Balanced Scorecard

Rajat Jhingan
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Balanced Scorecard
Introduction Balanced Scorecard (BSC)
Developed as a performance measurement tool by Dr. Robert Kaplan & David Norton at the Harvard Business School. BSC is a strategic performance management tool for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision & strategy. Attempts to translate the sometimes vague, pious hopes of a company's vision/mission statement into the practicalities of managing the business better at every level.

Balanced Scorecard

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BSC Learning And Growth
Includes employee training & corporate cultural attitudes related to both individual & corporate selfimprovement. People: repository of knowledge. Knowledge workers to be in a continuous learning mode. Metrics helps to guide managers in focusing training funds where they can help the most. It includes mentors & tutors, as well as that ease of communication among workers that allows them to readily get help on a problem when it is needed.

BSC The Business Process Perspective

This metrics allow the managers to know how their business is running, & whether its products & services conform to customer requirements (the mission). These have to be carefully designed by those who know these processes most intimately; cannot be developed by outside consultants. 4

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BSC The Customer Perspective
Customers are not satisfied: They will eventually find other suppliers that will meet their needs. Poor performance is a leading indicator of future decline, even if the financial picture may look good. In developing metrics for satisfaction, customers should be analyzed in terms of kinds of customers & kinds of processes for which we are providing a product or service to those customer groups.

BSC The Financial Perspective

Timely & accurate funding data will always be a priority With the implementation of a corporate database, it is hoped that more of the processing can be centralized & automated. Current emphasis on financials leads to the "unbalanced" situation with regard to other perspectives. Need to include additional financial-related data, such as risk assessment & cost-benefit data.
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BSC Example :

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BSC Conceptual Framework
The apex of the framework shows the desired outcome a high performance culture The conceptual framework proposes that four interdependent elements of divergence: Leadership style National culture Organizational culture HRM practices Different national cultural values, leadership styles, organizational culture, and HRM practices influence a BSC implementation

Balanced Scorecard
BSC The Cascading Process :

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BSC Pre-Requisite :
To embark on the Balanced Scorecard path an organization first must know (and understand) the following: The company's mission statement The company's strategic plan/vision The financial status of the organization How the organization is currently structured and operating The level of expertise of their employees Customer satisfaction level

Balanced Scorecard
BSC Implementation :
Implementing the Balanced Scorecard system company-wide should be the key to the successful realization of the strategic plan/vision. A Balanced Scorecard should result in: Improved processes Motivated/educated employees Enhanced information systems Monitored progress Greater customer satisfaction Increased financial usage
Use of BSC : TATA Motors, Indonesia Bank, Hilton Hotels, SBI .
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BSC At TATA Motors
Tata Motors is the first Indian Company to be inducted in the Balance Scorecard Hall of Fame. The popular Steuben crystal 'Rising Star' trophy was presented to the Company at the Balanced Scorecard Asia Pacific Summit held at Gold Coast, Queensland Australia. CVBU has been recognized for having achieved a significant turnaround in its overall performance. The implementation of the Balanced Scorecard has enabled greater focus on different elements of operational performance. The scorecard incorporates SQDCM (Safety, Quality, Delivery, Cost and Morale) and VMCDR (Volume, Market Share, Customer Satisfaction, Dealer Satisfaction and Receivables).
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Balanced Scorecard
BSC HR Perspective :
An HR practitioners perspective of Balanced Scorecard is that of a tool that integrates the HR activities with the Business perspectives leading to the achievement of the end-objectives. A comprehensive HR Balanced Scorecard to help HR practitioners to deliver visible and measurable HR contribution to the Business. It will also help in bringing about changes in the workplace by fostering a climate of innovation and entrepreneurship. It will lead to a smooth transition of HR into the 21st century by building a strong and credible HR system and is a proactive step towards Human Resource Capital Management.
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Criticism of balance scorecard

The scores are not based on any proven economic or financial theory, and therefore have no basis in the decision sciences. The process is entirely subjective and makes no provision to assess quantities (e.g., risk and economic value) in a way that is economically well-founded. Another criticism is that the Balanced Scorecard does not provide a bottom line score or a unified view with clear recommendations: it is simply a list of metrics

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Balanced Scorecard
BSC Conclusion : HR role on the 4 perspectives is addressed as:
Financial: Improving the returns on the Human Capital employed. Customer : Developing Human Resource to meet Internal and External Customer Expectations. Internal Processes: Continuously evolving HR processes in order to meet the stakeholders expectation and contribute to the Business objectives. Learning & Growth: Equip the HR team to deliver as planned.
Balanced Scorecard Collaborative, Inc. (BSCol) is a new kind of professional services firm dedicated to the worldwide awareness, use, enhancement, and integrity of the Balanced Scorecard as a value-added management process.
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Balanced Scorecard

THANK YOU!!!

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