Measuring Performance: The Balanced Scorecard Framework
Traditional way of measuring
corporate performance was mostly focused on generating value for its
stockholders. Little concerned about other stakeholders, corporate growth was
only indicated by raise in share price. But as organizations become more globally
dispersed, having complex supply chain distributed across continents and
working with culturally and geographically diversified customer as well as
employees, performance measurement is to be done with a holistic approach. Also
many organization provides public service (i.e. Health, education, political
institutions), where output cannot be assessed in financial terms. Balanced
Scorecard Framework provides perspectives on which the performance could be
measured as the organization works towards the common goal as set by its
leaders. Leaders set the target and help the organization to achieve that by
adopting desired leadership behavior. They ensure firms health in terms of
corporate governance and in terms fulfilling corporate social responsibility.
Balanced Scorecard Perspectives and Desired Leadership Behavior:
Perspective
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Key Imperatives
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Key Questions
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Leader ‘s behavior
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Financial
|
“Profitability”
“Return on Capital Employed”
|
To Satisfy our shareholder, what financial objectives must we accomplish
|
Task oriented
|
Customer
|
“Consumer Satisfaction”
“Market Share”
|
To achieve our financial goals, what customer needs, must we satisfy
|
Change oriented
|
Internal
Process
|
“Efficiency”
|
To satisfy our customers, what internal
business processes must we excel in
|
Task oriented
|
Learning & Growth
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“Knowledge”
“Innovation”
|
To achieve & maintain our competitive
position, how must the organization the Organization learn & improve
|
Relation oriented
|
Leaders affect the multi-faceted
performance by executing the following:
They communicate the strategic
purpose of KPIs and scorecards to various stakeholders
They develop goals and measures
consistent with the corporate strategies
They plan, create schedules and
assign responsibilities.
