Balanced Scorecard Example
Organizations focusing on enhancing their productivity and achieving sustainable development use different management tools to control the working process. One of the most popular tools currently applied in practice is called balanced scorecard. This tool was first developed by Kaplan and Norton (Armstrong, 2001). This performance metric allows translating a company’s mission and strategy into a set of performance measures. These measures or objectives are then carefully assessed and monitored to change them if necessary, thus ensuring that strategic goals are met (Smith, 2010). This essay provides a balanced scorecard example. The researcher expects that it can be used to explain the nature of the tool and encourage companies to adopt it to improve their long-term performance and stability.
Balanced Scorecard Definition and Advantages
Those who type “balanced scorecard Kaplan” in Google search can find hundreds of articles and books dedicated to this topic, which proves its popularity in business. As explained by Smith (2010), this tool was designed by Kaplan and Norton to provide senior managers with a comprehensive and detailed set of measures that they can use to assess their organization’s progress in meeting some strategic goals. A balanced scorecard is a management tool. It means that it is not some theoretical concept that has little to do with the real-life organizational environment. On the contrary, the tool drives the agenda, which means that it induces senior executives to discuss the company’s objectives, initiatives, and measures that it should use to achieve the set goals (Smith, 2010). Notably, the boss should promote its use. As explained by Smith (2010), employees seeing that their boss pays attention to this aspect will be more responsive themselves and place balanced scorecard at the forefront of their activity.
Balanced scorecard advantages should be mentioned. To begin with, this management tool allows looking at the organizational processes from the balanced scorecard financial perspective. Let me rephrase. In other words, it helps to track both short-term financial performance and acquisition of intangible assets that may increase income in the long-term perspective (Armstrong, 2001). In this way, the tool helps to take a broader view of the company’s development and factors that might affect it over time. It allows focusing less on financial performance. The problem is that considering immediate financial gain is not always right since it may lead to wrong decisions and excessive focus on short-term revenues.
Balanced Scorecard Example
Balanced scorecard example allows illustrating the description. For instance, a regional airline company may formulate the following scorecard. First, it will define its mission. It may sound something like “providing the services of the highest quality and serving to satisfy all customers’ needs with due respect, warmth, and attention.” Second, a vision needs to be formulated. It may look as follows: “continuing providing low-cost, high-quality services to customers of all income levels.” Third, a simplified strategy map is needed. It will consider financial, customer, internal, and learning aspects, each of them having its own performance measures, targets, and initiatives. For instance, customer-related goals may include increasing the number of customers and achieving 97% satisfaction. Achieving these goals requires much effort. Therefore, related initiatives will necessarily include customer loyalty programs. Enhanced quality management may also be needed in this case. In fact, there are many other examples available online that can help to get a general idea of the tool to adjust it to any organizational context.
As seen from the balanced score example, setting clear goals and identifying ways through which they can be achieved is critically important. The analyzed model is the perfect tool to succeed. It helps organizations to focus on long-term performance and consider all factors contributing to success. Therefore, it is highly recommended for companies to adopt it as the major management tool to stimulate positive changes.
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Armstrong, M. (2001). A handbook of management techniques: The best-selling guide to modern management methods. London: Kogan Page Publishers.
Smith, R. F. (2010). Business process management and the balanced scorecard: Using processes as strategic drivers. Hoboken, NJ: John Wiley & Sons.