The article was based on a multicompany research project to study performance measurement in companies whose intangible assets played a central role in value creation nolan norton institute, 1991. Balanced scorecard basics balanced scorecard institute. The balanced scorecard demystified by henry waruhiu abstract unease with traditional performance management systems in organizations prompted kaplan and norton 1992 to examine better approaches that match performance to strategy, recognize the importance of intangible assets in value creation and balance between lead and lag indicators. The balanced scorecard measures that drive performance. Kaplan and norton 1992 recommended that for each perspective there should be at least four goals and measures. Focusing your organization on strategywith the brilliantbut. Kaplan and norton 1992 introduced the balanced scorecard in the early 1990s to overcome the deficiencies of traditional financial performance measures in todays business environment. Senior executives understand that their organizations, measurement system strongly affects the behavior of managers and employees. Norton is president of nlan, norton et company, inc. Executives also understand that traditional financial accounting measures like. Using the balanced scorecard as a strategic management. Norton is founder and president of the balanced scorecard collaborative in lincoln, massachusetts.
The assignment focuses on balanced scorecard analysis kaplan and norton 1992. The balanced scorecard is a revolutionary performance measurement system that allows organizations to quantify critical intangible assets, such as people, information and culture. David norton and i introduced the balanced scorecard in a 1992 harvard. A practitioners guide to the balanced scorecard pdf 268kb.
The balanced scorecard has become an increasingly popular performance management and measurement. E c i saw th e scorecard as a w ay to clarify, sim plify, and th en operationalize th e vision at th e top of th e organization. Empirical evidence that explores the performance impact of the balanced scorecard, however, is extremely rare and much that is available is anecdotal at best. Norton the balanced scorecard tracks all the important elements of a companys strategyfrom continuous improvement and partnerships to teamwork and global scale. Kaplan, a harvard business school professor of accounting, and norton, president of renaissance solutions, make a key contribution by describing and illustrating the balanced scorecard, a multidimensional approach to measuring corporate performance that incorporates both financial and nonfinancial factors. Focusing your organization on strategywith the brilliant. The approach combines traditional financial measures with nonfinancial ones that drive business outcomes, so that organizations focus on the future and act in their longterm best interest.
Commentary transforming the balanced scorecard from. Isbn 9789795879374 kaplan and norton 1992 develop an organizational performance measure called the balanced scorecard, which is a collection of measurements that provides a comprehensive. Norton your balanced scorecard provides a topdown description of your companys strategy and. Linking the balanced scorecard to strategy strimgroup. It is based on a four dimensional framework, where each dimension represents a different set of. The four perspectives of the scorecard financial measures, customer knowledge, internal business processes, and learning and growthoffer a balance between shortterm and longterm objectives, between outcomes desired and performance drivers of those outcomes, and between hard. The balanced scorecard was developed byrobert kaplan and david norton 1992. Kaplan and norton s article wasnt the only paper on the topic published in early 1992 but the 1992 kaplan and norton paper was a popular success, and was quickly followed by a second in 1993. The article was based on a multicompany research project to study performance measurement in companies whose intangible assets played a central role in value creation nolan norton. Using the balanced scorecard as a strategic management system. According to kaplan and norton, the ultimate goal of implementing the balanced scorecard is the achievement of superior, longterm financial results. A critique of the balanced scorecard as a performance. Balanced scorecard certification balanced scorecard institute.
The balanced scorecard tracks all the important elements of a companys strategyfrom continuous improvement and partnerships to teamwork and global scale. The balanced scorecard measures that drive performance by robert s. H a r v a r d b u s in e s s r e v ie w jan u ary f eb ru ary 1992 71. The lack of a clear definition from kaplan and norton has triggered several attempts by others to provide a definition e. One of these groups that were active in harvard business school under the guidance of robert s. My experiences as a balanced scorecard practitioner with a large canadian company taught me that tremendous results are possible with the tool, but to attain. Januaryfebru ra y 1992 the balanced scorecardmeasures that drive performance robert s. The bsc technique was developed by kaplan and norton 1992, 1996 to. A balanced approach to implementing the balanced scorecard.
Kaplan and norton 1992, 1996, 2001 propose the use of four performance dimensions. We began with the premise that an exclusive reliance on financial. The balanced scorecard includes financial measures that tell the results of actions already taken. Norton, have created a powerful new tool based on their ongoing research.
Over the following 16 years, kaplan and norton developed their strategic management concept in a total of 25. Financial measures are lag indicators that report on the outcomes from past actions. Kaplan and norton 1992 introduced the balanced scorecard. The balanced scorecard lets executives see whether they have improved in one area at the expense of another.
This checklist focuses on the balanced scorecard, which was developed by robert kaplan and david norton in the early 1990s with the aim of providing a balanced view of an organisations performance. Several years ago we introduced the balanced scorecard kaplan and norton 1992. We began with the premise that an exclusive reliance on. Norton included anonymous details of this balanced scorecard design in a 1992 article. Norton and i believed that if companies were to improve the management of.
T h e e c i scorecard w as designed to focus th e atten tio n of its top executives on. In a previous paper kaplan and norton 2001b, we described the role for strategy maps and balanced scorecards to develop performance. The balanced scorecard bsc is an approach to performance measurement introduced by dr. Exclusive reliance on financial indicators could promote behavior. Norton s everal years ago, we introduced the concept of a balanced scorecard for motivating and measuring business unit performance. Aug 22, 2018 this entry describes the main principles that underlie the balanced scorecard bsc as presented by kaplan and norton in 1992. Balanced scorecard, performance management tools, management control systems 1. Kaplan and norton 1992 introduced the balanced scorecard in. Norton the balanced scorecard tracks all the important.
Transforming the balanced scorecard from performance measurement to. The idea in brief the core idea the idea in practice putting the idea to work 1 article summary 2 putting the balanced scorecard to work a list of related materials, with annotations to guide further. Balanced scorecard stepbystep volta river authority. The bsc has attracted worldwide attention since it was introduced by kaplan and norton. Before starting this discussion, complete your unit readings on balanced scorecards, as introduced in 1992 by kaplan and norton, and updated with lessons learned found in norton s article. Figure 1 shows a diagrammatic representation of kaplan and norton s original balanced scorecard design, based on that which appears in their 1992 article kaplan and norton, 1992. Performance indicators with specific and achievable targets will monitor each goal and measure. Several years ago, we introduced the concept of a balanced scorecard. We began with the premise that an exclusive reliance on financial measures in a management system is insufficient. Pdf the balanced scorecard measures that drive performance.
Balanced scorecard norreklit major reference works. Balanced scorecard s interpretative variability and. The balanced scorecard as a performance management tool for. The balanced scorecard is a management tool developed by kaplan and norton in 1992 in order to reflect the strategy of the company by gathering both financial and. Now the people who first developed the balanced scorecard, robert s. Kaplan and norton have also written a book on the balanced scorecard to be. The balanced scorecard requires specific measures of what customers getin terms of time, quality, performance and service, and cost. Pdf the balanced scorecard demystified henry waruhiu. Hbr 1992 the balanced scorecard measures that drive performance by robert s. Nortons concept of the balanced score card revolutionized conventional thinking about performance. The objective was to overcome the inadequacies of the traditional financialbased performance measurement tools. Definition and concept an approach to the provision of information to the management to assist with.
They realize that no single measure can protives understand that their organizations measure vide a clear performance target or focus attention on. The balanced scorecard was originally developed by dr. Putting the balanced scorecard to work by robert s. See the exhibit the balanced scorecard links per formance measures. Sibbet, 1997, the balanced scorecard concept has been celebrated as representing one. What follows, provides guidance and advice on the development and implementation of a balanced scorecard for those organisations considering the introduction of a. Traditionally companies used only shortterm financial performance as the measure of success. The balanced scorecard is a multidimensional performance measurement system encompassing both financial and nonfinancial measures that are derived from the organizations strategy and that are.
Summary by chris hourigan master of accountancy program university of south florida, fall 2002. Balanced scorecard other bibliographies cite this for me. Translating strategy into action, robert s kaplan and david p norton, boston. It is widely used by organizations as a tool to assess and manage their companies performance. Pdf boston lyric opera balanced scorecard case study. Balanced scorecard main page performance measures main page strategy main page. Knowing that, say the authors, will protect companies from posting suboptimal performance. Conceptual foundations of the balanced scorecard 3. The balanced scorecard as a performance management tool. Pdf transforming the balanced scorecard from performance. Kaplan and norton s presented balanced scorecard as an integrative device that would encourage and facilitate the use of nonfinancial information by senior managers of. Pdf the balanced scorecardmeasures that drive performance. In 1990, kaplan and norton led a research study of a lot ofcompanies with the purpose of exploring the newmethods of performance measurement. In the balanced scorecard kaplan and norton, 1992, value drivers are learning and growth, internal perspective, customer perspective key performance.
Introduction kaplan and norton developed the concept of the balanced scorecard bsc in 1992. Learning and growth perspective, internal business perspective, customer perspective and financial perspective. In 1990, kaplan and norton led a research study of a lot of companies with the purpose of exploring the new methods of performance measurement. David norton as a framework for measuring organizational performance using a more balanced set of performance measures. The success of the balanced scorecard is documented by its rapidlygrowing worldwide popularity. Kaplan is a professor at harvard university and david p. The balanced scorecard translates a companys vision and strategy into a coherent set of performance measures.
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