Balanced Score Card Method

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Ashford University FINANCE BUS 655 Introduction The balanced scorecard is considered as management approach that can be used to map out a company’s strategic objectives into performance metrics based on different perspectives: financial, learning and growth, internal processes, and customers. These perspectives offer essential feedback about how well the strategic ...[Show More]

Ashford University
FINANCE BUS 655
Introduction

The balanced scorecard is considered as management approach that can be used to map out a company’s strategic objectives into performance metrics based on different perspectives: financial, learning and growth, internal processes, and customers. These perspectives offer essential feedback about how well the strategic plan is implemented to make vital changes. Kaplan and Norton (2006) defines a balanced scorecard as a strategic management and planning model that most companies use, on a wider level, to convey what they try to accomplish; align their day-to-day activities with their strategy; focus on products, services; and evaluate and monitor progress made towards achieving the strategic targets. Traditional financial performance metrics offers information regarding a firm’s past outcomes but they do not often offer better results to foretell the future performance of organizations or for executing and monitoring the strategic plan of a business. Through the analysis of various perspectives, not only the financial ones, it becomes easy for managers to translate the strategy of an organization into actionable objectives and better evaluate how well the strategy is being executed (Ahn, 2001).

The term “balanced scorecard” originates from the notion of examining strategic measures in conjunction with traditional financial measures to acquire a more “balanced” perspective of a firm’s performance. The idea of balanced scorecard has evolved ahead of the simple use of views and has today become a holistic system for strategy management. One of the advantages of using a disciplined framework is the fact that it present organizations with a means of “connecting the dots” between the different components of strategic planning and

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management; which means that there will be a clear connection between the programs and projects that people work on, the KPI measures for tracking success, the strategic objectives that a company tries to accomplish, and the vision, mission and strategy of the firm (Kaplan & Norton, 2001)