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The Balanced Scorecard
is a strategically focused performance management
system. It defines in detail what management
means by performance whether an organization
is achieving their desired results against set
goals. The Balanced Scorecard translates Mission
and Vision Statements into a comprehensive
set of objectives and performance measures
that can be quantified and appraised
The Harvard Business Review
stated that Balanced Scorecard was one of the most
important management concepts of the last 75 years.
The Balanced
Scorecard concept was created by Robert
Kaplan and David Norton, who coined the term in a
1992 Harvard Business Review article.
Kaplan and
Norton describe the innovation of the balanced
scorecard as follows:
THE
NORTON & KAPLAN CONCEPTUAL
FRAMEWORK |
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| "The
balanced scorecard retains
traditional financial measures.
But financial measures tell
the story of past events,
an adequate story for industrial
age companies for which
investments in long-term
capabilities and customer
relationships were not critical
for success. These financial
measures are inadequate,
however, for guiding and
evaluating the journey that
information age companies
must make to create future
value through investment
in customers, suppliers,
employees, processes, technology,
and innovation." |
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The Balanced Scorecard looks at
performance from four perspectives rather than a single
and traditional bottom line financial measure. Kaplan
and Norton recognized that enterprise or corporate
performance is not one-dimensional, that there are
multiple contributors that were categorized as:
- Financial perspective - the focus is on the bottom line results achieved
- Customer perspective - the focus is on customer needs and satisfaction
- Internal Business perspective - the focus on the effectiveness of key internal processes
- Organization Learning & Growth perspective - the focus is on how the organization invests in and supports its human resources
The Balanced Scorecard ultimately
provides an approach which integrates an organization's
strategic business objectives or goals with a "balanced"
set of performance measures. This set of measures functions
as a basis for the monitoring of planned achievements/outcomes
(Lag Indicators) and also indicators for future performance
of the organization (Lead Indicators).
Adopting the Balanced
Scorecard approach within an organization can positively
yield the following benefits:
- Aligning performance measures with business strategies
- Clear communication of strategy to all levels of the organization
- A platform for monitoring achievement of overall strategic plans
- A foundation for individual performance planning and evaluation
- Provides a balance between short-term financial performance and long-term growth opportunities
Cetheus' RPM Balanced Scorecard is a robust
and integrated enterprise-wide performance measurement and
management solution that enables the effective measurement of
what matters most, organizational health.
| RPM Scorecard provides
decision-makers with the tools to better understand the
key drivers affecting a company's performance. |
With RPM Scorecard, you will be able
to identify if your company is meeting its strategic
long-term goals, discover opportunities for process
improvement, and recognize performance problems before
they have a financial impact.
With an economically viable
investment and effortless implementation, Cetheus' Enterprise
Scorecard provides a quick return on your performance
measurement investment and creates more proactive strategy
formulations for more effective results.
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