THE EMERGENCE OF BALANCED SCORE CARD: Prior to 1980s many academics and consultants became concerned that too

much emphasis was being put on financial and accounting measures of performance. Management accounting systems had been perfected to produce detailed cost breakdowns and extensive variance reports. t was reali!ed that these systems were not useful for managing a business under the circumstances resulted out of the emergence of global competitive environment during 1980s. Product "uality# delivery schedules# reliability# after$sales service# customer satisfaction became key competitive variables. %ut none of these were measured by the traditional performance measurement systems. &uring 1980s much greater emphasis was given to incorporating non$financial performance measures as mentioned above# into the management reporting system as they provided feedback on variables that are re"uired to compete successfully in a global economic environment. %ut a proliferation of performance measures emerged and has resulted confusion when some of the measured conflicted with each other and it was possible to enhance one measure at the expensing another. 'he need to link financial and non$financial measures of performance and identifying key performance measures led to the emergence of (%alanced )core *ard+ approach developed by ,orton and -aplan .199/0 in the 1.). 'he %alanced score card is defined as (an approach to the provision of information to management to assist strategic policy formulation and achievement. t emphasi!ed the need to provide the user with a set of information# which addresses all relevant areas of performance in an ob2ective and unbiased fashion+. -aplan and ,orton identified our perspectives representing the important facets of the organi!ation. 'hese were3 1. 4inancial perspective .how do we look to shareholders0 /. *ustomer perspective .how the customer see us0 5. nternal business perspective .what we excel at60 7. nnovation 8 9earning perspective .can we continue to improve and create value0 'he idea behind the four perspectives represents a balanced view of any organi!ation and by creating measures under each of these headings all the important areas of business would be covered. t is important to note that the balanced score card itself is 2ust a frame work and it doesn:t say what the specific measures should be. t is a matter for people within the organi!ation to decide upon. 'he set of measures for each organi!ation or even sections with the organi!ation will be different. Much of the success of score card depends on how the measured are agreed# the way they are implemented and how they are acted upon. )o the process of designing a score card is as important as the score card itself. FEATURES OF A GOOD BALANCED SCORE CARD: 1. t tells the story of a company:s strategy# articulating a se"uence of cause and effect relationships. /. t helps to communicate the strategy to all members of the organi!ation by translating the strategy into coherent and linked set of understandable and measurable operation targets. 5. ; balanced score card emphasi!es non$financial measures as a part of program to achieve future financial performance 7. 'he balanced score card limits the number of measures identifying only the most critical areas. 'he purpose in to focus manager:s attention on measures that most affect the implementation of strategy.

<. 'he balanced score card highlights less than optimal trade offs that managers may make when they fail to consider operational and financial measures together.

*omments 8 suggestions re"uired =egards -rishna saladi >91 98781 07/?< saladikrishna@yahoo.com