BALANCED SCORECARD CS 5

Balanced Scorecard CS 5

Balanced Scorecard CS 5

Introduction

Most traditional management systems focus on the financial performance of an organization. According to those who support the balanced scorecard, the financial approach is unbalanced and has major limitations:

Financial data typically reflect an organization's past performance. Therefore, they may not accurately represent the current state of the organization or what is likely to happen to the organization in the future (Ulrich, 2009).

It is not uncommon for the current market value of an organization to exceed the market value of its assets. There are financial ratios that reflect the value of a company's assets relative to its market value. The difference between the market value of an organization and the current market value of the organization's assets is often referred to as intangible assets. Traditional financial measures do not cover these intangible assets.

The process of building a balanced scorecard and strategy map brings together an organization's health care professionals from diverse backgrounds, training, and experiences to develop an integrated and shared view of the organization's strategy for success. One professional stated that the balanced scorecard gave him a framework for treating management from a systems approach, much like physicians think of human health as a system. Just as a physician would not diagnose a condition without considering multiple symptoms and running various tests, a health care organization should not articulate, measure against, and diagnose its strategy without a systems approach—the causally linked four BSC perspectives (Niven, 2002).

A project starts with a senior project team, drawn from among physicians, nurses, and managers, meeting to define the strategy. The team wrestles with the tradeoffs required to meet the multiple missions and constituency goals of health care organizations. For example, one hospital defined its mission in terms of customers—“our patients, their families, and referring physicians”—and its ...