Balanced Score Card Analysis

The most important judgment for a manager is how the decisions or actions taken by him today will affect the business later. To do that, various metrics come into play. Short term and long term both are to be taken into consideration. And for long term, one has to be more balanced. This is where Balanced Score Card enters the picture.

Balanced Score Card: It helps in measuring the financial as well as non-financial elements of a company’s performance aligned to the long term vision and strategy of the business. It argues that more than just financial performance is relevant to the success of a company.

Features of Balanced Score Card:

• It’s a top down approach

• Starts from the top organizational hierarchy of objectives with the mission and

It includes questions like “are you faring well by your shareholders?”

• Customer Perspective: Questions like “do they like your products and services”

• Internal Perspective: Questions like “can you competently supply what your customers need?”

• Learning and Growth Perspective: Questions like “can you continue to advance and generate value?”

Advantages of a Balanced Scorecard:

• Provides a broader view of how the business is performing

• It is relevant to a company’s mission and vision rather than just looking at the income statement.

• It involves everybody in the business and not just the financial people. So, anybody delivering customer service is going to have an interest in KPIs there.

• It is highly flexible

For successful implementation of the above perspectives, you are required to enlist both goals and metrics.

Example:

A company adopts the strategy of Balanced Scorecard. Its perspectives:

• Financial Goals: To survive, thrive and grow. For valuation, it used cash flow, quarterly sales growth, market share, operating margin and return on

• Conducting cost benefit analysis of the activities generating deliverables

• Accordingly, execute/ implement

The four perspectives that HRD Scorecard takes into consideration are:

• Financial Perspective: Address those strategies that increases customer’s satisfaction. For instance, increase ROI for HR strategies

• Customer Perspective: Focuses on what a customer wants or desires. For instance boost customer (internal & external) satisfaction

• Internal Perspective: Linking business objectives and stated desires of the customers. Executing best Talent Management practices

• Learning Perspective: Undertaking steps to align HR goals with the mission and vision of the company. For instance, set up HRIS System

Advantages of using HRD Scorecard:

• It helps in evaluating employee satisfaction as well as their loyalty

• It determines the productivity of HR department and its contribution towards the company’s profitability

• It measures the intellectual potential of an