It is about progress evaluation to ascertain whether the company is achieving short-term and long-term objectives. It also recommends necessary restructuring.
Central Pillars
Translating the mission is a central pillar of a balanced scorecard. The article gives a scenario of a manager of an engineering firm and his employees. They call the CEO to enquire about the mission statement of the company with a customer on sight. The authors are trying to show the lack of connection of what the employees do that contribute to the mission statement. Translating the mission is the initial stage of the whole process, and taking the first move in the right direction is crucial. The article asserts that being on the same page about the mission’s meaning is vital, and the opposite is hazardous. Robert and David further illustrate a 25 member executive of a bank who had to agree on the importance of strategy statement first before proceeding with the other processes. This scenario indicates how much different understanding the staff could have about the mission, making it challenging to work toward the same goals.
Communication and linkage is another prominent feature of a balanced scorecard. The article asserts that it involves exploiting the various communication channels in an organization to align individual employees to tasks leading to long term goals. This process, therefore, involves three other critical activities to align employees. These activities are communicating and educating, setting goals, and linking rewards to performance. Communication and education, the authors explain, involves actual sharing of the information with staff members. The company uses methods such as issuing brochures and newsletters, holding town meetings, and posting bulletin boards. It may also use electronic means such as electronic bulletin boards. The authors stress that the same media also allows employees’ opinions on how they can best attain their targets. This statement means that the card is also communicated upward to the top management. Therefore, communication is a complete two-way process. The author ascertains that the transmission of the scorecard to external shareholders depends on the management experience in using the card. The experience will enable the management to extend communication to the outside without exposing the firm’s competitive secrets.
Setting goals involve translating the set objective and measure for individuals and operating units. The author affirms that organizations introduce personal scorecards. In these scorecards, the individuals and teams suggest their own goals but consistent with the organizational goals. The scorecards facilitate an easier understanding of objectives by the employees. The third activity is linking rewards to performance. The balanced scorecard is structured in such a way that it connects the employee performance with their remuneration. The authors state that some companies that have adopted this have seen a high degree of alignment.
Business planning is another pillar of a balanced scorecard. The authors use the phrase “where the rubber meets the sky,” referring to an executive staff explaining their long-term planning. The article points out that such inability to state long-range planning is due to applying the wrong procedures to come up with and communicate these plans. Authors lament that long-term business planning is done in “off-site meetings” with consultants and kept in executives’ desks until the next meeting. The management ought to discuss the business plans during the general periodic reviews. The balanced scorecard via the business planning section ensures the integration of strategic plans and budgeting. This provides that the programs prioritized for budgeting are aligned with the long term goals. The article asserts that the process of building a balanced scorecard of stating the objectives and selecting critical drivers provides a blueprint to run other organizational plans. The balanced scorecard role helps determine the most useful programs since they compete for the resources, including the manager’s attention.
Obtaining feedback and learning from a balanced scorecard is an equally important pillar. The authors confirm that managers who have applied a balanced scorecard says that it’s beneficial. The managers also describe it as “real time research” where they can obtain information about the long term achievement at any time. The scorecard evaluates, whether both long-term and short-term goals are being achieved on a real-time basis. The article explains that a balanced scorecard’s feedback mechanism is enhanced by its nature of a framework that focuses on many critical management processes. The framework includes departmental and individual goal setting, business planning, capital allocation, strategic initiatives, and feedback and learning.
This article has a significant impact on a future manager. It presents itself as the ultimate tool for performance measurement. It will make the manager’s work more comfortable since it involves employees in structuring the long-term and short term objectives. Therefore, the employee becomes the implementers of their ideas. The linkage with the business programs would ensure the manager chooses the right plan. It also has a feedback mechanism that helps in making necessary adjustments. The employee becomes the implementers of their ideas. The linkage with the business programs would ensure the manager choose the right program. It also has a feedback mechanism that helps in making necessary adjustments.