The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and non profit 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.
Harvard Business School was the first to come up with a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more ‘balanced’ view of organizational performance.
However the phrase “balanced scorecard” was coined only in the early 1990s with the pioneering work of the “Tableau de Bord” – literally, a “dashboard” of performance measures.
Our studies suggest that over 70% of large business firms have adopted the Balanced Score Card approaches, with use growing across all domains.
Recent global studies have listed Balanced Score Card fifth on its top ten most widely used management tools around the world, a list that includes closely-related strategic planning at number one.
Balanced scorecard has also been selected by the editors of Harvard Business Review as one of the most influential business ideas of the past 75 years.
The balanced scorecard has evolved from its early use as a simple performance measurement framework to a full strategic planning and management system. The “new” Balanced Score Card transforms an organization’s strategic plan from an attractive but passive document into the “marching orders” for the organization on a daily basis. It provides a framework that not only provides performance measurements, but helps planners identify what should be done and measured. It enables executives to truly execute their strategies.
The Key Indicators of a Balanced Score Card are:
- Increase Customer Satisfaction
- Increase Customer Loyalty
- Retention of key customers
- Sales revenue per customer
- Competition pricing and product offering
- High Quality Service
- Customer preference compared to competitors
- Financial result and growth
- Key Financial parameters and
- performance (ROE, ROCE)
- Higher Profit Margin
- Improved Cash flow
- Lower Bad loans and lower debt
- Net Interest Margin
- Reduced overhead Expenses
- Proper Revenue Mix
LEARNING AND GROWTH
- Develop Critical Skills and Knowledge
- Proper Knowledge Management
- provide Strategic Information to all
- Align Personal Goals with Company goals
- Employee growth and turnover
- Employee Satisfaction and Retention
- Cross-Sell Products
- Improve Operational efficiency and
- minimize Problems
- Proper Customer relationship management
- Higher success rate in converting
- business opportunities
- Fast business decisions and approvals
- Proper work culture and higher employee
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