![]() ![]() As a whole, the implication of these 4 areas working unanimously is an improvement of goal congruence within the organization.Įxhibit B: Harvard Business Review Performance Measures Linkage, 2005 4. Robert Kaplan and David Norton assert that: “ While giving senior managers information from four different perspectives, the balanced scorecard minimizes information overload by limiting the number of measures used” (Harvard Business Review, 2005). Individually, the benefit of analyzing each area from 1 of the 4 dimensions allows managers to form conclusions from a different perspective.Īn article by the Harvard Business Review supports the notion that analyzing information from 4 different perspectives is advantageous (See Exhibit B). Collectively, all 4 areas help management make rational and measurable decisions towards improving those goals in a way that creates value. ![]() The 4 areas of the Balanced Scorecard (BSC) relate to one another by forming a cohesive framework for how management should improve its long-term goals with both financial and non-financial measures. Given the logical relationships between the four key areas of the Balanced Scorecard, how do these four areas tie together or relate to one another? “ The whole idea of the balanced scorecard is to use lead indicators to communicate with, motivate, and evaluate individuals with the expectation that their current actions will result in improvements in the company’s important lag measures.in the future” (Managerial Accounting, 518).Ī Forbes article titles: “ The Key to Management: A Balanced Scorecard ” by Gene Marks highlighted that a Balanced scorecard “ boosts performance using a combination of metrics, goals and process improvements” (Forbes, 2008). Our textbook explains this succinctly by stating: Lead indicators guide current decisions, while lag indicators guide final outcomes. As a whole, the BSC combines both lead and lag measures to measure performance. As a prime example, we can measure the financial perspective area of a BSC with the following measures: profit growth percentage, revenue growth percentage, and return on assets (Managerial Accounting, 515). How can a Balanced Scorecard be used to measure performance?Ī Balanced Scorecard (BSC) can be used to measure performance by analyzing the 4 key perspective areas. Harr emphasized in class on Friday, Novemthat the Balanced Scorecard was created by the same folks that created Activity Based Costing. How can we improve and grow, all while creating value?Įxhibit A : 4 Key Questions the Balanced Scorecard Helps Us Answer, Source pg. What internal activities should we make more efficient? Internal Business and Process Perspective How do we look to our owners or shareholders? In this way, the BSC can help us answer 4 pertinent questions (See Exhibit A). From this definition, we can see that the key features of a BSC include 4 areas: financial perspective, customer perspective, internal business process perspective, and learning and growth perspective. What is a Balanced Scorecard and what are its key features?Īccording to our textbook, a Balanced Scorecard (BSC) is strategy performance measurement tool defined as: “a model of business performance evaluation that includes several types of financial and nonfinancial performance measures, typically comprising the following perspectives: financial, customer, internal business process, and learning and growth (Managerial Accounting, 515). Course: ACCT 241: Principles of Managerial Accounting ![]()
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