In the previous blogs we have seen several definitions of business performance and business performance measurement systems. We now know that by measuring business performance and presenting the results for action, an organisation can achieve business success. The successful implementation of Business Performance measurement can deliver real business benefits, especially in todays challenging business environment.
Recent years have seen the introduction of new ways to measure business performance within an organisation. New measurement frameworks such as the balanced scorecard (Kaplan and Norton, 1991) have been embraced by the business community. This was developed to provide a management system that was better at dealing with today’s business pace and to provide business managers with the information they need to make better decisions.“The balanced scorecard is like the dials in an airplane cockpit: it gives managers complex information at a glance” [1]. The balanced scorecard seems to be the best known and the most influential concept in the field. “Research suggests that sixty per cent of companies have experimented with the balanced scorecard”. [2]. It can be defined as ‘a strategic planning and management system used to align business activities to the vision statement of an organization’.[3]. Simply, it is a management tool that provides stakeholders with a comprehensive measure of an organisations progression towards achieving their goals. Effective measurement is an essential part of management in businesses today.
The balanced scorecard allows managers to look at the business from four important perspectives:
- Financial
- Customer
- Internal business processes
- Learning and Growth
The balanced scorecard suggests that we view the organization from these four perspectives. Once goals and measures are defined, it is necessary to set targets for each measure. These four perspectives of the Balanced Scorecard are necessary for today’s business managers to be able to plan, implement, and achieve their business strategies. In order for a business to thrive, these have to be measured, analyzed, and improved together. “The balanced scorecard keeps companies looking and moving forward instead of backward”. [1]
[2]. http://citeseerx.ist.psu.edu/viewdoc/download?doi…1
[3]. http://www.businessballs.com/balanced_scorecard.htm
[4]. http://www.meshekah.com/wp-content/uploads/2012/10/BSC-concept-BalancedScorecardReview.com_1.jpg
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