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Hr Balanced Scorecard Approach For Effective Management

Nov 19, 2007
The balanced scorecard is a strategic management approach developed in the early 90s by two men, Dr. Robert Kaplan and Dr. David Norton. With the introduction of the balanced scorecard, Kaplan and Norton hoped to create a new, clearer strategic tool to improve upon previous management approaches which were generally vague.

The balanced scorecard is a management system that incorporates the use of metrics for measuring various aspects of an organization's performance. These measurements are categorized under four broad perspectives of looking at how an organization works: the financial, customer, internal business processes, and learning and growth perspectives.

The financial perspective is of course self-explanatory. Most, if not all, organizations need to keep close watch on the state of their finances. This is especially true for business organizations for which keeping a good flow of income is crucial. However, too big an emphasis on the financial aspects of an organization may lead to an unbalanced perspective, and this is exactly what Kaplan and Norton set out to correct.

It is also important to consider the customer perspective. This perspective looks at customer satisfaction, a low indicator of which may mean future decline, even if the current financial state is excellent. Keeping customers satisfied and maintaining healthy relationships with clients is important for any business to last and prosper.

Then there is the business process perspective. This covers the internal business processes that serve to keep the organization running and functioning smoothly. These include administrative and regulatory processes within the company, as well as those specific processes at which a business must excel. For instance, a restaurant must monitor its kitchen activities most closely, since it is by the quality of their food that they would be primarily judged.

Finally, there is the learning and growth perspective. This is more important in some businesses than others (such as those who have to deal with a rapidly changing market), but it is important for all organizations, regardless. A static business may do well and even prosper for a time, but over time every business would need to change and adapt. Those organizations which are able to effectively do so would be able to survive even the most sudden crisis.

This balanced scorecard approach helps managers to get a more holistic view of their organization, looking at its performance from these various perspectives. Take the specific case of HR (or Human Resources) management. Implementing this balanced scorecard approach would help to keep track of many important things. These include the costs of hiring and training, but also the efficiency of personnel discipline, customer evaluation of staff, and even the capability of employees to be trained. The balanced scorecard method offers HR managers a clear, organized, and effective way of bringing these considerations together into a great strategic approach.

The basic concept is simple - figure out the important metrics (or measurable considerations) and organize them with respect to one another. Many sample scorecards may be found online, and there are even programs available to help managers in the process of designing and implementing these scorecards. Managers looking for a potentially useful new management approach would do well to consider trying the balanced scorecard approach.
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