Managing Organizational Health - Balaneced Scorecard

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ASSIGNMENT:                  ESSAY

       Summary:

This essay revolves around the balanced scorecard and its impact on organizational performance management. Starting with an introduction of the Balanced Scorecard (BSC) and going through its four main perspectives (Financial, customers, learning and growth and finally internal business process), each of the four perspectives will include an example of a company that applied it. Furthermore, the essay tackles the reasons why organizations are adapting BSC, additionally; it defines the facts that organizations are adapting the BCS while it encloses the six stages of the development of BSC. To close, the essay ends with a concise conclusion that demonstrates the benefits of the balanced scorecard and its contribution to organisational performance management.

                           In today’s business world, organizations are progressively keeping pace with one another in order to gain profitability which is the supreme sustainability.  For this, managers are having a huge responsibility of keeping up attaining success within their segment of control. For this to be achieved, it is very important for them to carry out explicit strategic plans and implementing a requisite performance quantification system. There have been numerous performance strategies that were evident to measure the performance of the organization.  However, those strategies were not valid enough, since they only tackle the financial perspective when evaluating the management performance (Salem and Al, 2012). One of those strategies is the balanced scorecard (BSC).  It was first introduced by Kaplan and Norton as a mean to involve both financial and non-financial perspectives. The BSC strategy has been defined as an operative tool to transform the organization’s strategy into targets, real value and goals. Norton and Kaplan designated   that to evaluate performance and to be applied in different areas as ‘’business organisations, government and industries’’ in order to maintain the mission of the company. The BSC includes four crucial areas {Figure1}.

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The four different areas are finance, customer, internal business processes and learning and growth. The four perspectives are put to measure the whole activities of the organization evaluating the internal and external factors and the present and the future of the firm. [Edwards 2008].  For  organizations to maintain their balance, Kaplan and Norton emphasize on the fact that companies have to enhance their performance to go along with customers’ views and their performance need to be considered from the four perspectives, in addition to that, companies have to control the efficiency and the effectiveness of the internal processes. Moreover, companies need to have a clear image about their long-term development through their performance. On top of that, organizations should undertake performance measurements of the profits, cash flow, revenues of investment, revenues on capital employed and finally risks. [Edwards 2008].