How to Measure Drive Performance?

Topics: Balanced scorecard, Management, Strategic management Pages: 1 (293 words) Published: January 17, 2013
The scoiecard tracks the key elements of a company's strategyfiom continuous improvement and partnerships to tearnwork and global scale.

The Balanced Scorecard Measures That Drive Performance
by Robert S. Kaplan and David P. Norton
what you measure is what you get. Senior executives understand that their organization's, measurement system strongly affects the behavior of managers and employees. Executives also understand that traditional financial accounting measures like return-on-investment and earnings-per-share can give misleading signals for continuous improvement and innovation-activities today's competitive envifinancial results will follow." But managers should not have to choose between financial and operational measures. In observing and working with many companies, we have found that senior executives do not rely on one set of measures to the exclusion of the other. They realize that no single measure can provide a clear perforniance target or focus attention on the critical areas of the business. Managers want a balanced presentation of both financial and operational measures. During a year-long research project with 12 com-/ panies at the leading edge of performance measurement, we devised a "balanced scorecard"-a set of measures that gives top managers a fast but comprehensive view of the business. The balanced scorecard includes financial measures that tell the results of actions already taken. And it complements the financial measures with operational measures on customer satisfaction, internal processes, and the organization's innovation and iniprovement activities-operational measures that are the drivers of future financial performance. Robert S. Kaplan is the Arthur Lowes Dickinson Professor of Accounting at the Harvard Business School. David P. Norton is president of N()lan, Norton et> Company, Inc., a Massachusetts-based\information technology consulting firm he cofounded. 71

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