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Integrating Corporate Governance With The Balanced Scorecard

1248 words - 5 pages

Briefly, the Balanced Scorecard (BSC) is a strategic performance management tool that measure not only on financial outcomes but also on the operational, marketing progresses and strategy executives etc. In modern society now a day, the financial measurements have limitations.The Balance Scorecard (BSC) is developed by Drs. David Norton and Robert Kaplan in 1992. It has gained global acceptance as a powerful framework to help leaders define and rapidly implement strategy. This is accomplished by translating the vision and strategy in to a set of operational objectives that drive behavior and performance. The BSC concept is built upon the premise that measurement motivates and that measurement must start with a clearly described strategy. There is a balanced set of performance measures including four perspectives, so called: Financial, Customer, Internal Business Processes and Learning & Growth. The significant feedbacks, where generated by these four perspectives, could disclose more information during the business, rather than measuring performance based mainly on financial indicators.Before discussing the four business perspectives, there are several limitations that financial outcomes couldn't do the same as the four business perspectives do. The financial outcomes measures the performance that made by company on "yesterday", which it's not the quickest way to discover the problem that is existing or still undercover behind the financial outcomes. Since the measures focusing on results at the end of a time period, we are always solving the yesterday's problems. In other words, we are solving the surfaces of the problem, but not solving it internally. Shouldn't we discover the problems before they break out if there is solution for us?Therefore, the four business perspectives will able to measure the non-financial performances rather than only measuring financial performances. Measuring or scoring these non-financial performances during the business operating, show you whether your business is performing well or effectively during the procedure of creating returns for you no matter in a short-term or long-term consideration. The following show the processes of the value being created across these four business perspectives.Each of these four business perspectives has specific strategic objectives and performance measures to be achieved and taken.For the Financial perspectives, to satisfy shareholders, what financial objectives must be accomplished? Increasing the shareholder value would be one of the strategic objectives. In this case, we measure (i) earning per share, (ii) net income, (iii) return on assets, (iv) return on sales, (v) return on equity, (vi) product cost per unit and (vii) customer cost per unit to show whether the company is performing well or improving.Secondly, to achieve the financial objectives, what customer needs must be met? The Customer perspectives would have strategic objectives such as (i) acquire new customers,...

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