Alternate Ways of Measuring Performance Essay -- Essays Papers

Balanced Scorecard Alternate Ways of Measuring Performance Abstract Many organizations are usefully viewed as a web of relationships between and among various stakeholder groups. An organization may be defined as a "nexus of contracts," where said "contracts" are relationships that are marked by contributions from the various stakeholders in return for inducements provided by the organization. Over the long haul, the success of an organization is a function of the extent to which the needs and requirements of its various stakeholders can be integrated and balanced, without sacrificing any one to the other. There is, in this arrangement, mutual influence and accountability. It is the main thesis of this paper that many organizations would be well served by making use of the Balanced Scorecard as an alternate way of evaluating a company’s performance. Introduction Since its introduction in the Harvard Business Review in 1992, many corporate executives and information technology (IT) professionals have found the concept of Balanced Scorecard it to be a key strategic measuring stick of corporate success. Robert Kaplan and David Norton created balanced Scorecard, often referred to as BSC, in the early 1990’s. Today many large consulting firms like Pricewaterhouse Coopers and Earnst and Young have adopted the balanced scorecard concept. A balanced scorecard is a framework for translating strategic goals and visions into measurable results for the entire enterprise. The balanced scorecard starts with corporate strategies and objectives, and then uses financial and non-financial measures from across the company to create positive and negative indicators of corporate success for all levels of the organization (Kaplan and Norton, 1992). These indicators provide an in depth snap shot of corporate performance that managers and executives can use to clearly manage the company for success on a daily basis. Since the scorecard is based on key performance indicators (KPIs) that are directly linked to corporate goals, it provides a true measure of corporate success. These KPIs consist not just of financial indicators, but also of performance measures in customer satisfaction, internal process, and innovation and improvement (Kaplan Norton, 1992). The breadth and diversity provided by all four perspectives give managers an ideal cross-func... ...to a system of performance measurements that effectively communicate a powerful, forward-looking, strategic focus to the entire organization. This balanced concept allows an organization to evaluate its performance in different aspects other than financially acceptable balance sheets or income statements. Bibliography 1.) Atkinson A. A., Waterhouse, J.H., and Wells, R.B. (1997). â€Å"A Stakeholder Approach to Strategic Performance Measurement.† Sloan Management Review (Spring, 1997, pp25- 37): Cambridge. 2.) Kaplan, Robert S. and Norton, David P., (1992). â€Å"The Balanced Scorecard: Measures that Drive Performance.† Harvard Business Review (January-February 1992): 71-79. 3.) Kaplan, Robert S. and Norton, David P., (1996a). â€Å"Linking the Balanced Scorecard to Strategy.† California Management Review (Vol. 39 No.1, Fall, 1996): 53-77. 4.) Kaplan, Robert S. and Norton, David P., (1996b). â€Å"Using the Balanced Scorecard as a Strategic Management System.† Harvard Business Review (January-February 1996): 75- 85. 5.) 5.) Nickols, Fred (1999). â€Å"Reconciling and Integrating Stakeholder Needs and Requirements.† COG News (Spring 1999)