A Research Of How To Use "Balanced Scorecard" To Measure An Enterprise's Performance

In today's business environment, companies ace moving away from performance management systems linked exclusively to financial frameworks. A study in 1982 showed that tangible book values represented 62% of industrial organizations' market values. Ten years later, the ratio had dropped to 38%. And recent studies estimated that by the end of the twentieth century, the book value of tangible assets accounted for only 10% to 15% of companies' market values. The Balanced Scorecard, first introduced by Robert Kaplan and David P. Norton ("Robert & David") in early 1990s, with the purpose of provided a framework to measure the companies' financial and non-financial performance in four different perspectives. The four perspectives are: (1) Financial Perspective , (2) Customer Perspective, (3) Internal Process Perspective and (4) Learning and Growth Perspective. Apart from the first perspective which relates to financial indicators, the other three perspectives relate to non-financial indicators."If you can't measure it, you can't manage it." - This is the main theme of "Balanced Scorecard". The Cause-and-Effect Map describes an enterprise's strategy and aligns it with its financial outcome in a reliable way. The measurement frameworks used in three of the four perspectives reflect generally accepted, tested management models. The Financial Perspective is based on the DuPoint model. The Customer Perspective is based on value propositions. The Internal Process Perspective is designed around value chains. But the Learning and Growth Perspective, which encompasses intangible assets like human resources, information technology, and organizational climate, has no generally accepted management framework. Many experts and practitioners are now undergoing studies on inventing a generally accepted management model for human capital."Balanced Scorecard" can be implemented independently or with the complement of "Economic Value Added" and/or "Activity-Based Costing" to get the greatest benefit. With pressure from the financial analysts, disclosure of the key performance indicators that are built in the "Balanced Scorecard" is the current market trend.The company, that the author is currently employed, started culture change in early 2000, during which "Total Quality Management" as well as the concept of "Balanced Scorecard" were introduced. In 2001, a consultancy firm was appointed to help full implementation of "Balanced Scorecard". Author has shared her experience in respect of the obstacles in implementing "Balanced Scorecard".