Page 269 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Unit 14: Strategic Evaluation and Control

4. Learning and Growth perspective: This perspective captures the ability of employees, Notes
information systems, and organizational alignment to manage the business and
adapt to change. Processes will only succeed if adequately skilled and motivated
employees, supplied with accurate and timely information, are driving them. In
order to meet changing requirements and customer expectations, employees are
being asked to take on dramatically new responsibilities that may require skills,
capabilities, technologies, and organizational designs that were not available before.
It measures the company's learning curve for example, number of employee
suggestions or total hours spent on staff training.
Objectives, Measures, Targets and Initiatives
Within each of the balanced scorecard financial customer, internal process, and learning
perspectives, the organisation must define the following:
1. Strategic objectives - the strategy for achieving that perspective.
2. Measures - how progress for that particular objective will be measured.
3. Targets - the target value sought for each measure

4. Initiatives - what will be done to facilitate reaching out the target.
The balanced scorecard provides an inter-connected model for measuring performance
and revolves around four distinct perspectives - financial, customer, internal processes,
and innovation and learning. Each of these perspectives is stated in terms of the
organisation's objectives, performance measures, targets, and initiatives, and all are
harnessed to implement corporate vision and strategy.
The name also reflects the balance between the short-and long-term objectives, between
financial and non-financial measures, between lagging and leading indicators and between
external and internal performance perspectives.
Under the balance scorecard system, financial measures are the outcome, but do not give
a good indication of what is or will be going on in the organization. Measures of customer
satisfaction, growth and retention is the current indicator of company performance, and
internal operations (efficiency, speed, reducing non-value added work, minimizing quality
problems) and human resource systems and development are leading indicators of
company performance.
Robert S Kaplan and David P Norton the architects of the balanced scorecard approach,
recognized early that long-term improvement in overall performance was unlikely to
happen through technology only and hence placed greater emphasis on organizational
learning and growth. These, in turn, consist of the integrated development of employees,
information, and systems capabilities.
Context and Strategy

Just as financial measures have to be put in context, so does measurement itself. Without
a tie to a company strategy, more importantly, as the measure of company strategy, the
balanced scorecard is useless. A mission, strategy and objectives must be defined. Measures
of that strategy must be agreed upon to and actions need to be taken for a measurement
system to be fully effective. Otherwise, it will appear as if the organisation is standing at
a crossroad but unaware of which path to take.
Contd...

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