Dr.R.SRINIVASAN is a Post graduate in commerce and Management. He received his doctoral degree from Alagappa University in 1997. He currently teaches financial management and Research Methodology Subjects in Post graduate and Research Department of Corporate Secretaryship at Bharathidasan Government College for Women (Autonomous), Pondicherry University, Puducherry. Before Joining BGCW, he was teaching in SNR College, Coimbatore, Sindhi college, Chennai& T.S.Narayanasamy College, Chennai for eight years. He was with the industry for a short term at Salzar Electronics Pvt. Ltd, Coimbatore. He has about 20 years of teaching experience and having research experience of 15 years. His interests are in Accounting and finance, Capital Market, Quantitative Methods. He underwent the Faculty Development Programme at Indian Institute of Management Ahmedabad during 2000-01. He has presented 20 papers in national and international conferences and has published twenty papers in the areas of Finance and Human resource Management in National Journals. Co-authored a book titled, ‘Investors Protection, published by Raj Publications, New Delhi He has delivered lectures in contemporary finance topics at Pondicherry University. He is involved in consultancy projects for Godrej Saralee, Chennai in the areas of Statistical Applications. He has supervised a number of research projects in the area of corporate finance and Human Resource Management. He is the Board of examiner in corporate Secretaryship and Management for the past two decades. .
INTRODUCTION:
Balance Scorecard was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more '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.
8) 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.
- Related Videos
- Related Articles
- Ask / Related Q&A
- BALANCE SCORECARD-A TOOL TO MEASURE CORPORATE PERFORMANCE
- Performance of DRDA Projectc in Vizianagaram, inrespect to the Public Policy and Populist Measures
- Planning for Compliance - Ensuring the Integrity of Your Plans and Forecasts by Extending the Compliance Process
- Tips on Purchasing a Home After Bankruptcy
MYTHS OF MOTIVATION - Job Satisfaction
By: Vikram Karve | 24/12/2009In today’s world, it is naive to assume that people work primarily to achieve professional fulfilment and job satisfaction. Both Competition and Compensation levels are higher than ever before and the chief casualties are traditional so-called motivators like “job satisfaction”.
Gainsharing Best Practices – The Power of Communication
By: Robert Masternak | 23/12/2009The "three-C's" to a successful Gainsharing plan are, communication, communication, and more communication. Learn more about how to effectively communicate a Gainsharing plan. This article is the third in a series of four which share Gainsharing best practices from a group of 17 Human Resources Professionals.
The Need for Corporate Team Building Activities in Today’s Tough Economy
By: Luna Mohanty | 23/12/2009Today’s economic challenges leave many workers with emotional deficits. Many employees are tapped out, and are not at their best performance potential.
Experience Verizon HTC Touch pro skins at its best
By: BhratBrij | 23/12/2009The best thing about the Internet is that you can get made-to-measure cell phone skins extremely easily there. So go there to find your choice of HTC G1 skins and Verizon HTC Touch pro skins.
Be a Great Leader! - Setting a Good Example for Your Office
By: Legiant | 22/12/2009Are you one of those managers that wakes up on the wrong side of the bed and comes to work grumpy? Well after reading this you might change your mind about the attitude that you choose to bring to work.
Handling the Holidays - Be careful and Accomodating!
By: Legiant | 22/12/2009How does your office handle holidays? Do you allow decorations? Are you prepared for the rush of time off requests? This article will help you prepare yourself for the holidays.
Fighting Absenteeism
By: Legiant | 22/12/2009Is it okay for employees to skip work every once in a while? Do you know how unscheduled absences affect your business? Read this article to gain some insight on fighting unscheduled absences.
Employee Retention: 9 Unnecessary Reasons Employers Lose Good Employees
By: Ross Blake | 21/12/2009What many employers don’t realize is that they can correct most of the reasons why valuable employees leave. Avoid these 9 absolutely unnecessary reasons to lose good employees.
HIGHER EDUCATION REFORMS-SOME THOUGHTS
By: DR.R.SRINIVASAN | 23/12/2009 | College & UniversityIn the present article an attempt has made to understand the Status of Global impact on Higher education and the reforms required for the collegiate and university education in India. The supplementary area is the increased mobility of staff and students, as well as of study programmes. As a consequence of such new developments, the ways of knowledge is educationally provided and qualifications awarded tend to become global.
MONEY MARKET INSTRUMENTS—SOME THOUGHTS
By: DR.R.SRINIVASAN | 02/12/2009 | BankingMoney market is the market for short term debt finances. It provides an equilibrium mechanism for levelling out the demand and supply of short term funds and serves as a focal point for the intervention by the central bank (RBI in India) for influencing the liquidity and interest rates in the financial systems.
ISO 9001 CERTIFICATION-AN APPRAISAL
By: DR.R.SRINIVASAN | 02/12/2009 | Business OpportunitiesIn today's service-sector driven economy, more and more companies are using ISO 9001 as a business tool. Through the use of properly stated quality objectives, customer satisfaction surveys and a well-defined continual improvement program companies are using ISO 9001 processes to increase their efficiency and profitability.
MODES OF GENERATING FUNDS BY CORPORATE SECTOR -- SOME THOUGHTS
By: DR.R.SRINIVASAN | 02/12/2009 | FundraisingThe two extensive sources of finance available to a business Undertakings are internal sources and external sources. The most important external sources of funds are shareholders’ funds (Owners Residue) and loan funds (creditor ship security). This will enable the companies to establish itself and improve their bottomline through expansion, modernisation programme.
SECURITISATION- SOME THOUGHTS
By: DR.R.SRINIVASAN | 02/12/2009 | BankingThe securitization process would upgrade the level of cleverness of banking and finance in the country in the long run. This, combined with an appropriate regulatory framework, can make securitization an important catalyst in mobilizing domestic savings as well as attracting foreign capital, which can be of mammoth value, particularly in the context of capital requirements to develop the country's infrastructure sector.
BUY BACK OF SHARES – LEGAL ASPECTS
By: DR.R.SRINIVASAN | 30/11/2009 | Regulatory ComplianceBuy back of shares enable the company to go back to its shareholders and offers to purchase from them the shares they hold. Sec. 77A of the companiesAmendmentAct, 1999,the central Govt has permitted Indian companies to buyback their shares from the Open Market.
CURRENT ASSETS FINANCING-NEED FOR CREDIT ADMINISTRATION
By: DR.R.SRINIVASAN | 30/11/2009 | CreditAn important working capital policy decision is concerned with the level of investment in current assets. Determining the optimal level of current assets involves a trade off between costs that rise with current assets and costs that fall with current assets. After establishing the level of current assets, the firm must determine how these should be financed.
MUTUAL FUND ACCOUNTINGPOLICIES-SOME THOUGHTS
By: DR.R.SRINIVASAN | 30/11/2009 | InvestingMutual funds are distinct from portfolio management schemes and are essential vehicles for collective investment in stock market; risk diversification and expert management advice of the fund managers. Accounting policies of mutual fund schemes are somewhat different from those of an industrial concern. Ninth schedule to SEBI (Mutual Fund) Regulations 1996 deal with accounting policies and standards to be adopted by a mutual fund