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Explain balance scorecard and its characteristics
Explain balance scorecard and its characteristics
Explain balance scorecard and its characteristics
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Key Performance Indicators (KPI)
According to Parmenter (2011, p. 13), Key Performance Indicators (KPI) are a set of measures that assess the organisation performance on how effective the organisation achieve its objectives which are crucial for current and future success of the organisation. Key Performance Indicators (KPI) has been widely used by many organisations and for organisations to identify the right KPIs; it has to have a clear objectives and strategic directions that align with KPIs set.
For Key Performance Indicators (KPI) to be successful, it needs to have the following characteristics:
• Specific and concise - This emphasized that KPIs has to be clear and focused in order to avoid any misinterpretation occurring.
• Ambitious
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The relevant perspective of balance scorecard (BSC) that affected in this case would be internal business practice.
• In addition, the late flights will have a negative impact on supplier relationships and servicing schedules which will result a poor service quality. Moreover, with the increase number of customer dissatisfaction will increase staff dissatisfaction due the staff receiving constant customer complained. The increase of staff dissatisfaction will impact the innovation and learning perspective and internal business practice perspective of balance scorecard (BSC).
Key Performance Drivers (KPD)
Cole (2010, p. 362) stated that Key Performance Drivers (KPD) is an action taken by any business organisation to improve or decrease its key performance indicators. Key Performance Drivers (KPD) serves the following purpose:
• It helps management to identify the specific area that needs to be highlighted by the organisation.
• Provide the foundation for the metrics setup that measure and evaluate the completion of its highest impact and most critical sales activities.
Example of Key Performance Drivers (KPD) in an
The Balanced Scorecard is a business strategic planning system used by management to make decisions based on information provided about the business from four different perspectives. The first of the four perspectives is the financial perspective. Which means that we evaluate our business and conduct research from the shareholders perspective. Next is the internal business perspective, which is an internal evaluation of what the business must be good at to excel. Next is the innovation and learning perspective which is an evaluation of the firm’s ability to continue to improve and create value. The final perspective is the customer perspective, which is looking at the business activities from the customers
Since the beginning of time, companies are striving and working very hard, under a lot of stress, in order to survive and overcome the challenges they face day in and day out. For Managers, it can become even more challenging to execute tasks or make the most effective decisions for their teams as the competition increases. It requires the development of excellent business strategies and effective operations to deliver exceptional products and services. An original framework created by Drs. Robert Kaplan (Harvard Business School) and David Norton has helped managers and executives achieve a more 'balanced' view of organizational performance with the Balanced Scorecard. “The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals.”
Critics of the Baldrige process say that criteria are too focused on business results and not focused enough on quality. As it stands, the customer and market focus category counts for 450 of the criteria’s possible 1,000 points. (Schonberger, 2001) Richard Schonberger, president of Schonberger and Associates, a performance management consulting firm, argues that “the category of business results shouldn’t be in the criteria at all” (Schonberger, 2001).
The purpose was to show how employees could contribute to the company's objectives. Employees were able to understand the terminology and best practices of the scorecard as it related to strategic planning. KPI’s where they saw improvement were in the company’s operating cash flow, total revenue of bids submitted, and number of preventable environmental excursions. (2013) The balance scorecard allowed Veolia to develop a framework to measure their goals and show progress.
A Balanced Scorecard can be defined as a “performance management tool which began as a concept for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision and strategy” (Wikipedia 2009, ¶ 1). Scents & Things will need to develop a balanced scorecard that will assist in meeting and help define the company’s values, mission, vision, and SWOT analysis. The balance scorecard is made up of four perspectives; financial, customer, learning and growing, and internal process. This paper will define each of the four perspectives objectives, performance measures, targets, and initiatives. The paper will also show how the perspectives relate to Scents & Things vision, mission, values, and SWOTT analysis.
These benefits are best discovered and maximized if used in conjunction with KPIs. A KPI is a key performance indicator and they allow a company to measure and manage ...
Before the introduction of the balanced scorecard tool, only financial measures were used to determine the organi...
Bacal, Robert. Manager's Guide to Performance Management. 2nd ed. Vol. 1. New York: McGraw-Hill, 2012. Print.
Establishing metrics is crucial to any organization, especially in technology related company projects. Metrics can be defined as a system of parameters or ways of quantitative and periodic assess of a process that is to be measured, along with procedures to carry out such measurement and the procedures for the interpretation of the assessment in the light of previous or comparable assessments. The results of the metrics can be used to record trends, efficiency, capital, and etcetera. Metrics permit organizations to measure its performance against industry sectors to determine how well the company is doing. Metrics allow organizations to optimize its productivity.
It enables an organisation to plan future activities by considering a number of questions such as: What are our Strengths? How can we build on them to ensure that we offer a better product than our competitors? What are our Weaknesses? How can we eliminate them? What are our Opportunities?
Over the past two decades, the business sector has become increasingly competitive and with this increased competitiveness comes the drive for greater efficiencies in what are deemed non-core activities such as building maintenance (Lavy and Shohet 2010). This means that facility managers, who are responsible for all strategic decisions with respect to facility operations, are required to minimise operational costs by managing a building in an effective and efficient manner, whilst attaining a high standard of quality and performance (Cotts et al., 2009). One of the management techniques used to measure performance is the use of Key Performance Indicators (KPI’s) at all stages of a building’s life. This report critically discusses the different types of KPIs used in facility management, highlighting their advantages and disadvantages in the context of a non-residential building. The report starts with a definition of KPIs in the context of this report, which is followed by commonly used KPI’s with reference to a health care facility.
However, BSC is not a template that can be applied to businesses in general. In this circumstances, different market situations, product strategies, and competitive environments need different scorecards. The businesses must devise customized scorecards to fit their vision, mission, strategies, technology, as well as their culture. On the other hand, the Performance Prism is an alternative for the BSC which is worth considering for companies looking for a system to measure and manage their performance. Based on a stakeholder approach, it is more flexible and more integrative than other systems.
Performance management is a management tool used to value, monitor and measure a company’s strategies that ensure the efficiency and effectiveness of its product delivery. This management tool does not focus on the organisation and on its employees as well as stakeholders. It is a continuous process that entails that managers make sure that organisational and employee values are corresponding (Aguinis, 2005,p.1/2-1/5). Performance Management brings about the competencies in the employees, increases self-esteem by giving feedback to employees, there is a low number of lawsuits because it helps understand the company better (eThekwini Municipality, 2008,p.10-11). According to Pride, Hughes and Kapoor (2011, p.288) performance management creates motivation for employees; one theory of motivation is of Expectancy, which stipulates that employees satisfaction is driven by expectations of what an organisation will offer in return.
An organisation’s mission is the back bone of all strategic decisions; the mission will have an influence on all activities performed within the organisation, because if they aren’t achieving their mission an organisation is failing. The long term strategic goals of an organisation should directly aim to achieve their mission and these goals are what performance can be measured off. Without specific goals attempting to measure performance is pointless, and identifying who or what the main focus of these goals is the key to optimisation.
At the same time a balance score card intergraded with Accounting Information System allows the companies to collect rightfull information, analyse the data and make evidence based decisions. (Marr, 2010).