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Presentation

Bangladesh University of Business & Technology

Presentation on

Production & Operation

Management

Topic

The Balanced Scorecard

Submitted to,Mr.Md. Moinul Islam Murad

Lecturer,

Department of Management,

Bangladesh University of Business & Technology (BUBT)

Submitted by,Name ID No

Tanvir Mahtab Shejan 09102101211

Md.Sohanul Haque 09102101214

Kamrun Nahar Shila 09102101208

Sadia Tarannum 08093101209

Rabeya Basri 08093101212

What is a Balanced Scorecard?

The Balanced Scorecard is a strategic planning and management system used to align business activities to the vision and strategy of the organization by monitoring performance against strategic goals.

Balanced Scorecard Concept

Was first published in 1992 by Kaplan and Norton.

Traditional performance measurement that only focus on external accounting data are obsolete.

The approach is to provide 'balance' to the financial perspective.

Key Term of Balanced Scorecard Financial and non financial measurement. Performance measurement. Strategic management tool. Standardization & judgmental effects. Multidivisional firms. Measures the performance of human

resources.

Objective of Balanced Scorecard Deriving goal from current

strategic plan.  Measuring achievement of

objectives with ratios. Increasing focus on strategy

and results.

Focusing on the driver’s key to future performance.

Improving communication of the organization’s Vision and Strategy.

Why Use a Balanced Scorecard? Improve organizational performance by

measuring internal and external factors. Increase focus on strategy and results. Align organization strategy with workers

on a day-to-day basis . Prioritize Projects / Initiatives.

The Organization will become more “strategically focused” over the next ten years given the recent policy directive issued by BSP (Budget & Strategic Planning).

Need more balanced approach to looking at performance, both tactical and strategic.

Improve communication of the organization’s Vision and Strategy.

Why Use a Balanced Scorecard?

Four Original Business Perspectives

The Balanced Scorecard model suggests that we view the organization from 4 perspectives.

Then Develop metrics, collect data and analyze it relative to each of these perspectives.

Financial Perspective To succeed financially, how should

organizations appear to there shareholders.

Financial measures Show economic consequences of

actions already taken. Show each strategy, implementation

have given results.

Customer Relations Perspective To achieve organizations vision, how should organizations appear to there customers

Measures typically can be related to: Customer satisfaction Customer retention/business expansion with existing New customer acquisition Value delivery - to customer Market and account share in targeted segments

Segment specific drivers could be: Shorter lead times Innovative products and services Better quality

Learning and Growth Perspective To achieve organizations vision, how will organizations

sustain organizations ability to change and improve. The infrastructure that the organization must build to

create long-term growth and improvement. Come from:

People Systems Organizational procedures

Measures include Employee Satisfaction Retention Training Skills

Internal Business Process Perspective• Percentage employee absenteeism• Hours of absenteeism• Job posting response rate• Personnel turnover rate• Ratio of acceptances to offers• Time to fill vacancy

Balanced Scorecard Measurements

Principle of Balanced Scorecard

Consistent focus on objectives. Balanced involvement of all stakeholders. Combining simple structures. Transparency with ratios. Concentrating on the essentials.

Performance management FeatureBusiness case is the collection of choices about how to proceed based upon analysis of scenario options.Critical assumptions are factors that could change the future within the time domain of the planning horizon.Vision is the desired state to be achieved by the plan.Planning horizon is the length of the vision.Strategy is the persistence of vision.Budget is the cost of strategy.

Key Implementation Success Factors Obtaining executive sponsorship and

commitment. Involving a broad base of leaders,

managers and employees in scorecard development.

Choose the right Scorecard Champion. Beginning interactive (two-way)

communication first. Viewing the scorecard as a long-term

journey rather than a short-term project. Getting outside help if needed.

Key Implementation Success Factors Implementing the Balanced Scorecard system

company-wide should be the key to the successful realization of the strategic plan/vision. A Balanced Scorecard should result in:

Improved processes Motivated/educated employees Enhanced information systems Monitored progress Greater customer satisfaction Increased financial usage

Scorecard Potential Pitfalls & Criticisms Lack of a well Defined Strategy The balanced scorecard relies on a well defined strategy

and understanding of linkages between strategic objections and metrics. Without this foundation the implementation could fail.

Too much focus on the lagging measures Focusing on only the lagging measures may cause a lack of

priority or opportunity for the leading measures. Use of Generic Metrics

Don’t just copy metrics from another firm. Identify the measures that apply to your strategy and competitive position.

Self-serving managers Managers whose goal is to achieve a desired result in order

to obtain a bonus or other self reward.

Balanced Scorecard Benefit

Helps align key performance measures with strategy at all levels of an organization.

The methodology facilitates communication and understanding of business goals and strategies at all levels of an organization.

Strategic initiatives that follow "best practices" methodologies that cascade through the entire organization.

Transforms an organization’s mission statement and strategic plan from a passive document into the "marching orders" for the organization on a daily basis.

It enables executives to truly execute their strategies by identifying what should be done and measured.

Conclusion

The Balanced Scorecard is a management system used to focus and prioritize management energy toward achieving both short and long term organizational goals and with the ability to give early warning signals for midcourse correction.