You can download a free balanced scorecard sample to be edited as per your needs. It will save your and your company money and time needed to write it from the beginning. It can be used by any institution though it was created for a bank. You can properly download it free on a document in Word format.
Definition of balanced scorecard
Organization Thoughtware International &Visum Solutions, Inc. has defined balanced scorecard as a framework of an organization used for managing and implementing strategy at its all levels by linking initiatives, measures and objectives to the strategy of an organization. It provides the view of overall performance of an organization. It combines internal business processes, key performance indicators around customer perspectives, and organizational growth, learning and innovation with its financial measures. Balanced scorecards are used by strategic business unit, corporate, hundreds of individual organizations and shared service function all over the world in public and private sectors both, since its inception in 1992.
According to them, balanced scorecard has proved to be a powerful framework for performance management (the balanced scorecard template you can download here shows this). Still a successful idea allows thinking in a different manner to encourage a larger group to move in the same direction and achieve a better cultural change. By using the score card as a strategic navigational chart success can be achieved in institutionalizing it and linking it to the strategy of the organization.
Balanced Score card Approach
The division of balanced scorecard of a business into various sub-sections is its most distinctive feature according to Lafferty Publications. Initially Norton and Kaplan divided into customer, financial, innovation and learning and internal business subsections as all these components are principally found in any sensible strategy. These components were described by Organizational Thoughtware International & Visum Solutions, Inc. under the heads customer perspective, financial perspective, learning and growth perspective and internal perspective.
Another way to increase the revenue of a business is to produce the things required by its customers. Your products will compel people to buy them from you than from your competitors. According to business experts Operational Excellence, Customer Intimacy and Product Leadership are the three generic value propositions for a business. Operational Excellence allows timely differentiation of products and services on the basis of their quality, price and fulfillment capability. Customer Intimacy differentiates products and services on the basis of personal relationship with the customers. And Product Leadership differentiated them on the basis of their features, overall performance and functionality.
Every effort links with financial result at the end. Financial performance can be improved in two ways – either through revenue growth or productivity growth. Revenue growth can be achieved either by producing wider variety of products or increasing the worth of existing products. Productivity growth depends upon reducing cost or reducing supporting capital of the business. Note: A good balance navigational scorecard can maintain balance between long term and short term strategies and revenue and productivity growth.
It relates to proper deployment of efforts to cope up with customer perspectives and financial perspective. The customers should be allowed to touch and feel the innovative or value added products produced by an organization to know that they have got what they needed otherwise it is just an assumption. Unless the customer is allowed to measure the comfort or difficulty level of the product it is only like a technique-less philosophy. According to business experts four internal processes can be used to implement a strategy in this regard. They include:
Introduction Process for New Services/Products which includes the innovations to build the business. Management Process for Customer Relationship used as a strategy and commitment to develop long lasting and deeper relationship. Value Stream Process from Order Entry to Order Fulfillment to provide continuous flow of providing customer value along with supply chain management, demand generation, material conversion, information conversion, asset utilization, demand fulfillment and quality and cost management. Corporate Citizenship Process to build and maintain relationships with outside stakeholders including environmental entities, regulators, citizens and law-enforcers etc.
Learning and Growth Perspective:
It designs the future shape of the business. At this point implementation of a strategy becomes possible after controlling it critically. Some of the precious organizations which have reached this point have set aside the cause-and-effect linkage and financial objectives to achieve it as it is important for the progress of an organization. It can be divided into three important fields:
Core Competencies and Skills of the employees: to get significant return it is important to invest strategically on human capital. An aligned development and training plan will help an organization to utilize it fruitfully. Generation, development, maintenance and reward of knowledgeable workers are the fundamental necessity as they are the lifeline of a business.
Technological ability: It is required to control the central capabilities of a business. Managing the repeatable and routine events comes under technological ability. ATM machine of a bank is a good example of technological ability as it manages relationships along with fulfilling personalized needs by leaving money after handling the process predictably and repetitively.
Corporate Culture: It relates to every day guesses carried to a business. If the culture is sensible and communicable then it will respond to Strategic Navigational Chart of the business. By understanding its place in the cause-and-effect hypothesis an organization can know its contribution in corporate culture instead of connecting with distant and uncontrollable concept of customer delight and shareholder equity.
The attributes of a successful scorecard were explained by Lafferty Publications
Five fundamental requirements have been outlined for a good scorecard by Rick Anderson from a company which has extensively implemented scorecards, BP, including suitable, acceptable, effective, aligned and feasible. Other attributes are summarized as under:
- It should not be financial excessive.
- The score should be embodied precisely to the strategy of the firm.
- It should be included in a learning process.
- It can be implemented successfully.
- It should be balanced.
At last Organization Thoughtware International, Lafferty Publications as well as Visum Solutions, Inc. are thanked for providing information about balanced scorecard.
Click here to download the free Balanced Scorecard Example, a template you can edit to suit your company’s needs.
If you would like to learn more you can check out the Balance Score card Step-by-Step: Maximizing Performance and Maintaining Results at amazon.com.