Week 5 Exam

ABC International, Inc.

Marquita Watkins

HRM5000 | Strategic Human Resource Management

South University - Online

April 20, 2020

A balanced scorecard (BBC) is a management system and strategic planning performance metric that organizations use to identify and enhance different internal functions and their external outcomes. A balanced scorecard was first introduced by Robert Kaplan and David Norton in 1992. They took previous performance metrics and reformed them to incorporate nonfinancial information. This paper will, therefore, evaluate the purpose of a balanced scorecard, recognise the categories on the balanced scorecard, defend the significance of a balanced scorecard, and, lastly, design a supplemental graphic of a balanced scorecard.

Purpose of a Balanced Scorecard

BSC has several purposes. Organizations can use BSC to communicate what they want to accomplish. They can also use a balanced scorecard to prioritize products, services, and projects (balancedscorecard.org). Besides that, they can use the balanced scorecard to monitor and measure progress and to align the everyday work that every employee is doing with the company’s strategy.

Many large companies all over the world use the balanced scorecard. More than half big companies in Asia, Europe, and the U.S. are using a balanced scorecard, with the use increasing in those areas as well as Africa and the Middle East. According to recent research, BSC is among the top ten mostly largely used performance metric around the world (balancedscorecard.org). Harvard Business Review editors have also selected BSC as one of the most influential management tools of the past seventy-five years.

Categories on the BSC

Traditional Categories

The four categories of BSC are customer, learning and growth, internal, and financial perspective. The financial perspective is normally traditional measures. They usually seek to answer the following question: how should an organization appear to shareholders in order to thrive financially? Financial measures usually convey the economic results for the specific actions already undertaken by the company and focus on measures that relate to profitability (Malgwi & Dahiru, 2014). Under financial perspectives, the most common measures used include Cash Flow, Revenue Growth, Net Operating Income, and Return on Investment. Financial Data such as expenditures, income, and sales are used to understand and evaluate financial performance.

Communication Flow

The content of an organizational BSC must be communicated to all stakeholders in a clear, timely, correct, structured, complete, and honest manner to arouse company-wide commitment and to gain buy-in for it. When the BSC has been communicated in this manner, the entire company will realize the significance of continuous improvement, strategic thinking, learning, and personal development.

The Role of HR Professionals

HR professionals have several roles in a company. The roles of HR professionals in improving the performance of the organization includes formulating strategies that centre on retaining and recruiting skilful workers as well as supervising initiatives that enhance company productivity. The HR professionals are also in charge of developing training and development programs that enhances and strengthens quality work in the organization.

Action Plan/Strategic Plan

A successful and effective BSC will always begin with goals or a strategic plan of the entity. The plan or goals are then stated based on the organization level to which the BSC pertains. A BSC for an entire company will be wider and more general in terms of measure and goals than a BSC designed for a unit manager (opentextbc.ca). Once the strategic plan and goals are restated for the appropriate level, the measures for every category of the BSC will be created.

Employees’ Commitment

Employee’s commitment is essential to improve the performance and productivity level of the organization. When there is employees’ commitment, employees will realize the significance of continuous improvement, strategic thinking, learning, and personal development.

Importance of BSC

The balanced scorecard allows managers and other senior employees to better understand and follow how their employees are performing and how the performance links with the overall company’s growth. Additionally, the information obtained from the BSC offers wider understanding into how the current actions in the organization impact the long term objectives of strategic management and allow managers to make necessary changes to make sure the company’s goals are attained (Tarver, 2020). Organizations can also use BSC to easily recognize factors obstructing business performance. Companies also use BCS to develop strategic objectives and strategic initiatives.

It is important for organizations to align human capital with decision-makers goals. Decision-makers and HR must handle all the various variables that influence the ability of the organization to achieve its goals. They must work together to develop strategic initiatives and plans that meet the needs of decision-makers.

A Supplemental Graphic of the Balanced Scorecard

ABC, INC.

Balanced Scorecard

References

https://balancedscorecard.org/bsc-basics-overview/

https://opentextbc.ca/principlesofaccountingv2openstax/chapter/describe-the-balanced

scorecard-and-explain-how-it-is-used/

Malgwi, A. A., & Dahiru, H. (2014). Balanced Scorecard financial measurement of

organizational performance: A review. IOSR Journal of Economics and

Finance, 4(6), 1-10.

Tarver, E. (2020). Balanced Scorecard. Investopedia. Retrieved from:

https://www.investopedia.com/terms/b/balancedscorecard.asp