BALANCED SCORECARDMOHAMMED SAMEERAssignmentBalanced Scorecard is a strategic performance management framework, allowing organizations to define strategic priorities and then design indicators and measures to monitor how well they are executing their strategy. Dr. Robert Kaplan and David Norton developed the Idea. Robert Kaplan is a Harvard business school professor, David Norton a consultant and they did a project in early 1990s to come up with better ways of measuring performance and as a part of the project they got number of companies together and one of this companies had almost a balanced score card and they thought it was a good idea to have measures in the number of areas of business or to cover the important parts, and this is how the concept started, Balanced score card is defined at the top level of the company, where you define what the company is all about and in which direction you are going in to, and then you can use this to direct your business units to make sure they are all aligned with top level objectives of the company.

Balanced scorecard generally would identify the most intuitive components of a companys strategy; it all starts with Vision and Strategy, like where we would like to take this organization in 2 or 5 Years. From their on you define objectives for four key perspectives, starting of with financial perspective like what is that we want to deliver in terms of profits, where we would like to grow our revenues to, what sort of value do we want to return to our share holders, to what level do we need to cut our costs, Hence this is where we articulate financial objectives of a business.

To deliver financial perspective we need to deliver to our customers, so second perspective is customer perspective where objectives are laid around like launching a new product in to a new market, Increasing the satisfaction for the services and products being delivered, Increasing the brand awareness, growing market share.so anything we have articulated in customer perspective will help us deliver our financial objectives.

In order to know how well we are doing with the customers we need to identify in organization what we are good at, like what are vital areas we need to excel as an organization i.e. which we call Internal Process perspective or operational priorities which would address like right people, right IT Infrastructure, right organizational culture all of these will help us do well internally which would help us then better deliver to our customers, and that in-turn would help us deliver better towards our financial objectives. And coming to the last perspective i.e. learning and growth perspective which is least understood perspective among other perspectives, Hence Kaplan and Norton have further defined this perspective.

There are three components to learning and growth perspective, Human Capital which is related to people and employees addresses whether they are trained, do they have necessary capability, are they engaged to the right level, as well as Information and Organizational capital like culture, leadership and leadership approach.

Organizations have freedom to develop their own perspectives; they can tailor perspective as per their need. Balanced scorecards are no longer limited to four-box perspective display, they have evolved in to strategy map display where these four perspectives are put in a hierarchy and driven with their respective organizational industry goals.

The common benefit shared across organization with balanced scorecard is to have agreement on organizations strategic priorities, though further down the organization the priorities may become cumbersome as they might amount to large amount of goals that are hardly followed, so its useful to classify them in to these four priorities and have them laid out on a dash board, as it better helps to communicate the strategy, have agreement among all related to the strategic priorities and provides clear picture as to how they all are Interlinked. As this would provide clear laid out objectives, it would then help in identifying key performance indicators which will further help Improve management information and management reporting. In order for Balanced Scorecard to be successful it requires all key members commitment from its Inception to execution, provided such commitment exists balanced scorecard can be implemented in a 2 weeks timeframe.Rev By:Prof.Ramesh Kavassery KrishnanIIMK