Should a business only look at its financial statements to find out the state of its business?
Dr. Robert Kaplan of Harvard Business School and Dr. David Norton believe not. According to them, a balanced scorecard must be used to appraise the business, decide its strategies and also measure the employees’ performances. By using this, a holistic view of the company is seen rather than only looking at the financial reports which give past information.
According to its propagators, the balanced scorecard consisting of four main dimensions- financial, learning and growth, internal business processes and customer- is important in “guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation.”
But its critics often ask: Has the balanced scorecard shown any success yet? And the answer is yes! A fine success story is that of Veolia Water that has used the balanced scorecard metrics system to drive its North American strategy. This leading provider of comprehensive water and wastewater partnership services had transitioned to a new CEO in 2008. She needed a winning strategy with a very high goal of increased revenue. And so, her team and she decided to implement the balanced scorecard to help translate organizational strategy into something employees could understand and use. Also, the scorecard helped them break communication barriers between departments, boost organizational performance and serve customers better. The company finally started using this tool to such an extent that they used this to develop a framework for managing the production in all their geographically diverse facilities.
This clearly illustrates the effectiveness of using a Balanced Scorecard for measuring an organization’s performance.
http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx
http://www.balancedscorecard.org/LinkClick.aspx?fileticket=8Zup08adIQg%3d&tabid=36