The Balanced Scorecard – Beyond Performance Measurement

Management without measurement is, needless to say, one of the biggest strategic mistakes an organization could commit. But what about measurement without management? Too often, one comes across references to the Balanced Scorecard as a performance measurement framework. In my opinion, that is akin to calling Six Sigma “a defect control device”. A better description of the BSC would be as a metrics-based strategic management system. A majority of organizations today are riding on the BSC bandwagon – but only a few of them have achieved the dramatic results that Kaplan and Norton envisaged.

Trent Limited, the retail arm of the Tata Group, opened its first store – Westside – in 1998 when the retail business in India was still in the fledgling state. By 2001, its annual growth rate had exceeded 100%. But the group realized that there was no place for complacency – to sustain and stabilize this growth, they needed to clearly articulate a common strategy for the entire organization. Trent needed a performance management system that went beyond financial measures and analyzed other critical factors like customer satisfaction an efficiency of internal operations. The BSC, with its four-dimensional model, double-loop feedback and strategy map, came up as the perfect option. The first step was to get a cross-functional team to work on putting together the strategy map. This process enabled them to identify strategic objectives and ensure that the entire management team was on the same “strategic wavelength”. The team defined their financial objectives – short term and long term – and went on to identify ways to achieve these by considering all the four BSC perspectives. These solutions were further broken down into specific, measurable and time-bound action plans which are still reviewed on a regular basis.

While monitoring its strategic action plans, Trent hit upon a well-known but oft-ignored management dictum – listen to your customers and employees. The company’s customer relationship team hit the shop floor, literally, to see what the customer really wanted. This hands-on knowledge was behind the whopping success of Trent’s homegrown, customized brands in its stores – particularly Westside. Simultaneously, they tackled the problem of high attrition – retail’s biggest bane – by designing a unique coaching initiative which has now become the training benchmark for the entire Tata Group. Trent made spectacular improvements in customer satisfaction, employee retention and profitability within four years of implementing the BSC – a feat that got the company a mention in the Balance Scorecard Hall of Fame.

The writing on the wall: If you want to reap real benefits from BSC, be prepared for the long haul. If you are looking for an organizational “ruler” – an instrument for one-time measurement – maybe you should look elsewhere.

Advertisements
Explore posts in the same categories: 03 Customer and Market Focus, 04 Measurement, Analysis, and Knowledge Management, 06 Human Resource Focus, Benchmarking, Business, Management

Tags: , , , , , , , , ,

You can comment below, or link to this permanent URL from your own site.

10 Comments on “The Balanced Scorecard – Beyond Performance Measurement”


  1. I couldn’t agree more! My company, ActiveStrategy, provides on-demand software for Balanced Scorecard deployment, and we find that if executives aren’t bought into the idea of the Balanced Scorecard as a management system, the project is going to fail. We stress constant, on-going Business Reviews as a means of ensuring long-term results. It’s important for every employee to be held accountable for the things a company is measuring on a BSC, and we find that monthly Business Reviews are the best way to make sure that sticks!


  2. […] Suresh worries about metrics without management and tells how Trent Limited, the retail arm of the Tata Group, used the Balanced Scorecard to […]

  3. Biznetzen Says:

    I have observed that in several organizations, the biggest benefit of BSC implementation is not improved operational efficiency or increased profitability; it is not even better-defined strategic goals. The single greatest gain that emerges from the entire BSC exercise is a newfound coherence and harmony in terms of the organization’s vision and objectives. For one, a sound BSC process usually has a highly productive “storming stage” which, as you say, ensures that all employees – not just the management team – are on the same “wavelength”. In sectors like retail, some firms have gone to the extent of involving customers at this storming stage. Another facet of coherence is that BSC establishes a veritable maze of links between the vision, financial objectives, customer-related and employee-related goals and business processes, at both strategic and operational levels. Retail is among the sectors that have benefited remarkably from BSC implementation – the best-known success story is Tesco’s Steering Wheel system based on the Balanced Scorecard.

  4. nqcenter Says:

    Bạn có thể tham khảo một số tài liệu về balanced scorecard theo link dưới đây:

    http://nqcenter.wordpress.com/2008/10/30/balanced-scorecard/

    Rgs

  5. Bob Says:

    Agree – having just concepts, strategies and ideas is not enough now, all this things should be connected to real numbers, facts, targets. The point is to do this is friendly, not spending more resources than you are going to save with this. I seems that you had Balanced Scorecard Designer software in mind when commenting on this article.

  6. PSI Says:

    Very nice post regarding the topic Balanced Scorecard. Here they have given some useful information and clearly they said that the balanced scorecard is very useful and important to an organization,a majority of organizations today are riding on the BSC .

    http://www.GlobalPerformanceForum.com
    http://www.MissionDrivenPerformance.com
    http://www.gsmiweb.com

  7. Jeremy Says:

    Awesome article strategy management and corresponding performance measurement!

    The world of performance management software (BPM and BSC software) is an incredibly interesting field especially as more and more social and nonprofit sector organizations begin to utilize these powerful tools.

    We recommend that every potential buyer should sample and demo a few alternatives to fully understand each systems capabilities and to build internal momentum behind implementing and using a new method of communication, collaboration, and management.

    One option you might try is ClearPoint Strategy.

    ClearPoint Strategy is a web-based balanced scorecard, dashboard, and performance management solution. ClearPoint has a highly effective US based support team that is eager to help you get started. We also offer a number of example templates to browse and can add your strategic plan, charts, or even add other users while you get comfortable using the software.

    Visit us at: http://www.ClearPointStrategy.com

    Best of luck!


  8. I actually ponder why you called this specific
    blog post, “The Balanced Scorecard – Beyond
    Performance Measurement BestPrax Blog”.
    No matter what I adored the post!Thanks for the post-Jamika

  9. this site Says:

    If you wish for to improve your familiarity just keep visiting this site and be updated with the newest information posted here.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: