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balance scorecard

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balanced scorecard

on 3 December 2012

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Transcript of balance scorecard

Balanced Scorecard 2828731 DERRICK ANIM
3123368 SEYHAN GEL
2456157 LUTAAYA SEMWANGA OUTLINE 1. Introduction to the Balanced Scorecard.
a. What is it?
b. Why do it?
2. Balanced Scorecard Fundamentals
a.Four perspective
b. Measures, targets and initiatives
c. Roles and responsibilities
3. Building a Balanced Scorecard
4. Using the Balanced Scorecard as a management system
5. Benefits and challenges
Defintion: “The Balanced Scorecard translates an organization’s mission and strategy into a comprehensive set of performance measures that provides the framework for a strategic measurement and management system”( Kaplan and Norton, 1996) Meaning: It’s a strategic performance management tool
Its translates an organization mission and strategy
Ties performance measures to corporate strategy
Improve internal and external communication
The name is from an attempt to balance both financial and non- financial objectives
Evaluate both short and long-run performance in a report Responsibilities The Balanced Scorecard is based on three general management concepts:

Measurement and Goal Setting

Communication, Motivation and Human Relations

Business Strategy The four perspective BALANCED SCORECARD FUNDAMENTAL A Balanced Scorecard approach generally has four perspectives:

1. Financial

2. Internal business processes

3. Learning & Growth (human focus, or learning and development)

4. Customer Each of the four perspectives is inter-dependent
Improvement in just one area is not necessarily a recipe for success in the other areas.
Once an organization has analyzed the specific and quantifiable results
Utilize the Balanced Scorecard approach to improve the areas where they are deficient MEASURES, TARGETS AND INIATIVES What is it? To achieve strategic objectives
To provide quality with fewer resources
To eliminate non-value added efforts
To track progress
To evaluate process changes
To continually improve
To increase accountability Why do it? Why measure? To make decisions based on FACT and DATA Translate customer expectations into goals
Evaluate the quality of processes
Track our improvement
Focus our efforts on our customers
Support our strategies Cause it should Targets? Need to be set for all measures
Should have a “solid basis”
Give personnel something to aim
If achieved will transform the organization “If you don’t know where you’re going, you’re probably not gonna get there.” Forrest Gump Initiatives After the measurement and targets are met It is the responsibility of management to determine how goals of an organization are achieved B BALANCED SCORECARD FUNDAMENTAL Roles Responsibilities • Assumes ownership for the balanced scorecard implementation
• Provides background information to the team about strategy and methodology
• Maintains communication with internal and external stakeholders
• Commits resources ( both human and financial) to the team
• Provides supports and enthusiasm for the balanced scorecard throughout the organization Executive sponsor
Senior member of scorecard team should ensure the team receives the human and financial resources necessary for a successful Balance scorecard champion (or team leader) Roles •Coordinates meeting, plans, tracks and reports team results to all audiences
•Provides thought leadership on the balanced scorecard methodology to the team
•Ensure all relevant background material is available to the team
•Provides feedback to the executive sponsor and senior management Roles & Responsibilities Team members
• The job of the team member is is to translate that material into a working strategy map and scorecard that effectively tells about your strategy

• Provide a back grounded context for the scorecard and subject matter

• Team member must constantly communicate with their leaders , building support and providing feedback to the larger scorecard team

•Act as balanced scorecard ambassadors within their unit or department introduced as one of the newest management tools. Balanced Scorecard as a Management System The scorecard allows managers to introduce four new processes: A. Translating the vision - expressing the mission with an integrated set of objectives and measures

B. Communicating and linking - facilitates the communication of strategies throughout the organization

C. Business planning - Integrate the strategic planning and budgeting process

D. The final, process is feedback and learning - Monitor feedback and relate this to the strategy Benefits of a Balanced Scorecard Simple to Use and Understand
Based on Vision and Strategy
Current and Future
Provides Measurement of and Method for Improving our Services
Serves as a Communication Tool Challenges in implementing Main problem is that it does not provide practical guidance for deployment
Poorly Defined Metrics
Lack of Efficient Data Collection and Reporting
Lack of a Formal Review Structure
Ignore non-financial measures
It tells the story of a company strategy by articulating cause-and effect relationship

It helps to communicate the strategy to all members of the organization to understand and measure operational target

limits the number of measures used by identifying only the most critical ones
In for profit, its places strong emphasis on financial objectives and measures Good Balanced Scorecard ANY QUESTIONS? The four perspective: Performance Management System Building a Balanced Scorecard six-step framework Assessment Strategy Reference Balance scorecard

Balance scorecard fundamental



Measurement and initiatives

Roles & Responsible
Paul R Niven, 2nd edition, performance & maintaining results Reference con... Objectives Strategic Map Performance Measures Initiatives organization’s foundations, its core beliefs, market opportunities, competition, financial position,
short- and long-term goals, and an understanding of what satisfies customers. development of overall business Strategy Build the Business, Improve Operational Efficiency, and Develop New Products decomposition of business strategy into smaller components organization’s overall business strategy cause-effect linkages (if-then logic connections)
the components (objectives) of strategy are connected and
placed in appropriate scorecard perspective categories how an objective (effect) is dependent
on another objective (cause), and how, taken together, they form a strategic thread from activities to
desired end outcomes To develop meaningful performance measures new Initiatives are identified that need to be funded and implemented to ensure that our
strategies are successful
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