Measuring enterprise performance
In modern business models, intangible assets such as employee skills and knowledge
levels, customer and supplier relationships, and an innovative culture are critical
in providing the much-needed cutting-edge to the organisation. This is where
tools like the balanced scorecard method hold relevance for the enterprise.
Developed by Robert Kaplan and David Norton, the balanced scorecard method translates
an organisations strategy into performance objectives, measures, targets
and initiatives. It is based on four balanced perspectives, and links them together
with the concept of cause and effect. Paul Nivens book is a work that
attempts to explore this crucial business aid.
A proper balanced scorecard can predict the effectiveness of an organisations
strategy through a series of linked performance measures based on four perspectives
including finance, customers, internal processes and employee learning and growth.
It is based on common-sense principlesincreased financial returns, greater
employee alignment to overall goals, improved collaboration, and unrelenting
focus on strategy.
This book is divided into five parts and 14 chapters. In
the first part, the reader is introduced to performance measurement and the
balanced scorecard method.
Scorecard Step-By- Step: Maximizing Performance and Maintaining Results
||Paul R Niven
||John Wiley & Sons
|Available through :
Chapter one highlights how the scorecard method solves two
fundamental issues of modern business. These issues are reliance on financial
performance measures and strategy implementation.
Four barriers prevent successful strategy implementation in an organisation.
These are vision, people, resource, and management barriers. The balance in
the balanced scorecard method is the balance between financial and non-financial
indicators, internal and external constituents of the organisation, as well
as lead and lag indicators.
The second chapter focusses on the rising prominence of human capital in todays
enterprise. A substantial amount of an organisations value is derived
from its intangible assets.
The second part provides a detailed review and description of elements necessary
to use this method. This examination starts from the third chapter which examines
the objectives of the balanced scorecard, how to secure executive sponsorship,
how to create a team, and how to prepare a development plan. The fourth chapter
talks about the core elements of the effective balanced scorecard method. The
fifth chapter gives an in-depth view of what it takes to build indicators that
act as faithful translation of strategy.
The sixth chapter explains the right perspectives for an organisation. This
involves topics such as how it can gather relevant background material, and
how to measure the four perspectives and narrow the performance measures to
a select few that form a cause-effect link to describe an organisations
strategy. The seventh chapter deals with how to set targets. It reviews different
types of targets to ensure that organisational plans and initiatives are aligned
with the balanced scorecard and strategy.
The third part focusses on how the scorecard can be used as a strategic management
tool. Chapter eight highlights how to align every employees actions with
the overall organisational goal. This helps the organisation to enjoy the benefits
of the employees increasing knowledge, and focus on key strategies. Chapter
nine focusses on the role of the balanced scorecard in budget processing, and
the specific techniques used to align spending with strategies. The tenth chapter
reviews critical compensation planning and design elements.
Part four focusses on how to sustain the balanced scorecard success. It also
deals with topics such as whether an organisation should buy performance management
software off the shelf or create its own reporting solution.
The fifth part examines how the balanced scorecard is used in the public and
non-profit sectors. It also highlights the top ten implementation issues.
This book can guide not only those who want to use the balanced scorecard for
the first time, but it will also be useful for those organisations which have
been using the balanced scorecard for some time because they will be able to
audit their system to get the most from it.