Four Perspectives Of Balance Scorecard

Chapter 3:

THEROTICAL BACKGROUND OF THE STUDY

3.1 Introduction:

Balance is just a seven letter word which provides the principle of a healthy organization. Balance is necessary for efficient and effective performance of every organization, for the achievement of sound, and for supporting in reaching its fullest potential. These days the traditional accounting models are not sufficient to maintain this balance in the organization. With the passage of time not only financial statements but also the internal process, advanced technology, motivated employees play a vital role in measuring the company’s performance. To measure the performance with these traditional and non-traditional tools a concept of “Balance Scorecard” was introduced.

Balance

3.3 The four Perspectives of Balance Scorecard:

The Balanced scorecard is an example of a performance measurement system. It nurtures a balance between strategic measures in an effort to achieve goals, therefore helps the employees to perform in the best way of the organization. The BSC is a tool for improving communication, setting managerial objectives, and providing feedback on policies. Each measures in the BSC addresses an aspect of the company’s strategy. It must be noted that, the set of measurements must be chosen in such a way that they:

1. Reflect the critical factors that will determine the success of the company’s strategy.

2. Show the relationships among the individual measures in a cause-effect manner, indicating how non-financial measures affect long term financial results of the

Without the information of what drivers will change your scorecard, your organization just control spends much time, money and attempt and accomplish very little. Hence the study and research of these success drivers plan a vital role in functioning and implementation of balance scorecard.

These drivers fall into four categories:

• Environmental –

These are the factors outside the influence of organization, such as legislative policy, the financial series, local, nationalized and international politics, etc.

• Organizational –

These are the systems inside the organization such as company policy, human resource structures, policies, procedures, organizational structure, pay, etc.

• Group or departmental –

These drivers include work methods, group relationships, work responsibilities, work projects.

• Individual –

The drivers related to personality, management style, skills and