As we parade through the darkness towards the light, so do our efforts to make life easier. The balance scorecard is one such management concept that is used in business organizations which tries to align the mission and vision concept of that particular organization. Originally originated by Dr. Robert Kaplan of Harvard Business School and David Norton, as 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. The balance scorecard is used in order for the organization to work in an efficient manner keeping its direction on the mission and the vision that is to be achieved. In order to truly make use of the balance scorecard, a firm must understand the two important aspects of the firm:
• “The company’s mission statement”
• “The company’s vision statement”
After that the firm needs data on the following:
• Financial status of the organization
• The current structure and operations of the organization
• Level of expertise of the employees
• Level of customer satisfaction
The metrics should be S.M.A.R.T (Specific, Measurable, Achievable, Realistic and Timely), one can’t improve what can’t be measured, and the metrics must be aligned with the company’s strategic plan.
The balance scorecard directs us to visualize the organization to have four perspectives that are inter-dependent, yet improving one area doesn’t mean success for the other areas as well, all four must work in sync:
Managers do whatever is necessary to provide accurate and timely funding data because it is an important task that needs to be done regarding the time constraint. More so often there is enough work done on handling and processing of financial data. Corporate database implementation will help the processing to be centralized as well as automated. But it is obvious that the current emphasis on financial’s leads to such a situation that is not in balance regarding the other perspectives.
The Customer Perspective
Customer focus and customer satisfaction has been given a lot of importance in the recent years in the businesses. They are the leading signs: if the customer is not satisfied, he/she will eventually find other suppliers that will meet his/her needs. Performance, regarding this perspective is a leading indicator future decline or increment. Customers are usually analyzed in terms of kind of the customers, who are provided with a product or service regarding the kind of service of product that they need or want.
The Customer Perspective
This perspective refers to internal business processes, in which the managers are allowed to know about how well the business is running and that the products and services are conforming to the requirements of the customer or not. These metrics are usually designed by those who know these processes, and it is not something that the outside consultant can develop.
The Learning and Growth Prospective
This perspective keeps on track the training, cultural attitudes of the employees as well as the organization as a whole, the term may also be used as corporate self-improvement. People are the main source of knowledge in any organization that has a tendency to learn and grow more efficient as they go. The current rapid technological change is becoming necessary for knowledge workers to be in a continuous mode to learn. Managers are put responsible for taking the tome and funding and use them resourcefully. In any case, learning and growth make up the essential foundation for success of any ‘knowledge worker’s organization.