Download a free sample balanced scorecard that includes financial, customer, internal, learning and growth perspectives and more. This will save your and your company time writing yours from scratch. It can be used by any business, though it was created for a bank. Before you download, however, read the definition, approach and attributes of a scorecard:
Definition of Balanced Scorecard
Organization Thoughtware International and Visum Solutions, Inc. have defined a balanced scorecard as a framework for managing and implementing business strategy at all levels by linking initiatives, measures and objectives. It provides the view of overall performance of an organization. According to them, a balanced scorecard has proven to be a powerful framework for performance management. It allows thinking in a different manner to encourage a larger group to move in the same direction and to achieve a better cultural change. By using the scorecard as a strategic navigational chart, success can be achieved in institutionalizing it and linking it to the strategy of the organization.
Scorecards are used by strategic business units all over the world in both the public and private sectors. The sample balanced scorecard you can download here brings out all of these points.
Balanced Scorecard Approach
The division of a scorecard into various subsections is the most distinctive feature, according to Lafferty Publications. Initially, Norton and Kaplan divided the scorecard into customer, financial, innovation and learning strategies. These components were described by Organizational Thoughtware International & Visum Solutions, Inc. under the headings: customer perspective, financial perspective, learning and growth perspective and internal perspective, which are detailed as follows:
This is another way to increase revenue of a business by producing the things required by customers. Your products will compel people to buy from you rather than from your competitors. According to business experts, operational excellence, customer intimacy and product leadership are the three 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.
- Product leadership differentiate 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 through productivity growth:
- Revenue growth can be achieved either by producing a wider variety of products or by increasing the worth of existing products.
- Productivity growth depends on reducing cost or reducing supporting capital of the business. A good balanced navigational scorecard can maintain balance between long-term and short-term strategies, revenue and productivity growth.
This relates to proper deployment of efforts to cope 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. This helps them know if they get 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. These are as follows:
- 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 aids continuous customer value. It also aids the supply chain management, demand generation, material conversion, information conversion, asset utilization, demand fulfillment, and quality and cost management.
- Corporate Citizenship Process that builds and maintains relationships with outside stakeholders, including environmental entities, regulators, citizens and law-enforcers, etc.
Learning and Growth Perspective:
This shapes the business. At this point implementation of a strategy becomes possible after controlling it critically. Some organizations that 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. As can also be seen in the sample balanced scorecard, this can be divided into three important fields as follows:
- Core Competencies and Skills of the employees: In order to achieve significant return it is important to invest strategically in human capital. An aligned human resource management, development and training plan will help an organization to succeed. Hiring, developing and rewarding of workers are fundamental to the lifeline of a business.
- Technological ability: This is required to control the central capabilities of a business. Managing the repeatable and routine events comes under this heading. An ATM machine of a bank is a good example of technological ability as it manages relationships along with fulfilling customers’ personalized needs.
- Corporate Culture: A sensible and communicable culture 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
Five fundamental requirements have been outlined for a good scorecard by Rick Anderson from a company which has extensively implemented scorecards. These include, suitable, acceptable, effective, aligned and feasible. Other attributes are summarized as under:
- It should not be financially 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.
Organization Thoughtware International, Lafferty Publications as well as Visum Solutions, Inc. are thanked for providing the information about this topic.
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Download the sample balanced scorecard
Click here to download the free sample balanced scorecard that you can edit to suit your company’s needs.