Senior management professionals in an organisation play a vital role to utilise and deploy resources in such a way asto full fill the organisational goals andobjectives.
Skilled managers may have full of opportunities but it is achallenge to select correct strategies. Manytools, technics and frameworks are usingthem to manage quality, performance andvalues. Balance scorecard is one of a most popular tool deliberate to increasecorporate performance.
In early 1990, Kaplan and Norton developed this approach with four perspectives which are financial, customers, internal business processes, andinnovation, learning and growth to evaluate performance at an organisation. The Balanced Scorecard empowers organisations to aligned balanced focus on these four perspectives to ultimately achieveorganisation’s vision. The key importance of balanced scorecard is theperformance should not be evaluated with just a single monetary ?nancial approach.(Kaplan and Norton 1992) Generally, organisations measure their performance on short-term?nancial measures but the balanced scorecard approach stretches out this totogether with measure performance relating to their customers and employeelearning needs. (Latshaw and Choi, 2002).
This is more consider longer term,strategic dimension to the business, by not just taking a ?nancial performance, yet in addition how theassociation is approaching conveying the outcomes, and checking overall “strategichealth” of the organisation. Byconcentrating on these non-?nancialmeasurements, the organisation can survey its performance in building keycapabilities, required its approach to succeed in future. This is especiallysignificant to organizations looking for longer-term higher returns, settingout on new strategies. (Hagood and Friedman, 2002).In Balanced scorecard, financial perspective evaluates how to succeed in financially and its consider aboutreturn on capital, improve shareholder value and how to utilize assets in theorganization while customer perspective is about how the organization to appear in front of their customer to achieve the vision and missions. It will measureproducts and services allocation customer relationship and maintain the imageof the organization.
The internal business processis all about what kind of a business process should be excel satisfyshareholders and customers. It can developsales and products, deliver sales and product or post-sale services. Finally learning and growth perspective lookingfor how organization sustain their ability to change and improve. Its measurescan be employee capabilities, motivation or empowerment The purpose of the balancedscorecard is to guide, control and test a whole organisation towardsunderstanding a correct beginning of the future. According to Kaplan and Norton, the Balanced Scorecard is a vital partof the strategy, in a framework alienated into ?ve stages: when developing a strategyfirst step is focusing on vision, mission core values of the organization andanalysis its strengths, weakness, opportunities and threats. Hence, managers use strategic maps and the BalancedScorecard to convert their strategy into objectives and initiatives. The third step involves the advancement of an operational plan to accomplish suchobjectives and all activities such as targeting process, the preparation ofsales plans, plans to optimise resources and capabilities.
In the final stage assessthe strategy by analysing cost,profitability and considering the correlation betweenstrategy and actual performance. (Performance measurement Book) BSC is a multi-dimensional approach to deal with estimating and managingperformance that is particularly connected to organizational strategy. (Otley, 1999) It guides managers to ensure that all areas of theorganisation are covered in an appropriate way. It helps keep organisationalobjectives at the centre, utilizes particular measurements to evaluate progress,and follow initiatives to track activities. Balanced Scorecard not onlyconverts strategy into operation but also concentrating on the units andemployees in an organisation about their role in achieving the mission of thecompany.
Therefore it will help to clearly communicate the strategic plan amongemployees and assist them to see their individual goals. (Frigo & Krumwiede, 2000). In anotherhand, balanced Scorecard is balanced in both internal and external factsof the business. It highlights the significance of internal process to accomplishthe business result, and also get a view of customers and market position. (Olve et al.
, 2003) The Balanced Scorecard approach can be linking into connecting employeerewards to performance in all four perspectives, with appropriate weightingsapplied re?ecting the relative importance of each four area.