Construction of the Balance Scorecard: Financial and Non Financial Measures

1. Success BSC? Mixture of Financial or Non Financial Measures grouped into 4 distinct perspectives of F, Int. Bus Process, Customer and L&D.
2. Objective of any Business unit: Motivate all managers and employees to implement successfully the business unit’s strategy
3. BSC: Method of translation of the strategy into a measurement system. Companies who do so are able to EXECUTE their strategy because they can communicate their objectives and goals.
4. This communication focuses managers and employees on critical drivers, enabling them to align investments, initiatives and actions with accomplishing strategic goals.
5. SUCCESSFL BSC: Communicates a strategy which is an integrated mix of financial and non financial measures.

Construction of a BSC which communicates the business unit/company’s strategy: Why is it important?

1. Scorecard describes organization’s vision of the future to the entire organization; creation of shared understanding.
2. Creation of a holistic model of the company strategy which allows employees to see how they contribute to organizational success. Without such a linkage, individuals and departments can optimize their local performance but not contribute to achievement of the overall company strategic objectives.
3. BSC focus on: Change Efforts. If the right objectives and measures are identified, successful implementation is likely to occur. If not investments and initiatives will be wasted.

• Rashmipant.com link BSC to Company Strategy