Running head: THE BALANCED SCORECARD

The Balanced Scorecard

Name

Institutional Affiliation
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The Balanced Scorecard

Introduction

The purpose of the Balanced Scorecard (BSC) is to achieve a balance between the

overall strategy of the organization and all its operational elements. The global strategy

refers to the mission and vision of the company as well as the main objectives and values

with which the organization identifies (Gliborn, 2006). The operational elements refer to

the evaluation of the progress of each project with the outcome indicators. This

methodology allows describing the strategy of the organization, its strategy measures, and

the actions taken by the organization to obtain an improvement in the results (Kaplan,

2010). Thus, with the Balanced Scorecard, it is possible identify all corrective measures

necessary to maintain the strategies of the organization.

Traditional Categories

This management method defines categories that consist of four different

perspectives to evaluate the performance of an organization's strategy. According to the

Balanced Scorecard Institute (2019), these perspectives are:

The financial perspective: consists of knowing the real income of the organization and its

budgetary capacity.

The customer’s perspective: allows one to evaluate several factors that influence the

customer experience.

The process perspective: consists of an analysis that optimizes the operation within the

organization to ensure agility and efficiency.

The learning and growth perspective: allows analyzing the infrastructure of the

organization, including the organizational environment, people, and systems, thus creating

future value.
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The Flow of Communication

With the Balanced Scorecard, the exchange of communication in the organization

improves considerably. The messages of the managers are clearer, and the workers have

better spaces to make suggestions. The departments can communicate between them more

easily and to distribute the information in a secure way through the systems of the

organization. According to Zizlavsky (2014), performance indicators are a fundamental part

of this communication process since they allow detecting the achievement of set goals. All

these features improve the work environment leading to greater performance in the

processes.

The Role of Human Resources

Through the Balanced Scorecard, the human resources department will have at its

disposal an effective management to measure the work performance of employees. Human

resources management consists of planning, organizing, and controlling the techniques

capable of promoting efficient performance by employees. The elaboration of the Balanced

Scorecard has an unquestionable contribution in the area of human resources. According to

Quesado, Guzmán and Rodrigues (2017) applying this methodology has several advantages

for the area of human resources. It enables an organization to

- know and analyze staff salaries or cost

- introduce management by objectives

- measure absenteeism levels in the company and their causes

- bring intelligence to decision making

- evaluate employee performance

- justify the investments made in the department

- measure the influence of human resources in the company's global organization

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- provide flexibility to the job and changes in the company

- analyze workloads and apply the necessary adjustments

- establish performance evaluation.

The Importance of the Balanced Scorecard

The BSC is important because allows to transform the strategies into results that

help to achieve the mission and vision of the organization. This management system is a

tool for controlling and improving communication. The workers of the organization can

have access to indicators and trends that permit feedback on ideas that help to solve

problems and make better decisions by managers. Applying this model strengthens the

management of the company. According to (Chavan, 2009) being able to measure the

fulfillment of the objectives helps to take timely actions such as changing the business

model or even the strategy (p.396). This tool allows managers to evaluate what was

expected with what really happens in the organization. The balanced scorecard allows

continuous learning to keep the organization in a state of evolution.

Conclusion

The development and construction of the Balanced Scorecard of the Human

Resources Department, as in the general case, takes as a starting point the strategy and

business objectives of the organization. The methodology is advantageous as it enables an

organization to control the objectives of the organization using indicators. While the

consideration of all workers and their skills is the key to the success of organizations, the

creation of indicators to analyze their behavior makes the company more competitive. The

Balanced Scorecard will provide the company with valuable information that will allow it

to optimize its policies and decisions regarding human resources as well as to incorporate

and retain the most appropriate people for the organization.

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Graphic of the Balance Scorecard

The graphic of the balnced scorecard has to consider finanacial and non financial

metrics (Chavan, 2009, p.396). The graphic must relay on four perspectives (financial,

costumer, internal business processes, and learning and growth). Acording to Josep,

Barrubés, and Joan (2012) a basic design has to consider objetives, indicators, and targets

that can provide a complete overview of the organization.

According to the previous concepts, the following scheme is proposed for the

application of the BSC model.

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Financial
Process

Objetives Mesures Targets initiatives

Objetives Mesures Targets initiatives

Strategy
Plan

Costumer Learning and Growth

Objetives Mesures Targets initiatives Objetives Mesures Targets initiatives

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References

Balanced Scorecard Institute. (n.d.). What is the balanced scorecard? Retrieved from

https://www.balancedscorecard.org/BSC-Basics/About-the-Balanced-Scorecard

Chavan, M. (2009). The balanced scorecard: A new challenge. Journal of Management

Development, 28(5), 393-406. doi:10.1108/02621710910955930

Gliborn, I. (2006, February). Balanced scorecard approach. Academic Advising Today,

29(1). Retrieved from https://www.nacada.ksu.edu/Resources/Academic-Advising-

Today/View-Articles/Balanced-Scorecard-Approach.aspx

Josep, Barrubés, & Joan. (2012, October 01). The balanced scorecard as a management tool

for assessing and monitoring strategy implementation in health care organizations.

Retrieved from https://www.revespcardiol.org/es-the-balancedscorecard-as-

management-articulo-S188558571200240X?redirect=true

Kaplan, R. S. (2010, March 17). Conceptual Foundations of the Balanced Scorecard.

Retrieved from https://hbswk.hbs.edu/item/conceptual-foundations-of-the-balanced-

scorecard

Quesado, P., Guzmán, B. A., & Rodrigues, L. L. (2017, July). Advantages and

contributions in the balanced scorecard implementation. Retrieved from

http://www.intangiblecapital.org/index.php/ic/article/view/1110/702

Zizlavsky, O. (2014). The balanced scorecard: Innovative performance measurement and

management control system. Retrieved from

https://scielo.conicyt.cl/scielo.php?script=sci_arttext&pid=S0718-27242014000300016