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About Balanced Score Card
Balance scorecard is a modern methodology used by the companies around the world to align the business’s activities and the strategies with the vision and measure the performance of the company in terms of achieving the set objectives and goals.
Developed in the early 1990’s, Balanced Scorecard technique allows the managerial executives to measure the performance of the organization through financial as well as non-financial performance measures. This allows the managerial cadre team to have a balanced view of the ongoing performance of the company. Simply stated, a balanced score card technique translates the vision and missions of a company into a comprehensive set of objectives and performance measures that can be appraised using set parameters known as Key Performance Indicators(KPI) which are categorized into financial and non-financial categories, namely,
Financial- This includes KPI relating to revenue, return on capital , operating income, economic value added, etc.
Customer- This category includes KPI’s relating to customer satisfaction measures, customer bounce rate, market share, etc.
Internal Business Process- The KIP under this category discusses productivity rate, budgeting& costing, timeliness, procurement, etc.
Innovation and Performance: This includes KIP’s relating to rate of improvement index, employee satisfaction, productivity per employee.
Employee Performance - The KPI discussed under this category includes knowledge and skill set, morale and employee retention, etc.
We can witness that each category discusses concurrent or predictive aspects of company’s performance. Although every company develops its own Key Performance Indicator under the above discussed financial and non-financial categories, but is equally important to avoid inclusion of incorrect KPI’s in the balanced score card as this will produced false goals and objectives or will either defer the organization success as under such KPI’s, management will not be able to attain a true performance view by its workforce.
Companies using Balanced Score Card:
At present, the use of BRC technique is not confined to any one type of organization as its adoption now sprawls to public. Private, non-profit and even educational institutions. Some of the adopters of the Balanced Score Card technique are named below:
Exxon Mobil Inc.
Ford Motor Company
Texas Educational Agency
Vision- In terms of corporate scenario, Vision is a mental perception of the kind of environment or layout an individual owner or the management desires to create under set time horizon. Thus, a vision is simply the reason for foundation of any business organization, either small or big.
Every company has its own vision statement which they use to foster long-term thinking and to develop a shared sense of purpose.
Mission- It can be defined as the statement of purpose of any organization declaring why it is in existence, what business it plans to do and what customer it plan to serves. In short, mission is the reason for existence of the business organization.
Just like a vision statement, every organization also develops a mission statement which is then used to take decision relating to the allocation of the resources of the company and for achieving objectives.
Objectives-They represent the commitment of the organization to achieve the desired results both financial as well as non-financial within a given time frame and who will be responsible for achieving those objectives. In short, objectives are the end results of the planned activities discussing what is to be achieved and in what time by the organization.
Unlike vision and mission statements, objectives of an organization are quantified which are later used to compare with the actual outcome by the end of set time horizon.
"PepsiCo's responsibility is to continually improve all aspects of the world in which we operate - environment, social, economic - creating a better tomorrow than today. Our vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company."
"Our [Amazon's] vision is to be earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.’’
Procter and Gamble
‘’To provide products of superior quality and value that improves the lives of their customers.’’
‘’The company is committed towards providing best personal computer experience to varied users through its innovative hardware, software and other offerings.’’
‘’To be our customers favorite place and way to eat and drink’’.
“To be the most respected and successful enterprise, delight customers with a wide range of products and solutions in the automobile industry with the best people and best technology.”
The most respected.
The most successful.
Wide range of products.
The best people.
The best technology.
Balanced Score Card. 18 January 2015 <http://www.bain.com/publications/articles/management-tools-balanced-scorecard.aspx>.
Balanced Scorecard. 18 January 2015 <https://www.organizedchange.com/examplesofcompaniesusingthebalancedscorecard.htm>.
Balanced Scorecard Adopters. 18 january 2015 <https://balancedscorecard.org/Resources/About-the-Balanced-Scorecard/Balanced-Scorecard-Adopters>.
Best Examples of Vision Statemet. 19 January 2015 <http://examples.yourdictionary.com/best-examples-of-a-vision-statement.html>.
Jyothiman. Vision, Mission and Objectives. 18 January 2015 <http://www.slideshare.net/jyothimonc/vision-mission-objectives-goals>.
Mcdonalds Vision Statement. 19 January 2015 <http://www.ask.com/business-finance/mcdonald-s-vision-statement-196d54bdf424026f>.
Totyota Vision Statement. 19 January 2015 <http://www.toyota-indus.com/corporate/company-profile/vision-mission/>.
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