Implementing a Balanced Scorecard

The framework of the balanced scorecard, was developed by Dr. Robert Kaplan and Dr. David Norton  in 1992, pertains to a strategic performance management system that extensively promotes the efficient and effective implementation of policies and tasks necessary to align an organization against its strategic goals. The balanced scorecard focuses on the careful management of the processes involved in evaluation, and factors that drive an organization’s performance. This paper examines the non profit organization Cattaraugus County Rehabilitation Center and their successful job of implementing a balanced scorecard approach in a fashion that reflects their organizational mission and vision.

Kaplan and Norton’s Balanced Scorecard is equally broken down into four perspectives to provide managers with a set of performance metrics balanced between outcome measures and measures that have potential to affect future outcomes. (1998-2013) The four perspectives are financial, customer, internal business processes, and learning and growth. The balanced scorecard intertwines these four perspectives to help companies make decisions about creating competitive business strategies in the business environment. This management tool may also be used to evaluate current business strategies and make corrections for improving the strategy. (1998-2013)

The first balance scorecard perspective relates to financial operation of the company. The financial perspective includes operating income, and rate of return on capital investments. Financial information is important to all companies because economic resources or business inputs must eventually be paid for by the business. Using too much external financing from debt or equity can limit the company’s operational effectiveness since interest must be paid for this type of financing. The finance perspective also relates to how shareholders view the company. (2003-2013)

The second part of the balance scorecard perspective is the customer. The customer perspective measures the company’s customer satisfaction, repeat sales and target market or demographic analysis. Customer are import to every organization business process; The customer perspective leading indicators described by the balanced scorecards' can help companies understand how well they are meeting their customer needs and the future desires of customers. (1998-2013)

The third part of the balanced scorecard is the internal business processes. This perspective focuses on a company’s business costing process for allocating goods and services, quality of goods produced, how economic resources or inputs are acquired and filling customer orders. This perspective points out how well the company operates and which functions may need improvements to increase productivity. It relates to how well a company's products and services are meeting customer requirements. (2003-2013)