MBM 411 /5

Dayalbagh Educational
Institute
(Deemed University)

Unit 4 : Balance Score Card

History
While the phrase balanced scorecard was coined
in the early 1990s, the roots of the this type of
approach are deep, and include the pioneering
work of General Electric on performance
measurement reporting in the 1950s
The balanced scorecard is a management system
(not only a measurement system) that enables
organizations to clarify their vision and strategy
and translate them into action
it helps planners identify what should be done and
measured. It enables executives to truly execute
their strategies
What is Balance Score
Card
Balance score card is an extension of
Performance Management process which
provides a strategic framework for bringing
link of Individual and department performance
and balance between various short term and
long term measures needed in competitive
era
 Balanced Scorecard is

A strategic performance
management tool
Which Balances and integrates:-
Long and short term
Hard and soft measures
Leading and trailing indicators
Internal/external perspectives
In a scientific way
Measuring
performance
Organizations are measuring factors that contribute to financial
performance and shareholder gains.
Balance Score card is one of the ways to measure the Executive
Performance
It gives linkage of each goal to organizational priorities
The entire organization is viewed from four perspectives
1. Customer perspective :How do customers see us: Customer
perspective
2. Innovation & learning perspective : How can we continue to
improve
3. Internal business process : At what must excel ?
4. Financial perspective :How do we reward shareholders:
Companies have realized that there is a direct link between various
measures. Eg. There is direct link between customer satisfaction ,
employee satisfaction and revenue.
(KRAs)are set in 4 areas

Key Areas where company wants to

focus in current year
1. Financial/Cost perspective
2. Customer/delivery perspective
3. Internal process perspective( Org
Capability :Technology and Process)
4. Learning and Innovation perspective
(Org capability :People )
 New Executive performance
measures
Balance Score Card
Financial perspective
1. Profitability
2. Growth
3. EVA

Internal business
Customer process
perspective 1. Productivity
1. Satisfaction 2. Globalization
2. Market share 3. Quality
4. Speed

Innovation &
Learning perspective
1. Employee satisfaction
2. Innovation
3. Safety
Performance
measures
sn

1
Areas

Custome
KRA

Satisfaction
Measures/KPI

Revenue from existing customers

r Customer satisfaction index
2 Market share % growth in key segments

3 Finance Profitability ROE, ROTC

4 Growth Net income, cash flow

5 EVA Value added per Rs

6 Internal Productivity Output + input measures

Business
7 Processe Globalization Sales outside India
s
8 Quality % rework

9 Speed Cycle time

10 Learning Employee Undesired turnover, survey raing

and satisfaction
growth
11 Innovation Revenue from new products
2. Management by
Objectives (MBO)
A comprehensive and formal organization
wide goal-setting and appraisal program
requiring:
1. Setting of organizations goals.
2. Setting of departmental goals.
3. Discussion of departmental goals.
4. Defining expected results (setting
individual goals).
5. Conducting periodic performance
reviews.
 Using MBO
Setting unclear Time-consuming
objectives appraisal process

Problems with
MBO

Conflict with
subordinates over
objectives
360- degree
appraisal
360 degree feedback, also known as 'multi-rater
feedback', is the most comprehensive appraisal where the
feedback about the employees performance comes from
all the sources that come in contact with the employee on
his job.
360 degree respondents for an employee can be his/her
peers, managers (i.e. superior), subordinates, team
members, customers, suppliers/ vendors - anyone who
comes into contact with the employee and can provide
valuable insights and information or feedback regarding
the "on-the-job" performance of the employee.
360 degree appraisal has four integral components:
1. Self appraisal
2. Superiors appraisal
3. Subordinates appraisal
4. Peer appraisal.
360-degree appraisal
Self appraisal gives a chance to the employee to look
at his/her strengths and weaknesses, his
achievements, and judge his own performance.
Superiors appraisal forms the traditional part of the 360
degree performance appraisal where the employees
responsibilities and actual performance is rated by the superior.

Subordinates appraisal gives a chance to judge the

employee on the parameters like communication and
motivating abilities, superiors ability to delegate the
work, leadership qualities etc. Also known as internal
customers, the correct feedback given by peers can
help to find employees abilities to work in a team, co-
operation and sensitivity towards others.
360-degree appraisal
360 degree performance appraisal is also a powerful
developmental tool because when conducted at regular
intervals (say yearly) it helps to keep a track of the changes
others perceptions about the employees.
A 360 degree appraisal is generally found more suitable for the
managers as it helps to assess their leadership and managing
styles. This technique is being effectively used across the globe
for performance appraisals.
Some of the organizations following it are Wipro, Infosys, and
Reliance Industries etc.
DHA -9
Which process (BSC , MBO , 360 Degree ) you
would recommend to organisation to
measure the Organisational as well as
Individual performance and why ?
Write max 6 lines