Balanced scorecard - The balanced scorecard: bleasures that...

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The balanced scorecard: bleasures that drive performance Roben Kaplan'& David Nonon, 1992, Harvard ~usiness Revimv [excerpts] What you measure is what you get. Senior execu- tives understand that heir organization's rneasure- ment system mongly affects the behavior of managers and employees. Executives a!so under- stand that traditional financial accounting measures like return-on-investment and earnings- per-share can give misleading signals for continuous improvement and innovation-activities . today's competitive environment demands. The traditional financial performance measures worked well for the industrial era, but they are out of step with the skills and competencies companies are trying to master today. .& managers and academic researchers have tried to remedy the inadequacies of current performance measurement systems, some have focused on making financial measures more relevant. Others have said, "Forset the financial measures. Improve operational meuures like cycle time and defect ntes; the financial results will follow." But managers should not have to choose between financial and operational measures. Ln observing and working with many .companies, we have found that senior esecutives do not rely on one set of measures to the exclusion of the other. They realize that no single measure provide a clear performance tarset or focus atrention on the critical areas of the business. Manazers want a balanced presentation of both financial and operational measures. During a year-long research project with 12 companies at the leading edge of performance measurement, we devised a 'balanced scorecard' - a set of measures that gives top m~agers a fast but comprehensive view of the business. The balanced scorecard includes financial measures that tell the results of actions already taken. And it complements the financial measures with operational measures on customer satisfaction, internal processes, and the oreanization's innovation and improvement activities-open~ional measures that are the drivers of future financial performance. Tnink of the balanced scorecard as the dials and indicators m an airplane cockpit. For the comples task of navigating and flying an airplane, pilots need detailed infomation about many aspects of the flight. They need information on fuel, air speed, altitude, bearinz, destination, and other indicators that summarize the current and predicted environment. Reliance on one instrument
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This note was uploaded on 04/01/2010 for the course JMSB COMM 210 taught by Professor Barbarareda during the Winter '09 term at Concordia Canada.

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Balanced scorecard - The balanced scorecard: bleasures that...

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