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       <H1>balanced scorecard</H1>
       <H3>kaplan and norton's organizational performance management
tool</H3>
       <P>In the beginning was darkness. We went to work, did our job
(well or
            otherwise) and went home - day in and day out. We did not
have to worry about
            targets, annual assessments, metric-driven incentives, etc.
Aahh&#133; life was
            simple back then. </P>
       <P>Then there came light. Bosses everywhere cast envious eyes
towards our
            transatlantic cousins whose ambition was to increase
production and efficiency
            year-by-year. Like eager younger siblings we trailed behind
them on the
            (sometimes) thorny path to enlightenment. </P>
       <P>Early Metric-Driven Incentives - MDIs - were (generally)
focused on the
            financial aspects of an organization by either claiming to
increase profit
            margins or reduce costs. They were not always successful, for
instance driving
            down costs could sometimes be at the expense of quality,
staff (lost expertise)
            or even losing some of your customer base. </P>
       <P>Two eminent doctors (Robert S Kaplan and David P Norton)
evolved their
            Balanced Scorecard system from early MDIs and jointly
produced their
            (apparently) ground-breaking book in 1996. Many other 'gurus'
have jumped on
            the Balanced Scorecard wagon and produced a plethora of books
all purporting to
            be the &#145;Definitive' book on Balanced Scorecards.
Amazon.com shows over
            4,000 books listed under Balanced Scorecards, so take your
pick - and your
            chances! </P>
       <P>&nbsp;</P>
       <H2>balanced scorecard - definition </H2>
       <P>What exactly is a Balanced Scorecard? A definition often quoted
is: 'A
            strategic planning and management system used to align
business activities to
            the vision statement of an organization'. More cynically, and
in some cases
            realistically, a Balanced Scorecard attempts to translate the
sometimes vague,
            pious hopes of a company's vision/mission statement into the
practicalities of
            managing the business better at every level. </P>
       <P>A Balanced Scorecard approach is to take a holistic view
            <B><U></U></B>of an organization and co-ordinate MDIs so that
efficiencies are
            experienced by all departments and in a joined-up fashion.
</P>
       <P>To embark on the Balanced Scorecard path an organization first
must know
            (and understand) the following: </P>
       <UL>
            <LI> The company's mission statement </LI>
            <LI>The company's strategic plan/vision </LI>
       </UL>
       <P>Then</P>
       <UL>
            <LI> The financial status of the organization</LI>
            <LI> How the organization is currently structured and
operating </LI>
            <LI>The level of expertise of their employees </LI>
            <LI>Customer satisfaction level </LI>
       </UL>
       <P>The following table indicates what areas may be looked at for
            improvement (the areas are not exhaustive and are often
company-specific): </P>

      <P>&nbsp;</P>
       <H2>balanced scorecard - factors examples</H2>

       <TABLE WIDTH="80%" BORDER="1" CELLPADDING="5" CELLSPACING="5">
            <TR>
              <TD WIDTH="275"><B>&nbsp;Department</B></TD>
              <TD WIDTH="450"><B>Areas</B></TD>
            </TR>
            <TR VALIGN="TOP">
              <TD WIDTH="275" VALIGN="TOP">&nbsp;Finance</TD>
              <TD WIDTH="450" VALIGN="TOP">Return On Investment <BR>Cash
Flow
                    <BR>Return on Capital Employed <BR>Financial Results
(Quarterly/Yearly)</TD>
            </TR>
            <TR VALIGN="TOP">
               <TD WIDTH="275" VALIGN="TOP">Internal Business
Processes&nbsp;</TD>
               <TD WIDTH="450" VALIGN="TOP">Number of activities per
function
                    <BR>Duplicate activities across functions <BR>Process
alignment (is the right
                    process in the right department?) <BR>Process
bottlenecks <BR>Process
                    automation</TD>
            </TR>
            <TR VALIGN="TOP">
               <TD WIDTH="275" VALIGN="TOP">Learning &amp; Growth</TD>
               <TD WIDTH="450" VALIGN="TOP">Is there the correct level of
expertise
                    for the job? <BR>Employee turnover <BR>Job satisfaction
<BR>Training/Learning
                    opportunities</TD>
            </TR>
            <TR VALIGN="TOP">
               <TD WIDTH="275" VALIGN="TOP">Customer</TD>
               <TD WIDTH="450" VALIGN="TOP">Delivery performance to
customer
                    <BR>Quality performance for customer <BR>Customer
satisfaction rate
                    <BR>Customer percentage of market <BR>Customer
retention rate&nbsp;</TD>
            </TR>
       </TABLE>
       <P></P>
       <P>&nbsp;</P>
       <P>Once an organization has analysed the specific and quantifiable
results
            of the above, they should be ready to utilise the Balanced
Scorecard approach
            to improve the areas where they are deficient. </P>
       <P>The metrics set up also must be
            <A
            HREF="acronyms.htm#smart smarter acronyms business acronyms
dictionary">SMART</A>
            (commonly, Specific, Measurable, Achievable, Realistic and
Timely) - you cannot
            improve on what you can't measure! Metrics must also be
aligned with the
            company's strategic plan. </P>
       <P>A Balanced Scorecard approach generally has four
perspectives:</P>
       <OL>
            <LI> Financial </LI>
            <LI>Internal business processes </LI>
            <LI>Learning &amp; Growth (human focus, or learning and
development)
              </LI>
            <LI>Customer </LI>
       </OL>
       <P>Each of the four perspectives is inter-dependent - improvement
in just
            one area is not necessarily a recipe for success in the other
areas. </P>
       <P></P>
       <TABLE WIDTH="100%" CELLPADDING="5" CELLSPACING="5">
            <TR>
              <TD ALIGN="LEFT"><IMG
SRC="images/balanced_scorecard_pic1.jpg"
                   ALT="balanced scorecard" BORDER="0" WIDTH="472"
HEIGHT="480"></TD>
            </TR>
       </TABLE>
       <P></P>
       <P>&nbsp;</P>
       <H2>balance scorecard implementation</H2>
       <P>Implementing the Balanced Scorecard system company-wide should
be the
            key to the successful realisation of the strategic
plan/vision. </P>
       <P>A Balanced Scorecard should result in: </P>
       <UL>
            <LI>Improved processes </LI>
            <LI>Motivated/educated employees </LI>
            <LI>Enhanced information systems </LI>
            <LI>Monitored progress </LI>
            <LI>Greater customer satisfaction </LI>
            <LI>Increased financial usage </LI>
       </UL>
       <P>There are many software packages on the market that claim to
support the
            usage of Balanced Scorecard system. </P>
       <P>For any software to work effectively it should be: </P>
       <UL>
            <LI>Compliant with your current technology platform </LI>
            <LI>Always accessible to everyone - everywhere </LI>
            <LI>Easy to understand/update/communicate </LI>
       </UL>
       <P>It is of no use to anyone if only the top management keep the
objectives
            in their drawers/cupboards and guard them like the Holy
Grail. </P>
       <P>Feedback is essential and should be ongoing and contributed to
by
            everyone within the organization. </P>
       <P>And it should be borne in mind that Balanced Scorecards do not
            necessarily enable better decision-making! </P>
       <P>Here's a <A

      HREF="http://en.wikipedia.org/wiki/Balanced_scorecard">helpful
webpage for
            further in-depth information on Balanced Scorecards</A>. </P>
<br>
<hr>
<h3>see also</h3>
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Learning
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