BALANCED SCORECARD

Balanced Scorecard



Balanced Scorecard

Introduction

There is a need to advise the community group of volunteers who have considered taking over some greenhouses at a nursery garden. The need is also there to train young people who have faced difficulties in this task. The major work for the community group is to prepare an appropriate balanced scorecard in order to perform the task in an ideal way. There is also a need to explain the benefits to the Nursery Volunteers of the Balanced Scorecard. Then the second task is to assess the appropriate number of financial and non financial measures for the Balanced Scorecard. The value of all the measures will be explained in the best possible way. Therefore, all the issues and aspects related to Balanced Scorecard have been discussed in detail.

Discussion

The Balanced Scorecard model of organizational management was created by Robert S. Kaplan and David P. Norton as a method of measuring organizational efforts that lead to financial performance. Previous methods of performance measurement and strategic planning focused primarily on outcome measurements. The researchers known as Kaplan and Norton determined that goal setting and performance management at stages prior to outcomes would improve those matters over which organizations had control. The authors referred to these controllable stages as leading indicators and final results stages as lagging indicators of performance. The financial perspective is identified as a lagging indicator and focuses on bottom-line improvement within an organization. This measurement is typically conducted in terms of profitability. The remaining three perspectives, customer, internal business processes, and learning and growth, are identified as leading indicators. The customer perspective relates to customer satisfaction, retention, and acquisition, as well as market share. The internal business process perspective incorporates measurements of existing processes and identifies new processes that may impact financial and customer objectives. It also encourages innovation by identifying new markets and product possibilities. The learning and growth perspective of the Balanced Scorecard identifies the framework necessary within the organization to foster growth and corporate learning such as the adoption of new technologies (Budde, 2007, 539).

The long-term success of an organization is dependent upon the alignment of operations with strategic goals. The Balanced Scorecard allows for this alignment by focusing performance measurements on the organization's progress towards its strategic goals and objectives. Performance incentives are common in any professional organization, and the efficacy of rewarding employees for good performance as a way to achieve positive business outcomes is not generally questioned. The researchers known as Kaplan and Norton do assert some skepticism about tying employee incentives directly to individual Balanced Scorecard criteria. Simply summing up an employee's performance in each Balanced Scorecard criteria could result in overpayment when some of the criteria are not adequately met. They advocate instead tying incentives to achieving threshold levels of performance across a larger set of measures. Using a more comprehensive view for incentivizing successful completion of performance measures adds some subjectivity to the evaluation process. These issues always matters for most of the organizations because ...