A balanced scorecard approach to measure the value of enterprise architecture joachim schelp, institute of information management, university of st. Conclusion in conclusion, it can be noted that the balanced scorecard methodology is an useful tool not only for production organizations but also for services ones from a wide range of areas. This refers to the aspect of learning and growth as well as the viewpoint of internal business processes, which enable a company to possess the infrastructure for achieving ambitious goals. Targets are set out for each of the four perspectives in terms of long.
In terms of an analogy, quality experts suggest that six sigma teaches people how to fish, whereas the balanced scorecard teaches them where to fish. The book provides an excellent complement to the two kaplan. Balanced scorecard slightly refers to nontechnological innovations as well and also mentions them in the context of intangible assets. The key elements of balanced scorecard success by sandy richardson sandy richardson is managing consultant for strategy focused business solutions inc. The name balanced scorecard comes from the idea of looking at strategic measures in addition to traditional financial measures to get a more balanced view of performance. Chapter2 a conceptual framework of balance scorecard approach in 1996, when charlotte became the first municipality in the united states to adopt the balanced scorecard, city officials realized that they had to modify the management tool in order to make it fit the public sector niven, 2003. The balanced scorecard concept arose out of a recognized need to measure success on more than just financial statements. Despite the widespread adoption, a growing body of scholarship finds limitations in the bsc, particularly in its concept, application, and practice.
Balanced scorecard bsc as information based strategic management tool is capable of removing the limitation associated with the traditional measures for evaluating the current status of a hei. Balanced scorecard example the following is an example of how one might develop a balanced scorecard. She recently designed and implemented a bsc at canada life. The article was based on a multicompany research project to study performance measurement in companies whose intangible assets played a central role in value creation. Introduction need for measurementstrategic planning, university of minnesota strategic planning effort ii. The paper uses the following structure for organizing the origin and subsequent development of the balanced scorecard. To create a balanced scorecard by using performancepoint services, you typically use the following process. Conceptual foundations of the balanced scorecard working. Robert kaplan and david norton created the balanced scorecard approach in the. Keywords balanced scorecard bsc, higher educational institution hei, performance management system i. Conceptual foundations of the balanced scorecard colleaga. A balanced scorecard is a strategic planning and management system that is used to align business activities to the vision and strategy of the organisation, improve internal and external communications, and monitor organisation performance against strategic goals balanced scorecard institute, unknown.
The balanced scorecard as a performance management tool. The balanced scorecard helped the management to understand its objectives and roles in the bigger picture. The balanced scorecard has become an increasingly popular performance management and measurement framework and regularly comes in the top ten in bain and companys most used annual management tools surveys. The article was based on a multicompany research project to study performance measurement in companies whose intangible assets played a central role in value creation nolan norton institute, 1991. Figure 2 shows the current structure for a strategy map. Get a consensus around your strategy map or key goals, and then start using the bsc in your leadership team meetings as you build out the rest. A balanced scorecard is a set of measures that gives top managers a fast but comprehensive view of. Using balance scorecard in educational institutions. Smart companies plan their development for both the near and far future. The balanced scorecard provides a solution for this by breaking down objectives and making it easier for management and employees to understand. The belief was that if companies were to improve the management of their intangible assets, they had to integrate. Bsc framework looks at the strategy from four different perspectives i. Conceptual foundations of the balanced scorecard harvard. The competitiveness and balanced the competitiveness.
The balanced scorecard is used across a wide spectrum of organizations commercial government nonprofit the balanced scorecard can focus any organization on customers it serves, accomplishing the mission, and the processes required to assure mission accomplishment. Conceptual foundations of the balanced scorecard request pdf. Norton from nolan norton institute in the early 1990s 17. Balanced scorecard is a strategy performance management tool a semistandard structured report, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions. Chapter2 a conceptual framework of balance scorecard.
Balanced scorecard is a management system that enables organizations to translate the vision and strategy into action. As evaluated in the paper, the main objectives of the scorecard is direct the high level managers attention to the decisions in which excelling can brings the organization to the position over its. The balanced scorecard helps npses select a coherent use of nonfinancial measures to assess their performance with constituents. The present paper tries to examine the applicability of bsc as a performance measurementcummanagement system in academic institutions. Part ii 149 their own bodies of knowledge, language, and culture.
Conceptual foundations of the balanced scorecard sciencedirect. Instead of including all of the kpis or metrics, the balanced scorecard should consist of a few financial and nonfinancial kpis. The balanced scorecard model was developed as a means. The balanced scorecard focuses on factors that create longterm value traditional financial reports look backward reflect only the past. Definition and concept an approach to the provision of information to the management to assist with. A critique of the balanced scorecard as a performance.
In addition, he shows how to become a strategyfocused organization by imbedding the balanced scorecard into critical organizational processes. Balanced scorecard is a strategy performance management tool a semistandard structured report, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions the phrase balanced scorecard primarily refers to a performance management report used by a management team. The balanced scorecard acts as a measurement system, strategic management system, and communication tool. Science and education publishing, publisher of open access journals in the scientific, technical and medical fields. The balanced scorecard can be effective in the public, if and only if, the current perspectives are rearranged see figure 3. Since financial success is not their primary objective, npses cannot use the standard architecture of the balanced scorecard strategy map, where financial objectives are the ultimate, highlevel outcomes to be achieved. The four perspectives of the current version of the balanced scorecard can still be applied in government organizations as long as they are rearranged according to governmental priorities. My experiences as a balanced scorecard practitioner with a large canadian company taught me that tremendous results are possible with the tool, but to attain. Planning, setting targets and aligning strategy are two of the key areas where the balanced scorecard can contribute. It provides a framework for measuring company strategy and performance, which translates your strategy into a setof tangible objectives. Norton and i believed that if companies were to improve the management of.
The article was based on a multicompany research project to study performance measurement in companies whose intangible assets played a central role in value creation nolan. Anytown hospital has just finished a twoday retreat where they revised and updated their mission and vision statements and drafted a strategic plan. It extends the classical finance focused analysis of corporate. Financial results provide an indication of past performance, but dont provide you. One of the most widespread tools is the balanced scorecard bsc. Conceptual foundations of the balanced scorecard by robert. The rapid expansion in university education has changed the educational sector. Hence, it became a management strategy, which could be used across various functions within an organization. Customer, internal processes, learning and growth, and financial.
Pdf conceptual foundations of the balanced scorecard. Below, she offers her suggestions based on her experience with canada life and other organizations. The role of leadership a special mention is made regarding the leadership role of organizations executive team in the process of implementing the balanced scorecard management system as well as in the operation of this system. And even when you have a solid strategy, trying to measure your success can be even more complicated.
Conceptual foundations of the balanced scorecard 3. Within a decade since its emergence, a majority of the fortune companies was implementing the bsc. Make a list of those kpis and the data sources that you must have to create them. Metricnets service desk balanced scorecard the balanced scorecard step 1 six critical performance metrics have been selected for the scorecard step 2 each metric has been weighted according to its relative importance step 3 for each performance metric, the highest and lowest performance levels in the benchmark are recorded step 4 your actual. The information included is fictional and is provided to simply demonstrate the process. The balanced scorecard should focus on the strategy of the business and the maintenance department, by translating the vision into operational goals. Focusing strictly on financial results doesnt provide an organization with the information that it needs to prosper in todays environment. Introduction there has been a reform in educational policy, as the educational market has become liberalized. The balanced scorecard can focus any organization on. Functional silos arise and become a major barrier to strategy implementation since most organizations have great difficulty communicating and coordinating across these specialty functions.
Its this focus on both highlevel strategy and lowlevel measures that sets the balanced scorecard apart from other performance management methodologies. After presenting the conceptual foundations of ea and the. This system provides feedback on internal business processes and external outcomes to continually improve organizational performance and results. What is balanced scorecard balanced scorecard is a strategy management system that helps managers to translate organisation strategy into operational objectives and implement it. Definition the balanced scorecard is defined as a strategic management and measurement system that links strategic. The conceptual foundations of the balanced scorecard in 2010, professor bob kaplan put together a paper called the conceptual foundations of the balanced scorecard.
Conceptual foundations of the balanced scorecard article in ssrn electronic journal 3. The balanced scorecard is a method developed by prof. For the example balanced scorecard, we use a sql server analysis. However, comingup with a good strategy is not always simple. Balanced scorecard step by step guides readers through the processes required for a successful balanced scorecard project. The competitiveness and balanced scorecard of health care companies 3 creating competitive advantage swayne, duncan, ginter, 2006 is often a matter of selecting an appropriate basis on which to compete, it is the means by which the organization seeks to develop cost advantage or to differentiate itself from other organizations. Conceptual foundations of the balanced scorecard by robert s. The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. Theoretical perspectives and public management implications article pdf available in managerial auditing journal 166. Conceptual foundations of the balanced scorecard econbiz. Commentary transforming the balanced scorecard from.
Chapter2 a conceptual framework of balance scorecard approach. The popularity of the balanced scorecard increased over time due to its logical process and methods. Transforming the balanced scorecard from performance m easurement to strategic management. Creating an excelbased balanced scorecard to measure the. An integrated framework for describing and translating strategy through the use of linked performance measures in four balanced perspectives. Principles of balanced scorecard linkedin slideshare. Balanced scorecard has been widely adopted by us companies and nonprofit organizations.
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