ACCT 202-08 Grp 7

Balanced Scorecards : 

Balanced Scorecards

What is a Balanced Scorecard? : 

What is a Balanced Scorecard? Strategic planning and management system that is used in business, industry, and nonprofit organizations Helps an organization achieve their goals by aligning business activities to the vision and strategy of the organization

Expands traditional financial measures with benchmarks for performance in 3 areas: : 

Expands traditional financial measures with benchmarks for performance in 3 areas: A company’s relationship with its customers Its key internal processes Its learning and growth

Slide 4: 

Gives managers and executives a more balanced view of organizational performance Helps identify what should be done and measured and enables executives to execute their strategies

Binds short-term activities to long-term Objectives in 4 ways: : 

Binds short-term activities to long-term Objectives in 4 ways: 1) Translating the Vision 2) Communicating and Linking 3) Business Planning 4) Feedback and Learning

Balanced Scorecard views the organization from four perspectives : 

Balanced Scorecard views the organization from four perspectives

1) Learning and Growth Perspective : 

1) Learning and Growth Perspective Includes employee training and corporate cultural attitudes related to both individual and self improvement

2) Business Growth Perspective : 

2) Business Growth Perspective Refers to internal business processes. Metrics based on this perspective allow the managers to know how well their business is running , and whether its products and services conform to customer requirements

3) The Customer Perspective : 

3) The Customer Perspective Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any business.

4) The Financial Perspective : 

4) The Financial Perspective Timely and accurate funding data will always be a priority, and managers will do whatever necessary to provide it. There is more than enough handling and processing of financial data. With the implementation of a corporate database, it is hoped that more of the processing can be centralized and automated

Expected Results from using a Balanced Scorecard : 

Expected Results from using a Balanced Scorecard Improved processes Motivated/educated employees Enhanced information systems Monitored progress Greater customer satisfaction Increased financial usage

History of the Balanced Scorecard : 

History of the Balanced Scorecard The first balanced scorecard was created by Art Schneiderman (an independent consultant on the management of processes) in 1987 at Analog Devices, a mid-sized semi-conductor company. While the "balanced scorecard" concept and terminology was coined by Art Schneiderman, the roots of performance management as an activity run deep in management literature and practice. Management historians such as Alfred Chandler suggest the origins of performance management can be seen in the emergence of the complex organisation - most notably during the 19th Century in the USA. Since then Balanced Scorecard books have become more common - in early 2010 Amazon was listing several hundred titles in English which had Balanced Scorecard in the title.

Popularity of Balanced Scorcards : 

Popularity of Balanced Scorcards In 1997, Kurtzman found that 64 percent of the companies questioned were measuring performance from a number of perspectives in a similar way to the Balanced Scorecard. Balanced Scorecards have been implemented by government agencies, military units, business units and corporations as a whole, non-profit organizations, and schools.

How do Companies Benefit From Balanced Scorecards? : 

How do Companies Benefit From Balanced Scorecards? Some organizations are finding out how to use Balanced Scorecard (BSC). Companies all around the world are already using Balanced Scorecards and are achieving outstanding results in the strategic directions of their business.

How do Balanced Scorecard help ? : 

How do Balanced Scorecard help ? Balanced Scorecards helps companies to implement Key Performance Indicators (KPI), realize business strategies and initiatives and achieve higher performance and global competitiveness.

Balanced Scorecards are used as a strategic tool such as: : 

Balanced Scorecards are used as a strategic tool such as: IMPROVE Financial results through better use of resources and cost savings. IMPROVE Customer Service and Satisfaction. PROVIDE Fact-based management with solid planning, monitoring & control. DRIVE Business Results through Human Capital.

How many companies use Balanced Scorecards? : 

How many companies use Balanced Scorecards? About half of major companies in the US, Europe and Asia are using Balanced Scorecard Approaches. The exact figures vary slightly but the Gartner Group suggests that over 50% of large US firms had adopted the BSC by the end of 2000. A study by Bain & Co finds that about 44% of organizations in North America use the Balanced Scorecard and a study in Germany and Austria finds that 26% of firms use Balanced Scorecards. The widest use of the Balanced Scorecard approach can be found in the US, the UK, Northern Europe and Japan.

Case Studies of the BSC at Work : 

Case Studies of the BSC at Work The telecom company (Epstein, and Manzoni 194-95) Employer of about 1600 people, 750 of the workers are blue collar Firm divides work into teams Started using the BSC in 1999 BSC measures performance in four areas: plant, department, workshop production team Scorecards integrated on all levels of production Direct labor less committed to scorecards

Case Studies of the BSC at Work : 

Case Studies of the BSC at Work The telecom company cont. For its success company combined the BSC with Result oriented Management Result oriented management helped By creating an informal relationship between corporate and shop level In all the BSC works to a degree over the corporation

Case Studies of the BSC at Work : 

Case Studies of the BSC at Work Manufaturer of spherical roller bearings (Epstein, and Manzoni 196-97) Employer of 150 people 120 blue collar workers Production line is run by target-oriented teams Each six workers are supported by 2 managers Each team is responsible for planning and procurement Company started using the BSC in 1998 Cards implemented on the company level, production line level and CI team level Scores in Three different areas: Finance, customer and production

Case Studies of the BSC at Work : 

Case Studies of the BSC at Work Manufaturer of spherical roller bearings cont. Lack of commitment at production level Work with continuous improvement (CI) teams necessary to work cooperatively with BSC Weekly meeting also help communicate strategies and goals Increased production team participation in the CI meetings

References : 

References 1. “What is the Balanced Scorecard?” Balanced Scorecard Institute. (1998-2010): Balanced Scorecard Institute, a Strategy Management Group Company. Web. 14 Apr. 2010. https://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx 2. Kaplan, Robert S. Norton, David, P. “Using the Balanced Scorecard as a Strategic Management System”. Harvard Business Review (2007). 14 April 2010. http://download.microsoft.com/documents/uk/peopleready/Using%20the%20Balanced%20Scorecard%20as%20a%20Strategic%20Management%20System.pdf 3. William N Zelman, George H. Pink, Catherine B. Matthais. “Use of the Blanaced Scorecard in Health Care”. Journal of Health Care Finance (2003). 14 April 2010 http://www.balancedscorecard.org/bscresources/faqs/tabid/60/default.aspx http://www.ap-institute.com/Balanced%20Scorecard%20How%20many%20companies%20use%20this%20tool.html