Value Balanced Score Card

Topics: Management, Strategic management, Balanced scorecard Pages: 8 (2145 words) Published: January 31, 2013


Balanced score card is a new dimension in the field of performance appraisal. It is a comprehensive, top down view of the organizational performance with a strong focus on vision (i.e. goals) and strategy (i.e. performance measures). The balanced score card has become the pre-eminent strategic tool for the management. The success of its implementation is attributable to its focus on strategy and the future. By the help of this the managers are able to translate broad mission statements into tactical action plans. It paves the way for the managers to exploit the firm’s information resources and ultimately produce economic results while directing the firm towards the achievements of its goals.

Key words:- balance score card, dimension, performance appraisal, perspectives INTRODUCTION:-

Balanced score card is a new dimension in the field of performance appraisal. Performance means the efforts extended to achieve the targets efficiently and effectively. The achievement of target involves the integrated use of human, financial and natural resources. Appraisal refers to a critical review with a view to improve performance. It evaluate the actual performance in the light of predetermined targets, measures deviation in between actual and targets, locate alternatives and suggests remedial action.

Thus, the term “performance appraisal” can be defined as a critical assessment or evaluation of various activities in different areas of operations of an organization. It is known that to keep an individual healthy doctors advice periodical check-up and examination of body. Similarly to safeguard the interests of the shareholders, outsiders, creditors etc. every concern should have a proper appraisal of its performance in different sphere viz. Customer satisfaction, value addition in share price, human resource development index etc.

Drucker has argued that “performance can be measured in terms of two concepts viz. efficiency and effectiveness.” Efficiency means “doing things right” and effectiveness means “doing the right things”. Efficiency refers to the ability to get things done in the correct manner. It is the degree to which inputs are used in relation to a given level of outputs. A manager is regarded efficient when “he achieves results or outputs that measures up to the inputs (i.e. labor, materials and time) used to achieve them. Managers who are able to minimize the cost of the resources are able to attain their goals efficiently. Effectiveness is concerned with the effect of work on people, with the appropriateness of goals, with long term results and with humanistic and idealistic values.”


Balanced score card is a performance appraisal and reporting system that strike a balance between financial and non-financial measures, links, performance to rewards, and gives explicit recognition to the diversity of organizational goals. The balanced score card gets its name from the attempt to balance financial and non-financial performance measures to evaluate both short run and long run performance in a single report. Paul Arveson describes balanced score card as “an approach which provides information to the management and assist them in formulation of organization’s mission and strategy. The main purpose of balanced score card is to provide the user with a set of information which reveals all relevant areas of performance in an objective and unbiased manner.


The prime objective of balanced score card is to provide a platform for translating a firm’s strategic objectives into a coherent set of performance measures. Kaplan and Norton recommended that “an organization should articulate the major goals for each of the four perspectives and then translate these goals into specific performance measures.” Basically three to five performance measures are set for each goal....
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