Nama : Aveline Christina N

NIM : 2201737311

Class : LD53

1. What is the Balanced Scorecard?

2. What are the benefits of the Balanced Scorecard?
3. How does the Balanced Scorecard help in improving performance?
4. What are the applications of Balanced Scorecard?
5. What is a strategy map and how is it different from a Balanced Scorecard?
6. What is the methodology of creating the Balanced Scorecard?
7. How long does it take to develop the Balanced Scorecard?
8. What type of organizations can implement the Balanced Scorecard?

- What is the Balanced Scorecard?

The balanced scorecard is a set of performance targets and results that show an
organization’s performance in meeting its objectives to its stakeholders. It is a management
tool that recognizes organizational responsibility to different stakeholder groups, such as
employees, suppliers, customers, business partners, the community, and shareholders. Often
different stakeholders have different needs or desires that the managers of the organization
must balance. The concept of a balanced scorecard is to measure how well the organization
is doing in view of those competing stakeholder concerns.

- What are the benefits of the Balanced Scorecard?

 Better Strategic Planning

The Balanced Scorecard provides a powerful framework for building and

communicating strategy. The business model is visualised in a Strategy
Map which helps managers to think about cause-and-effect relationships
between the different strategic objectives. The process of creating a Strategy Map
ensures that consensus is reached over a set of interrelated strategic objectives.
It means that performance outcomes as well as key enablers or drivers of future
performance are identified to create a complete picture of the strategy.

 Improved Strategy Communication & Execution

Having a one-page picture of the strategy allows companies to easily

communicate strategy internally and externally. We have known for a long time
that a picture is worth a thousand words. This 'plan on a page' facilitates the
understanding of the strategy and helps to engage staff and external stakeholders
in the delivery and review of the strategy. The thing to remember is that it is
difficult for people to help execute a strategy which they don’t fully understand.

 Better Alignment of Projects and Initiatives

 The Balanced Scorecard help organisations map their projects and initiatives to
the different strategic objectives, which in turn ensures that the projects and
initiatives are tightly focused on delivering the most strategic objectives.

 Better Management Information

The Balanced Scorecard approach helps organisations design key performance

indicators for their various strategic objectives. This ensures that companies are
measuring what actually matters. Research shows that companies with a BSC
approach tend to report higher quality management information and better
decision-making.

 Improved Performance Reporting

The Balanced Scorecard can be used to guide the design of performance reports
and dashboards. This ensures that the management reporting focuses on the
most important strategic issues and helps companies monitor the execution of
their plan.

 Better Organisational Alignment

The Balanced Scorecard enables companies to better align their organisational

structure with the strategic objectives. In order to execute a plan well,
organisations need to ensure that all business units and support functions are
working towards the same goals. Cascading the Balanced Scorecard into those
units will help to achieve that and link strategy to operations.

 Better Process Alignment

Well implemented Balanced Scorecards also help to align organisational

processes such as budgeting, risk management and analytics with the strategic
priorities. This will help to create a truly strategy focused organisation.

- How does the Balanced Scorecard help in improving performance?

Balanced Scorecard works on the premise that measurement drives performance.
Historically, organizations measured performance based purely on financial parameters. The
Balanced Scorecard approach lays strong emphasis on measuring key strategic parameters
not only financial, but also non-financial parameters. By identifying the top 4-5 strategic
objectives within each of the 4 perspectives, the Balanced Scorecard presents a
comprehensive picture of a company's strategy.

- What are the applications of Balanced Scorecard?

 Budgeting and resources allocation
 HR Strategy, and rewards alignment
 Strategy implementation at the Corporate Level
  Alignment of units / departments strategy with the Corporate Strategy
 IT Strategy
 Post Merger integration
 Initiatives management
 Joint venture and alliances

- What is a strategy map and how is it different from a Balanced Scorecard?

A strategy map is a diagram that shows your organization's strategy on a single page.
It’s great for quickly communicating big-picture objectives to everyone in the company. With
a well-designed strategy map, every employee can know your overall strategy and where they
fit in. It helps keep everyone on the same page, and it allows people to see how their jobs
affect the company’s strategic objectives. If you’re using balanced scorecard software, your
strategy map will also show how your organization is performing at a glance. Each bubble is
automatically colored red, yellow, or green based on your actual measures and the goals you
set for them. Strategy maps help clarify the strategy and the related strategic objectives,
whereas balanced scorecards are used to establish metrics and targets to measure and
manage the performance of the organization against those strategic objectives. The strategy
map, which is used to visually display the strategy’s causally linked strategic objectives, and
its subsequent companion balanced scorecard helop answer a different question: “How will
we get there?” Their purpose, together, is to successfully implement the strategy.

- What is the methodology of creating the Balanced Scorecard?

It is a globally and regionally well-tested methodology to develop the Balanced Scorecard. The
key steps include:

a. Detailed internal assessment of the organization.

b. Analysis of the business context for the enterprise, to highlight the existing and
potential challenges facing the business.
c. One-on-one interviews with key management executives/ personnel across the
organization. The purpose is to allow the management team to articulate their
interpretation of the vision, the financial, customer, internal process, and
organizational issues/objectives of the enterprise, their concerns vis-à-vis the
strengths and weaknesses of the organization, etc.
d. Conduct strategy workshop for the management team to gain consensus and finalise
the strategic objectives of the organization.
e. Finalise objectives ownership amongst the management team, and recommend
measures, which are discussed and finalised with the objectives owners during
meetings after the strategy workshop.
f. The set of initiatives to ensure delivery of the objectives, and initiatives mapping are
then finalized during the second workshop.
 g. The management team then fills in the actuals and sets targets for each measure.
These targets are broken down monthly or for the respective period for which the
measure has to be reported

- How long does it take to develop the Balanced Scorecard?

A Corporate scorecard takes around 8 weeks to be developed. The first workshop to
finalise the strategy map is conducted at the end of the 6 weeks point, and the second
workshop around 2 weeks after that to finalise the Balanced Scorecard. If 6-8 departmental
cascades are also included, then all scorecards can be completed in around 10-12 weeks. A
series of first and second workshops, each separate for Corporate and individual
departments are conducted during this time.

- What type of organizations can implement the Balanced Scorecard?

The Balanced Scorecard is a flexible tool, and can be implemented by any kind of organization:
- Large, medium and small businesses to ensure achievement of revenue / profit objective for
its shareholders
-Non-profit organizations, to enable delivery of its social objectives, based on the availability
of limited resources
-Government organizations / departments to enable delivery to the public / community.