Performance Management is a new focus by management teams on ways to achieve improvement in performance of the enterprise through better alignment of employee activities with corporate goals and strategies. Although several methodologies exist for developing a "performance management" discipline and cultural, the Balanced Scorecard perhaps best represents this new approach.

The Balanced scorecard (BSC) is a strategic, measurement-based management system, originated by Robert Kaplan and David Norton. The concept aligns business activities to strategy and monitors performance of strategic goals over time. It describes and explains what has to be measured in order to assess the effectiveness of strategies.

The BSC enables organizations to clarify their vision and strategy and translate them into action. It suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives:

   ▪  Financial perspective (how do we perceive our shareholders?)

   ▪  Customer perspective (how do we perceive our customers?)

   ▪  Process perspective (in what processes should we excel to succeed?)

   ▪  Learning and innovation perspective (how will we sustain our ability to change and improve?)

The BSC approach logically links these four perspectives. Improvements in employee learning and growth result in improved internal business processes, which create better products and services and, therefore, higher customer satisfaction and higher market share, leading to enhanced financial results for the organization. Thus, a good BSC identifies many cause-and-effect relationships within the business and helps employees and managers appreciate the roles of employee and task as well as the importance of each result to the overall corporate effort.

Benefits

The benefits of applying BSC can be summarized as follows:

   ▪  Emphasizes achieving results and implementing strategy

   ▪  Focuses on high-impact performance measures

   ▪  Is easy to use and economical to maintain

   ▪  Empowers process owners to make improvements

   ▪  Allows comparison to best-in-class performance (benchmarking)

   ▪  Bridges the gap among strategy, development, formulation, and implementation

   ▪  Can drive cultural change in an organization