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Balanced Scorecard

Definition

Kaplan and Norton (1996), balanced scorecard ”… a set of measures that gives

top managers a fast but comprehensive view of the business… includes financial

measures that tell the results of actions already taken… complements the financial

measures with the operational measures on customers satisfaction, internal process, and

the organization’s innovation and improvement activities-operational measures that are

the drivers of the future financial performance.”

Anthony, Banker, Kaplan, and Young (1997), define balanced scorecard

as: “a measurement and management system that views a business unit’s

performance from four perspectives: financial, customers, internal business process, and

learning and growth.”

Balanced and scorecard

(balanced) : performance which is measured balance from two side (financial and non financial, short and long time, internal and external)

(scorecard) is a card that is used to write the score for the result of performance, for now and the future

BSC is the first systematic measuring that marking work measuring system, define vision and strategic of organization to the clear target, measurement, target, and initiative.

Measurement in BSC show to the balance between 4

perspective :

1. financial perspective,

2. customer perspective,

3. internal process perspective,

4. learning and growth perspective

Relationship of BSC and Strategy

1. Cause and effect relationship

2. Performance Drivers – (Lagging indicator and leading indicator)

3. Linkage to Financial

Five principle : Organization focus to strategy

1. define the strategy to the operational step

- chart of strategy

- Balanced Scorecard building

2. Relationship and harmonious of organization and strategy

- corporation task

- unit business synergy

- Support unit synergy

3. Hold strategy as job for each employee

- Conscious of strategic

- Scorecard personal

- Balance salary system

4. Hold strategy as a continuing process

- connection of budget and strategy

- strategyc learning

- analyisis dan information system

5. Chief of executive to mobilize the transition

- Mobilization

- executive process

- strategic management

4 interference in Implementation of Strategy

1. Interference in learning, Feedback gets tactical character be not strategic

2. Interference in vision, vision and strategy is not actionable

3. Interference in operation, Strategy is not conjugated to corporate resource

allocation

4. Interference in human resource, strategy is not connected to personal and

team of department.

Solution for strategy implementation (Integrating BSC with

Strategy Management system)

Feed back strategy and learning

· Feed back system used to train hypothesis of strategy which is implemented

· Existing of team problem solving

· Developing of strategy is sustainable process

Business plan and target determination

· Stretch target is made and received

· Initiative of strategic is identified clearly

· Investment is specified appropriate to strategy

· Annual budget linked to the long term plan

Communication and Connection availability

· Harmonization of purpose from top management to lower staff

· Education and communication which is opened is a basic for empowerment organization

· Compensation system linked to the strategy

Clarification & translation of vision & strategy

· Strategy as main reference to all of management process

· Uniform Vision as foundation for strategic learning

Speciality of Balanced Scorecard

BSC enable to produce strategic plan which has characteristic:

Comprehensive : measurement process more holistic, large and overall.

Comprehensive is not only in financial but also non has impact for enterprise to be more prudent in choosing corporate strategy and also make it able to insert the complex business arena

Coherent : Strategic target of each perspective must be able to explain in it’s relation to cause and effect

Balance: The balance of strategic target that is result in 4 perspective include short and long term focused to internal and external factors. BSC balance is also descript to the harmonious of scorecard personal staff and scorecard enterprise, so that each personal has responsibility to forward the enterprise.

Measurement : Basic idea that each perspective enable to measure is as a result for believing that ‘if we can measure it, we can manage it, if we can

manage it, we can achieve it’. BSC measures strategic target that is difficult to measured like customer, business/intern process and also learning and growing.


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