Technology (Balanced Score Card system)

Managers in large companies often find difficulties in translating strategies, objectives and performance, measures, to understandable standards of performance for employees at different levels of the company. Objectives at the senior management level frequently have no clear connection with performance priorities lower down in the hierarchy. Generally, financial objectives have the high west priority at the frontline employee level. However, the connection between lower level production and service objectives and upper level financial results is usually not clear to lower level employees.

The need to integrate objectives and strategies across levels and functions if becoming more critical as firms compete on a broader array of performance criteria. Kaplan and Norton have proposed a “balanced score card” (BSC) which integrates measures of customer satisfaction, process performance, project or service innovation and finance. They contend that these areas of measurement are of universal importance to most businesses. Management’s task is to balance the emphasis that is given to these inter-dependent factors and ensure that appropriate weigh is given to them at different levels of the company.

The BSC is one of the key techniques in strategy formulation and implementation. It communicates, thought the firm, the strategic goals and objectives and the performance measures that are important in developing, measuring, reviewing and evaluating the strategies and its eventual effectiveness. Therefore having the BSC applicable is important and it will ensure strategic success. It is also an essential competence that will help a firm gain a sustainable competitive advantage.

The BSC enables the firm to map its strategic intentions, including value prepositions for its customers, through making the form a compelling place to do business. The BSC facilitates the establishment of a market focus, building a winning culture, based on performance measurements. Focusing on core business and making continuous improvement in productivity and costs thereby bringing forth the competitive environment is changing in order to proactively and enthusiastically adapt it.

The BSC cascades strategy creation, communication and implementation through out the organisation. Companies that have succeeded with BSC have come to understand that there are different roles and purposed of performance measurement and reporting systems. Traditional financial measurement systems were designed for control; budgets define targets and feedback system and report variances. The objective is to eliminate variance and meet budgets. These are excellent approaches to management tactics.

The BSC however was designed for a different purpose: to communicate. Its underlying premise is the importance of performance measurement surveys and consequently its influences on behaviour. “What gets measured gets done”. The BSC builds on this premise, asserting that the implementation of strategy provides a means of communication the critical success factors to the organisation, thus focusing everyone’s effort on the strategy and overseeing organisational performance and transformation.

In conclusion the corporate BSC can be a valuable tool in getting all members of an organisation to focus on a flow of common business goals and objectives. The employee scorecard is the link between management and employees, which can increase in the probability that upper level corporate plans and departmental scorecards are translated into frontline performance indicators, goals and objectives, which employees can achieve and consequently assist the company to achieve a sustainable competitive advantage and over time create value for its stakeholders.