BALANCED SCORECARD DEFINITION, ADVANTAGES, DISADVANTAGES, USES, PERSPECTIVES.pdf

BALANCED SCORECARD

2. What is a Balanced ScorecardWhat is a Balanced ScorecardWhat is a Balanced Scorecard
[BSC] ???[BSC] ???[BSC] ???

3. BSC is a strategic management toolBSC is a strategic management tool
BSC is BSC is used to track and manage performance of organization & achieveused to track and manage performance of organization & achieve
strategic goalsstrategic goals
BSC is used on not just financial outcomes but also other criticalBSC is used on not just financial outcomes but also other critical
perspectivesperspectives
BSC was developed by Robert Kaplan and David Norton in the earlyBSC was developed by Robert Kaplan and David Norton in the early
1990s1990s

4. How does a Balanced ScorecardHow does a Balanced ScorecardHow does a Balanced Scorecard
Work ???Work ???Work ???

5. Since it is a tool to help with operations ofSince it is a tool to help with operations of
organization, it measures past performance data andorganization, it measures past performance data and
provide organizations the feedback on how efficientlyprovide organizations the feedback on how efficiently
and effectively they can take decisions for the futureand effectively they can take decisions for the future

6. The 4 Key Perspectives of BSCThe 4 Key Perspectives of BSCThe 4 Key Perspectives of BSC

7. BSC
Financial
Perspective
Customer
Perspective
Internal Business
Processes
Perspective
Learning &
Growth
Perspective

8. Financial perspective focuses onFinancial perspective focuses on
asset utilizationasset utilization
revenue growthrevenue growth
cost managementcost management
shareholder valueshareholder value
reduction of administrative expensesreduction of administrative expenses
operating incomeoperating income
return on investmentreturn on investment
sales growthsales growth
residual incomeresidual income
cash flow from operationcash flow from operation
Financial Perspective

9. Customer perspective focuses onCustomer perspective focuses on
customer satisfactioncustomer satisfaction
retentionretention
market sharemarket share
increased quality of productsincreased quality of products
reduced delivery timereduced delivery time
customer loyaltycustomer loyalty
no. of warranty claimsno. of warranty claims
returned productsreturned products
customer complaintscustomer complaints
new customernew customer
Customer Perspective

10. Internal Business Processes perspective focuses onInternal Business Processes perspective focuses on
efficiencyefficiency
quality of internal processquality of internal process
reduce errorreduce error
product qualityproduct quality
reduced manufacturing timereduced manufacturing time
material turnovermaterial turnover
Internal Business Processes Perspective

11. Learning & Growth perspective focuses onLearning & Growth perspective focuses on
innovationinnovation
employee developmentemployee development
long term capability buildinglong term capability building
employee satisfaction ratingemployee satisfaction rating
no. of new productsno. of new products
no. of patentno. of patent
amount spent on research and developmentamount spent on research and development
no. of suggestions per employeeno. of suggestions per employee
Learning & Growth Perspective

12. Benefits of using BSCBenefits of using BSCBenefits of using BSC

13. Aligns business activities with the organization’s vision and strategy.Aligns business activities with the organization’s vision and strategy.
Provides a balanced view of performance, integrating non-financial andProvides a balanced view of performance, integrating non-financial and
financial measures.financial measures.
Encourages a long-term perspective by focusing on growth and innovation.Encourages a long-term perspective by focusing on growth and innovation.
Improves strategic communication across all organizational levels.Improves strategic communication across all organizational levels.
BBringing all the needed information in a single reportringing all the needed information in a single report

14. Disadvantages of BSCDisadvantages of BSCDisadvantages of BSC

15. Complexity in implementationComplexity in implementation11..
Potential for misalignmentPotential for misalignment22..
Over emphasis on metricsOver emphasis on metrics33..
Requires regular updatesRequires regular updates44..
Subjectivity in measurementSubjectivity in measurement55..
Lack of casual clarityLack of casual clarity66..
Resistance to changeResistance to change77..
Focus on internal Rather than External factorsFocus on internal Rather than External factors88..
Difficulty in setting standardsDifficulty in setting standards99..
Time consumingTime consuming1010..
CostlyCostly1111..

16. Designs of BSCDesigns of BSCDesigns of BSC

17. Identifying measures.Identifying measures.11..
Setting targets.Setting targets.22..
Establishing perspectives.Establishing perspectives.33..
Articulating vision and strategy.Articulating vision and strategy.44..
Establishing objectivesEstablishing objectives55..
Developing measures and standardsDeveloping measures and standards66..
Creating systemsCreating systems77..
Collecting and analyzing dataCollecting and analyzing data88..
Taking actionTaking action99..

18. An Example of BSCAn Example of BSCAn Example of BSC

19. Banks often contact customers and conduct surveys to gauge howBanks often contact customers and conduct surveys to gauge how
well they do in their customer service. well they do in their customer service. These surveys include ratingThese surveys include rating
recent banking visits with questions about wait times, interactionsrecent banking visits with questions about wait times, interactions
with bank staff, and overall satisfaction. They may also askwith bank staff, and overall satisfaction. They may also ask
customers to make suggestions for improvement. Bank managers cancustomers to make suggestions for improvement. Bank managers can
use this information to help retrain staff if there are problems withuse this information to help retrain staff if there are problems with
service or to identify any issues customers have with products,service or to identify any issues customers have with products,
procedures, and services.procedures, and services.

20. Thank you