balance scorecard costing - rajan chhangani
TRANSCRIPT
BALANCED SCORECARD
Presented by-
PayalPratibha VermaRajan Chhangani
MBA 2nd Sem. JIET-SOM
CONTENTS Introduction
Definition
Balanced Scorecard as Performance Measure
Features
Purpose
Perspectives
Importance
INTRODUCTION
Balanced Scorecard is a comprehensive performance measurement framework that translates an organization’s strategy into clear objectives, measures, targets and initiative. It represents a management system that can motivate breakthrough improvement in critical areas of product, process, customer and market development. It integrates the measures used across the organization and helps it to grapple with the intangible or intellectual assets.
DEFINITION
According to Kaplan and Norton, the innovation of the balanced scorecard as, “The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, and adequate story for industrial age companies for which investments in long-term capabilities and customer relationship were not critical for success.
According to David Chaudron, “Using the balanced scorecard to combine viewpoints of Company success” defines Balanced Scorecard as follows:
A way of measuring organizational, business unit or department success.
A way of balancing long-term and short-term actions. A way of balancing different measures of success such as –
Financial, Customer, Internal Operations and HR system and Development.
A way of tying strategy to measures to action.
AS PERFORMANCE MEASUREArmstrong and Baron have laid down many criteria regarding performance measures that are of the opinion that performance measures should:
Be related to the strategic goals. Be relevant to the objectives and accountabilities of the teams
and individual concerned. Focus on measurable outputs, accomplishments and behaviours
that can distinctly be defined. Highlight the data that will be available on the basis of
measurement. Be verifiable by providing information that will confirm the
extent to which expectations have been met. Be as precise. Provide a perfect basis for feedback and action. Be elaborated, covering all the important aspects of
performance, so that a number of measures are available.
FEATURES It is a management tool which focuses on both
financial and non-financial goals of an organisation.
It includes performance measures of four perspectives – financial, customer, internal business processes and learning and growth(innovation).
Balanced scorecard focuses on the link between business processes, decisions and results.
Balanced Scorecard is considered as a device to guide strategy, formulation, implementation and communication.
Balanced Scorecard helps in tracking the performance and providing quick feedback for control and evaluation.
PURPOSE
Clarify and update strategy.
Communicate strategy throughout the company.
Align unit and individual goals with strategy.
Link strategic objectives to long-term and annual budgets.
Identify and align strategic initiatives.
Conduct periodic performance reviews to learn about and improve strategy.
PERSPECTIVES
Four Perspectives of Balanced Scorecard:
The Financial perspective
The customer perspective
The process perspective
The infrastructure (learning and growth) perspective.
IMPORTANCE Consensus on the strategy at executive level
Communicates strategy to the organization
Translates strategy into meaningful goals
Employees identify themselves with goals
Personal targets linked to strategy
Processes focus to achieve strategic goals
Periodic reporting of status of strategic goals
Drives investment/budget decisions
Thank You