Balanced Score for the Balanced Scorecard: a Benchmarking Tool

Topics: Strategic management, Balanced scorecard, Strategy map Pages: 33 (10394 words) Published: September 17, 2010
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BIJ 15,4

Balanced score for the balanced scorecard: a benchmarking tool M. Punniyamoorthy
Faculty of Production and Operations and Finance, Department of Management Studies, National Institute of Technology, Tiruchirappalli, India, and


R. Murali
Faculty of Human Resources and Finance, Department of Management Studies, National Institute of Technology, Tiruchirappalli, India Abstract
Purpose – The purpose of this paper is to create a model called “Balanced score for the balanced score card” and to provide an objective benchmarking indicator for evaluating the achievement of the strategic goals of the company. Design/methodology/approach – The paper uses the concepts of “Balanced scorecard” proposed by Robert. S. Kaplan and David P. Norton. This paper also adopts the model given by Brown P.A. and Gibson D.F. and the extension to the model provided by P.V. Raghavan and M. Punniyamoorthy. Preference theory is used to calculate the relative weightage for each factor, using the process of pair wise comparison. The balanced score for balanced scorecard provides a single value by taking into account all the essential objective and subjective factors – be it financial or non-financial. It also provides a suitable weightages for those parameters. The target performance and the actual performance are compared and the analysis is made. Findings – Information from a leading organization was obtained and the balanced score for a balance scorecard was calculated for that organization. The variations were analyzed through this model. The depth and objectivity in the analysis is highlighted. Research limitations/implications – This provides a single bench marking measure to evaluate how far the firm had been successful in achieving the strategies. The paper has adopted the preference theory which limits the weightage to be accorded to the factors concerned. However, further refinement can be provided by the usage of analytic hierarchy process for arriving suitable weightages. Practical implications – The organization can calculate the balanced score by themselves, by assigning appropriate importance to the activities – as they deem fit. It is a tailor made benchmarking information system created by the firm for itself. Originality/value – This is of value to the top management to identify the important activities and setting suitable target measures to be achieved in those activities. The variations are arrived by comparing the targeted performance with the actual. This will help the firm to take suitable actions under those parameters where there are significant deviations. Keywords Balanced scorecard, Benchmarking, Corporate strategy, Analytical hierarchy process Paper type Research paper

Benchmarking: An International Journal Vol. 15 No. 4, 2008 pp. 420-443 q Emerald Group Publishing Limited 1463-5771 DOI 10.1108/14635770810887230

Introduction Businesses houses are continuously striving to be successful amidst the increasingly competitive and constantly changing environments. To achieve that, they must be willing to adopt any processes and accept any benchmarking standards which would help them in not only doing things right but also in doing the right thing.

The bench mark so accepted should be a: . reference or measurement standard for comparison; . performance measurement that is the standard of excellence for a specific business; and . measurable, best-in-class achievement (“On what is a benchmark?”, available at: Competition has become so intense that managers do have less time to respond to market situation. Efficiency in operations and profitability are the key words in driving the organizations today to remain competitive. The rapid technological developments and improvements in communication have forced the manager to deal with a large...
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