MENILAI KINERJ

Using Balanced Scorecard

as a Holistic Measure of
Performance
BAGAIMANA MENILAI PERUSAHAAN
Market share.
Financial performance
Sales
Profitability
Ratios
Stock price.

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Problems
Too simple or too narrow.
Biased toward financial results.
Many believe emphasis is on short-term results
(quarterly earnings).
Difficult to see what actions firm is taking for
future.
Operational activities left out.

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Balanced Scorecard What is it?
Helps balance the way companys look
at performance by using four perspectives
or lenses:
Learning and Growth
Business Processes

Customer

Financial

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Learning and Growth
This perspective includes employee
training and corporate cultural attitudes
related to both individual and corporate
self-improvement. In a knowledge-worker
organization, people -- the only repository
of knowledge -- are the main resource.
(Balanced Scorecard Institute)

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Business Processes
This perspective refers to internal
business processes. Metrics based on
this perspective allow the managers to
know how well their business is running,
and whether its products and services
conform to customer requirements (the
mission). (Balanced Scorecard Institute)

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Customer
This perceptive refers to how customers
are being satisfied by products and
services being provided by the firm. Poor
performance from this perspective is thus
a leading indicator of future decline, even
though the current financial picture may
look good.

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Financial
This perceptive focuses on the traditional
measures of ROI, profitability, stock price
etc.

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 Basic Design of Balanced Scorecard System

Financial

Vision Internal Business

Customers and Processes
Strategy

Learning and Growth

From A Balancing Act by Howard Rohm in Perform magazine.

Balanced Scorecard
You can see this idea from simulation:
Financial performance
Marketing performance
Marketing effectiveness
Investment in future
Wealth
Asset management
Manufacturing productivity

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Balanced Scorecard
You can see this idea from simulation:
Financial performance Financial
Marketing performance
Marketing effectiveness Customers
Investment in future
Learning & Growth
Wealth
Asset management Business Processes
Manufacturing productivity

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Benefits
Long-term planning is valued.
Cumulative impact of building shareholder
wealth is valued over short-term earnings.
Highlights areas of weakness and
strength.
Its a more complete picture of the
firms performance.

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Criticisms
Unnecessarily complex.
Takes time and effort
Included variables are (a) somewhat
arbitrary and (b) simply whats available.

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Criticisms
All information in BSC is reflected in stock
price anyway.
Assumes you buy the traditional view of firm
value.
Depends on good dissemination of information.
But not appealing to HR, mgmt, engineers and
others who feel alienated with financials.

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Application to Crucible
Financial performance:
Net profit from current operations / total shares
issued
This is operating profit with R&D and quality
improvements added back in

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Application to Crucible
Market performance:
Average market share in targeted segments /
percent of demand actually served
So this accounts for stock outs and customer ill
will
Between 0.0 and 1.0; good score around .4 or .5.

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Application to Crucible
Marketing effectiveness:
Average market share in targeted segments /
percent of demand actually served
So this accounts for stock outs and customer ill
will
Between 0.0 and 1.0; good score around .4 or .5.

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Application to Crucible
Investments in future:
(Current expenditures aimed at future / net
revenues) * 10+1
=> 1.0 and good score is > 3.0

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Application to Crucible
Creation of wealth:
Net equity / total stockholders equity
= (retained earnings + common stock) / common
stock
= (retained earnings + $5,000,000) / $5,000,000
< 1 means equity is paying for operational
expenses
> 1 means firm is adding to wealth
<= 0 means bankruptcy

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Application to Crucible
Asset management:
Asset turnover * penalty for excess inventory
Good score should be around 3.0

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Application to Crucible
Manufacturing productivity:
Reliability judgment * % of operating capacity
used in production
Score between 0.0 and 1.0, with good score
around 0.80

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Application to Crucible
Total business performance:
The individual measurements multiplied together
into an index
Compare quarter-to-quarter to see improvement
Compare with competitors and industry average

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