Below is what i have gathered for one of my projects about balance scorecard system. Hope it helps:
A new approach to strategic management was developed in the early 1990's by Drs. Robert Kaplan (Harvard Business School) and David Norton. They named this system the 'balanced scorecard'. Recognizing some of the weaknesses and vagueness of previous management approaches, the balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective.
The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise.
The balanced scorecard methodology builds on some key concepts of previous management ideas such as Total Quality Management (TQM), including customer-defined quality, continuous improvement, employee empowerment, and -- primarily -- measurement-based management and feedback.
The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives:
• The Learning and Growth Perspective
• The Business Process Perspective
• The Customer Perspective
• The Financial Perspective
Usefulness of balance scorecard for MCS is as below:The process is designed to be executed with a management team in live workshop sessions. This is not easy to achieve but solves many of the problems of early balanced scorecard implementations, that of lack of ownership, understanding and consensus about the measures and the confusion over targets set and the end point organization is trying to achieve.
1. Create a destination statement: you should start with the articulation of and agreement to a strategic destination statement- a fairly detailed description of where the company, business unit or department is expected to be 2 to 5 years later, provided current plans are successfully implemented. The timeframe needs to be agreed with the management team.
2. Create and link strategic objectives: Next, you need a set of strategic objectives that describe the core elements of management teams plans to achieve the vision outlined in step1. And focus on a limited number of objectives, which should be a blend of activities (learning& growth processes) and outcomes (customer& financial)
3. Identify relevant measures: measure selection is normally strongly influenced by the need to obtain information quickly and cost effectively. For each objective, you should aim for one or two measures that will track organizational progress towards the objective over time.
4. Create implementation plans: Having a balanced scorecard is not enough- the objective and overall vision will only be achieved if someone actually does something to cause them to happen. A core part of the development process is to work out how the organization will be mobilized to deliver the selected objectives- an activity that involves communication, resource allocation and project prioritization.
5. Review on a regular basis: Using the balanced scorecard creates a reference point for management discussions that can promote more objective and analytical discussions based on a shared view of what needs to be done and factual information of what is happening, enabling management teams to become more efficient and effective at implementing strategy. The most effective use of this type of balanced scorecard is to review it on a regular basis. The review meetings become a forum for continually updating and refreshing the balanced scorecard design.
With the balance score card implementation, some of the organizations have benefited in the following ways:
1. The organization is now taking a long term view- short term objectives are also clearer.
2. The company interests are now primary.
3. There is a clear corporate direction.
4. There is a better communication between teams and team work has improved.
5. There is better understanding of other departments’ issues.
6. There is more interaction between managers in a cross-functional capacity.
7. Clearer individual responsibilities with collective ownership.