The Balance Scorecard Enhances
According to Kaplan R. S. & Norton D. P. (1996), the balance scorecard enhances the traditional financial measures with standards for performance in three non-financial areas like relationship between company and customer, internal business process and, learning and growth. It will assist the company to coordinate its’ operation and ensure all businesses activities parallel to the company’s strategies. The balance scorecard consists of four processes that combine short-term activities to long-term objectives. These processes include translating the vision, communicating and linking, business planning and, feedback and learning.
The main objective of the first process - translating the vision - is to clarify the understanding of management team about the vision and strategy. Then, it will help managers to build a consensus around the organization’s vision and strategy. After that an integrated set of objectives and measures in vision and strategy statement will be developed which subsequently required the agreement by all senior executives. This strategy can be referred as the long term drivers of success.
The second process – communicating and linking – is to disseminate the strategy up and down the organization and link it to departmental and individual objectives. So the long-term strategy will be understood by all the level of the organization. Then, it will communicate and educate these targets to individual performance and link the rewards based on their performance measures. As a result, each individual will understand their objective and target and support the overall strategy.
The third process - business planning – is to integrate the company business with the financial plans. Normally, the balance scorecard will force the manager to integrate strategic planning with budgeting in order to make sure the financial budgets support the strategic goal. They will allocate resource and set the priorities according to four scorecard perspectives which are
The main objective of the first process - translating the vision - is to clarify the understanding of management team about the vision and strategy. Then, it will help managers to build a consensus around the organization’s vision and strategy. After that an integrated set of objectives and measures in vision and strategy statement will be developed which subsequently required the agreement by all senior executives. This strategy can be referred as the long term drivers of success.
The second process – communicating and linking – is to disseminate the strategy up and down the organization and link it to departmental and individual objectives. So the long-term strategy will be understood by all the level of the organization. Then, it will communicate and educate these targets to individual performance and link the rewards based on their performance measures. As a result, each individual will understand their objective and target and support the overall strategy.
The third process - business planning – is to integrate the company business with the financial plans. Normally, the balance scorecard will force the manager to integrate strategic planning with budgeting in order to make sure the financial budgets support the strategic goal. They will allocate resource and set the priorities according to four scorecard perspectives which are