Measuring Performance: The Balanced Scorecard Framework

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	Key Imperatives	Key Questions	Leader ‘s behavior
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	“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.