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BALANCE SCORECARD-A TOOL TO MEASURE CORPORATE PERFORMANCE
INTRODUCTION:

Balance Scorecard was originated by Drs. Robert Kaplan (Harvard Business School) and David Nortonas a performance measurement frameworkthatadded strategicnon-financial performance measures to traditional financial metrics togive managers and executives amore 'balanced' view of organizational performance. The balanced scorecard is a system of combining financial and non-financial measures of performance in one single scorecard. The popular form of this card includes performance measures from four perspectives: financial, customer, internal business processes, and learning and growth (innovation). It focuses on the link between business processes and decisions and results. Hence, the proponents of the balanced scorecard claim that it is a device to guide strategy formulation, implementation, and communication (Kaplan and Norton, 1996a). It also helps in tracking the performance and providing quick feedback for control and evaluation.

Balanced score card is a new idea that will help restructure Global companies, and help them make it through difficult and changing times. It allows management to focus on those goals and objectives and the measures that will help reach those goals and objective to meet the needs of the impact of Globalization. The best thing about it is that scorecards are unique to the company and will specifically fit the needs of the company, subunit, or individual. Today every organization felt that, Balance score card is considered to be a center stage in performance measurement system in recent years. There are several reasons for the use of balance score card by the companies. For instance it is measured to be comprehensive tool to understand the target customers ,able to articulate the strategy of growth with Business excellence which requires greater focus on Non financial initiatives .

The matters involved in balance score card namely strategic mapping, objectives measurement, commitment and support of top management etc., which needs to be considered at large.

Selection Criteria for Performance Measurements

Financial Measures of Success

Sales growth

Earnings growth

Dividend growth

Bond and credit ratings

Cash flow

Increase in stock price

Customer Measures

Market share and growth in market share

Customer service

On-time delivery

Customer satisfaction

Brand recognition

Positions in favorable markets

Internal Business Processes

High product quality

Manufacturing innovation

High manufacturing productivity

Cycle time

Yield, reduction in waste

Innovation and Learning

Competence and integrity of managers

Morale and firm-wide culture

Education and training

Innovation

NEED FOR BSC:

Knowing what is going on in their enterprise

Effectively making and supporting decisions regarding Investments, plans, policies, schedules, and structure

Specifically communicating performance expectations to subordinates

Identifying performance gaps that should be analyzed and eliminated

Providing feedback that compares performance to a standard

Identifying performance that should be rewarded

A good facet of the balanced scorecard is that it is a simple, systematic, and easy-to-understand approach for performance measurement, review, and evaluation. It is also a convenient mechanism to communicate strategy and strategic objectives to all levels of management. The success of the balanced scorecard or a similar device will depend on the clear identification of non-financial and financial variables and their accurate and objective measurement and linking the performance to rewards and penalties.

The proponents of the balanced scorecard assume (perhaps implicitly) that it aligns with strategy leading to better communication and motivation which causes better performance. This assumption could be the single most important reason for the popularity of the balanced scorecard. But, this may or may not be true. This is an empirical question. There is a need to document the experiences of the balanced scorecard companies and establish the cause-effect relationship. No doubt, from the evaluation of BSC, It is clear that it shapes up to attain a well positioned response from the corporate sector at present after the globalization.

IMPLEMENTATION ISSUES:

1) A strategic planning move away with all levels of management reaches a consensus on the overall vision, strategic goals, and objectives of the company and identifies the critical perspectives.

2) A strategic planning committee formulates objectives for each perspective.

3) With the balanced scorecard as a communication tool, committee seeks comments and acceptance from all members.

4) Revise frequently balanced scorecard according to the requirements of the company as well as for the dynamic corporate environment.

5) communicate the revised version to everyone and then each individual creates their own personal balanced scorecard to supplement the overall goals and objectives described.

6) Strategic planning committee reviews individual balanced scorecards and revises those as well as the company's.

7) Management formulates a five-year strategic plan for the overall organization based on the balanced scorecard. The first year plan is expanded into the annual operating plan for the next year.

Review individual and company progress quarterly and identify areas that need attention.

9) Based on personal balanced scorecards, the company evaluates each member's performance for the past year and makes recommendations relating to retention, promotion, salary increases or other rewards.

10) Strategic planning committee revises the company's balanced scorecard and the five-year strategic plan based on external and internal scanning of the current condition and changes in the economic environment.

Having discussed implementation issues, it is felt tat, to meet the challenges ahead, companies need to develop a perspective on the role of the legal function in both qualitative and quantitative business terms. They may use a Balanced Scorecard of metrics that integrates the department short-term actions with long-term organizational objectives.

CONCLUSION:

From the aforesaid discussions, it is clear that, an implied assumption in the Balanced Scorecard, with a comprehensive information system to support it, provides a means to make a real difference throughout the organization as a whole. In addition to that,, Activity Based Costing, Six Sigma, process review and benchmarking systems are specifically designed to support the implementation and ongoing evolution of a Balanced Scorecard measurement system. Hence this tool is expected to emerge one among the best performance measurement system and a strategic tool for corporate decision making.