Balance Score Cards - Research Paper Example

However, before certain innovative measures to assess performance were in vogue, there were some prevalent and commonly used performance measures. With advancement of knowledge in this area, it was evident that the prevalent measures of performance can lead to false and poor inferences due to loss of variance of the data that represent performance. With repeated use of certain quantitative measures or indicators that might measure performance, over time, they tend to fail to discriminate between bad and good performance.

A change toward betterment often happens when people learn to deliver what is measured, and even when performance is sought but measured imperfectly would lead to deficient delivery (Kaplan and Norton 1996). In this assignment the four measures of the balanced score card approach in performance management and change agency will be discussed in detail. The balanced score card is a tool for the managers who desire to achieve competitive success in a future time. In the present context of complex organizational environments, this approach provides a strategy to attain goals following a complete understanding of these goals from different perspectives.

In order to that this method delineates a comprehensive state of performance measures within the framework of the existing management system in line with the organizational strategy, mission, and stakes. This framework may this also provide a framework of strategic measurement, while also retains an emphasis on accomplishment of financial objectives of the firm. However, this also introduces the dimensions of measurement of performance drivers necessary to achieve the financial objectives. As indicated by Kaplan and Norton (2004), the strategy maps thus describe how an organization may create value by linking strategic objectives in explicit cause and effect relationships.

They proposed four balanced score card objectives, namely, financial, customer, business process, and learning and growth. The ingenuity of this model lies in the fact that this not only formulates the strategy, it also incorporates a method to measure the achievement of the targets (Kaplan and Norton 2004). It has been stated that processes hold the central area of the balanced score card approach, since only processes can define the targets of the organization. Organizational processes are viewed in this approach to be central enablers for planning, acting, measuring, and evaluating work, and thus they provide some parameters to examine whether organizational targets are achieved or not.

Financial PerspectivesThe balanced score card tends to replace the traditional financial only approach to business. Historically, the cost financial accounting model cannot build long-range competitive capabilities of an organization. The balanced score card approach, although synthesizes into a novel process oriented measurement system; it does not discard the traditional financial system of business. Current business is futuristic in the sense that there is a