It is clear that linkages are the most important aspect of the balanced scorecard and that the cause and effect relationship (fig.2) allows for strategic alignment throughout an organisation.
It is clear that linkages are the most important aspect of the balanced scorecard and that the cause and effect relationship (fig.2) allows for strategic alignment throughout an organisation.This has been seen to be “the common thread to the successful implementation of the balanced scorecard,”(Murby and Gould, 2005, pp.10) another key element to the balanced scorecard is making sure “that all employees understand [the] strategy and conduct their business in a way that contributes to its mission and objectives”(Murby and Gould, 2005, pp.5).Since its inception in 1992 the ‘Balanced Scorecard’ is now “adopted by thousands of private, public, and non-profit enterprises around the world”(Kaplan, 2010, p. Which provides testament to its importance and effectiveness as a performance management system, it is likely that businesses that have implemented the systems have seen profound impacts on their profit margins and the happiness and innovativeness’ of their workforce. ”(Kaplan and Norton, 1992, p.72) By providing senior managers with information from four important perspectives, another benefit of implementing a scorecard is that it minimises information over-load by “add[ing] value by providing both relevant and balanced information in a concise way for managers”(Mooraj, Oyon and Hostettler, 1999, p.489).Tags: How Business PlanTeaching Comparative EssaysWhat Should An Abstract Include For A Research PaperWhat Were The Causes Of The French Revolution EssayBpc Business Planning And ConsolidationSamantha Hindle Thesis
Once a suitable measurement system is in place, managers are able to create targets to achieve and finally programmes in which to implement in an attempt to meet the pre-set targets.
By implementing a programme which is easily communicated, achievable and produces results that can be monitored by all levels that are relevant to the process, it will find that employees will benefit from seeing the results they produce with the intention of further motivating the work-force to increase efficiency.
By implementing a programme, in the form of a survey or other such measures “it [can] identify strategic initiatives and related measures, these gaps can then be addressed and closed by initiatives such as staff training and development”(Mooraj, Oyon and Hostettler, 1999, p. Once work-force empowerment is achieved and employees are happy and informed about their roles and the overall strategic aim of the organisation and methods of observing, recording and measuring are in place it can now focus on the next stage of the balanced scorecard.
This perspective, once an empowered and informed work-force is achieved and employees are working to their full potential, focuses primarily on making business and/or manufacturing processes more efficient, creating more output for the input.
Return-on-capital employed and cash flow reflected preferences for short-term results, while forecast reliability signalled the corporate parent’s desire to reduce the historical uncertainty cause by unexpected variations in performance”(Kaplan and Norton, 1993).
The first two are self-evidently of importance to shareholders with a return generated for shareholders and cash flow results which result in larger profits, while reducing the risk of uncertainty caused by a variation in performance is of particular importance and is something that can only be achieved through getting every employee focused and aligned with the overall strategic aims of the company, through an informed, focused and appreciated workforce, an efficient internal business process, and a satisfied customer-base.
By looking at these different perspectives the balanced scorecard “provide[s] answers to four basic questions; How do customers see us? The four different perspectives and the way they interconnect are an important issue, as such it is also important to analyse each of them on an individual basis; first it must be recognised that each of the perspectives is made up of Objectives, Measurements, Targets and finally Programmes.
Each of these areas within the perspective helps identify and measure a way in which a company can achieve its stated objective through the implementation of a programme.
The final perspective is that of the financial perspective, in the eyes of the shareholders this is by far the most important aspect and where the effort in the earlier facets of the balanced scorecards cumulates in an increase in profit margins and ratios such as Return on Investment (ROI).
This perspective “included three measures of importance to the shareholder.