How the four perspectives of a Balanced Scorecard (BSC) benefit an organization

How the four perspectives of a Balanced Scorecard (BSC) benefit an organization
Organizations seeking to be leaders in their areas of operation seek to develop reliable management systems that among other things translate the
organizations vision into measurable outcomes. The Balanced Scorecard (BSC) facilitates the deployment of an organizations strategic direction, communicate expectations, and measure progress against agreed-to objectives. BSC is a conceptual framework that translates an organizations vision into performance indicators (PI) distributed among four perspectives. The four performance indicators include customer, financial, internal business processes, learning and growth (Pearce & Robinson, 2008). Using the BSC, an organization monitor the progress made towards achieving the short and long term goals. Indicators such as customer satisfaction, financial, and internal business processes monitor the short term objectives of the organization whiles as learning and growth monitor long term objectives, such as employ motivation and education and the organizations information system. The financial perspective enables the organization to focus on how best to serve the customer while incurring the least possible cost to increase efficiency. The customer perspective captures the ability of the organization to meet customer expectations by delivering high quality goods and services. The perspective measures customer satisfaction. The internal business processes focus of the organizational activities that generate customer satisfaction and increase the efficiency at which the organization meets customer expectations. Learning and growth measure the alignment of the organization with its objectives and vision to ensure the capacity to meet the customers changing expectations in the future (Robert & David, 1992).
Why and how BSC shift focus from control to strategy and vision
Implementing the BSC enable the business to achieve its objectives while still meeting the expectations of the customers and employees. This it makes possible by demonstrating a clear need for improvement. This ensures that the management and other stakeholders within the organization are committed to implementing the BSC. The BSC change the organization culture by cultivating a culture of continuous improvement. These eliminate the view that performance is a one-time event by incorporating performance measurement into the existing management structure. The implementation of a BSC represents a fundamental change in performance measurement. Unlike other performance indicators that have a control bias, BSC puts strategy and vision at the heart of performance measurement (Robert & David, 1992). BSC identifies business goals and device measures designed to pull people towards the goals. However, the management cannot define to the employees the specific actions to take because they operate in a constantly changing environment. The BSC approach enables managers to understand interrelationships among different sectors of the organizations, which facilitate better decision-making. The BSC keeps companies focused on the future and only draw lessons for improvement from experiences (Pearce & Robinson, 2008).
Effectiveness of BSC if net profit remains the organizations bottom line when evaluating performance
Financial performance is the ultimate performance indicator for a business; however, measuring financial success does not provide guidelines on how to continue successfully into the future. Understanding the position of the firm, how it operates, and adapts for the future is key to ensuring sustainable profitability in the future. Using financial performance as the bottom line is backward because it focuses on the organizations past performances, which does not provide a guide for future dealing because the business environment is constantly changing (Moore, 2003). Using non-financial indicators of performance does not change the main objective of the business rather; it enables the business to focus on aspects of the business that allow it to develop more profitably in the future. For the organization to succeed in the long run, it must develop value creating strategies, which cannot be derived from financial performance but are closely aligned to the overall strategy and financial performance in the future. An organization must therefore use non-financial indicators to measure the execution of its basic strategy and the extent the basic strategy is still viable (Moore, 2003).


 References
Moore, M.H. (2003). The public value scorecard: a rejoinder and an alternative to strategic performance measurement and management in non-profit organizations by Robert Kaplan. The Hauser Center for Nonprofit Organizations, the Kennedy School of Government, Harvard University: Working Paper #18. Retrieved from: http://exinfmvs.securesites.net/workshop_files/public_sector_scorecard.pdf
Pearce, J. A., & Robinson, R. B. (2008). Strategic management. New York: McGraw-Hill Higher Education.
Robert, K. S. & David, N. P. (1992). The Balanced Scorecard--Measures That Drive Performance. Harvard Business Review, 70(1): 71-79.