IntroductionStrategy in the past had been looked at as an analytical problem that needed to be solved to get a solution to the problem at hand. This perception of things combined with the high stakes managers had for their strategies put in place led to an era of specialists such as MBA’s and consultancy firms that joined the field with frameworks and techniques aimed to help managers to analyse their strategies to give their firms a better strategic advantage. This was some 25 years ago. (Cynthia, 2008). This paper is aimed at evaluating the Balance Score Card (BSC) as a strategic management tool.
To achieve this evaluation, the paper starts by presenting the BSC and goes through all the four perspectives of it, then tries to show how all the four facets of the BSC can be put together using the financial industry, which of course can be translated to other industries. In the second part of this paper, strategic management is looked at and a careful comparison of BSC and strategic management will be made to best show how the BSC can be used as a management tool, in this case using a specific example. Evolution of the BSCThe Balanced Scorecard (BSC) developed by Dr.
Robert Kaplan and David Norton in the early 1990's as a new strategic management approach is to enable an organization to clarify its vision from different perspectives and create future value for the organization by concretising the metrics and actions necessary for this vision to come true. The basic methodology behind this performance management approach is that an organization should be able to define performance measurement system or metrics based on the organization’s value core drivers which should include everything that enhances the organization’s value (that is customer service), innovations deemed for the good health of the organisation, operational efficiency to meet the organisation’s goals, financial performance that should give the company and customers a better position on the market, and the strategy as set by the management of the company.
(Clampitt, 2005). The Balanced Scorecard views an organization from four different perspectives, which includes the learning and growth perspective, the internal business processes perspective, the customer perspective, and the financial perspective. Source: www. valuebasedmanagement. net/methods_balancedscorecard. html, retrieved on 22-04-2008The learning and growth perspective The learning and growth perspective of the BSC relates to the development of the human resources of the company, and includes increasing employee competencies through training and continuous improvement of that knowledge, cultivation of corporate culture within the organization to make every employee feel as part of the organisation, organisational development that the organization has to follow in the future, including the nurturing of corporate experts so as to permit them remain part of the organisation, gurus, and mentors, setting up of fast and efficient knowledge transfer infrastructure between the newly employed and the existing employees, and opening up of communication lines among personnel as to ease their work (Susan J.
2003). This perspective supports the concept that people are a company’s main resource and the most valuable assets that the organization should boast of. It is of great importance that what so ever metrics defined for this perspective by management should be able to measure the various aspects of employee improvement, growth so as to satisfy customer and company goals, and satisfaction on the part of the employees for doing their job.
(Ballard et al, 2005)