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A study on the balanced scorecard as an effective performance management system

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  1. Introduction: What is Balanced Scorecard?
  2. History
  3. Methodology
    1. Kaplan & Norton's model
    2. 2nd Generation model
    3. 3rd Generation model
    4. 4th Generation model
  4. Uses of the balanced scorecard
  5. How to implement
  6. Criticisms
  7. Critical factors for success
  8. Conclusion
  9. References

The balanced scorecard is a strategic planning and management system used to align business activities to the vision and strategy of the organization. In other words, it translates the vague statements and undefined aspirations of a company's vision or mission statement into practical components of performance required at every level of the organization. It takes a holistic view of the organizations and facilitates effective co-ordination between the various departments to achieve common organizational objectives and goals, and is therefore a performance management tool for measuring whether the smaller-scale operational activities of a company aligns with its larger-scale objectives in terms of vision and strategy. The roots of the Balanced Scorecard approach traces back to the pioneering work of General Electric on performance measurement reporting in the 1950's, and the work of French process engineers who created the ?Tableau de Bord? or a dashboard of performance measures in the early part of the 20th century. The concept also has similarities to the activity based costing methods, a costing model that identifies activities in an organization and assigns the cost of each activity resource to all products and services according to the actual consumption by each

[...] Value Maximization, Stakeholder Theory, and the Corporate Objective Function (October 2001). Unfolding Stakeholder Thinking, eds. J. Andriof, et al, Greenleaf Publishing Kaplan, R. S. and Norton, D. P. (1992) "The balanced scorecard: measures that drive performance", Harvard Business Review Jan Feb pp. 71-80. Kaplan, R. S. and Norton, D. P. (1993) "Putting the Balanced Scorecard to Harvard Business Review Sep Oct pp2-16. Kaplan, R. S. and Norton, D. P. (1996) "Using the balanced scorecard as a strategic management system,? Harvard Business Review Jan Feb pp. 75-85. Kaplan, R S. and [...]

[...] Many people confuse Balanced Scorecards with a ?strategic linkage model? or ?strategy map.? Balanced scorecard has nothing to do with formation of strategy, and its only role is to enable managers' focus on the already laid out strategy. Balanced Scorecards can comfortably co-exist with strategic planning systems and other tools. Similarly, many have the mistaken notion that Balanced Scorecard facilitates better decision making. Balanced Scorecard is a measurement, and the decisions base on the things measured. Better decision making depends not on how the measurement takes place, but rather on what is measured. [...]

[...] The four approaches or perspectives are learning and growth, business, customer and financial, and organizations would selected the appropriate factors or key performance areas within each of these perspectives as the basis on which they measure performance The Learning & Growth Perspective The Balanced Scorecard approach recognizes the modern approach that human resources, very often the company's only repository of knowledge, is an intangible asset, and attempts to measure such assets in terms of employee training and corporate attitudes related to both individual and corporate self-improvement. [...]

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