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BALANCED SCORCARD( BSC)
• IT IS A STRATEGIC PERFORMANCE MANAGEMENT TOOL
• IT CAN BE USED BY MANAGEMENT TO KEEP TRACK ON THE OGANIGATIONAL PERFORMANCE
CHARACTERISTICS
• BSC IS THE PRESENTATION OF A MIXTURE OF FINANCIAL AND NON-FINANCIAL MEASURES COMPARED TO A “TARGET”
• THESE NON-FINANCIAL ARE “CUSTOMER”, “INTERNAL BUSINESS PROCESSES” AND “LEARNING & GROWTH”
HISTORY•THE FIRST BSC WAS CREATED BY ART SCHNEIDERMAN AN INDEPENDENT CONSULTANT IN 1987
•IN 1996 DR.ROBERT S KAPLAN AND DR.DAVID P NORTON PUBLISHED THEIR BOOK “BALANCED SCORECARD : TRANSLATING STRATEGY INTO ACTION”
ORIGINAL DESIGNE METHOD
Objectives Measures Targets Initiatives
Financial
Customer
Process
Learning
DIAGRAM OF THE BALANCED SCORECARD
Financial
StrategyCustomer Business Processes
Learning & Growth
DESIGN
Adapted from Robert s. Kaplan & David P. Norton,” using the BSC as a strategic management system”
BSC -FACTORS
Department Areas
Finance Return On Investment Cash Flow Return on Capital Employed Financial Results (Quarterly/Yearly)
Internal Business Processes
Number of activities per function Duplicate activities across functions Process alignment (is the right process in the right department?) Process bottlenecks Process automation
Learning & Growth Is there the correct level of expertise for the job? Employee turnover Job satisfaction Training/Learning opportunities
Customer Delivery performance to customer Quality performance for customer Customer satisfaction rate Customer percentage of market Customer retention rate
Department Areas
BSC –FACTORS (Continued..)
IMPROVED DESIGNE METHODS
• IN THE MID 1990,AN IMPROVED DESIGNED EMERGED.
• MEASURES ARE SELECTED BASED ON A SET OF “STRATEGIC LINKAGED MODEL” OR STRATEGY MAP
• THIS STYLE OF BSC WAS KNOWN AS 2ND GENERATION
• STRATEGY MAP WITH A LONG-TERM OUT COME KNOWN AS 3RD GENERATION BSC.
BSC AS STRATEGIC MANAGEMENT SYSTEM
• CLARIFYING STRATEGY • COMMUNICATING STRAGIC OBJECTIVES• PLANNING, SETTING TERGATES AND ALIGNING
STRATEGIC INITIATIVES• STRATEGIC FEEDBACK AND LEARNING
BUILDING & IMPLEMENTING A BSC :Nine steps to success
CRITICISM• BSC HAS ALWAYS ATTRACTED CRITICISM FROM
MANY SOURCES• ACADEMIC COMMUNITY DISLIKE EMPIRICAL
NATURE OF FRAMEWORK• KAPLAN & NORTON FAILED TO INCLUDE ANY
CITATION OF PRIOR ART• BSC DOES NOT PROVIDE A BOTTOM LINE
SCORE OR RECOMMENDATIONS • IT IS SIMPLY A LIST OF MERTRICS .
POPULARITY
• IN SPITE OF CRITICISM BSC HAS BEEN IMPLEMENTED BY GOVT. AGENCIES, MILITARY, BUSINESS UNITS AND CORPORATIONS.
• BSC WERE OFTEN DESIGNED REMOTELY BY CONSULTANTS. MANAGERS DID NOT TRUST THEM.
SOFTWARE TOOLS
• BSC IS NOT A COMPLEX THING. IT IS ONLY SPREAD IN 20 MEASURES
• THE PROCESS OF COLLECTING REPORTING AND DISTRIBUTING BSC INFORMATION CAN BE LABOR INTENSIVE AND PROCEDURAL PROBLEM.
• SOFTWARE PACKAGES ARE ALREADY AVAILABLE TO AUTOMATE THE COLLECTION OF INFORMATION
THANK YOU