Week 5: Non-Financial Performance measures and balanced scorecard This week focuses on performance measurement. Will consider the purpose, problems with conventional measures, & characteristics of contemporary performance management systems. Will look at techniques for developing a balanced scorecard (BSC), & definitions/forms of benchmarking. Objectives: · Identify the purposes of strategic performance measurement system (SPMS) and explain why conventional financial measures are not sufficient for managing operations · Differentiate the four perspectives of a BSC and demonstrate their causal linkages · Outline a simple BSC for a firm · Identify the role of benchmarking in improving the firm's competitiveness. 5.2 The Balanced Scorecard Many organisations use performance measurement systems that go beyond the measurement of financial performance. These contemporary approaches to performance measurement may entail placing a greater emphasis on non-financial performance measures (such as measures of customer satisfaction and on-time delivery) and implementing strategic performance measurement systems (including the balanced scorecard) to manage resources better and hence improve performance. What is the balanced scorecard? (BSC) is a tool that translates an organisation's mission, objectives and strategies into performance measures. Is used to implement strategy and monitor and manage performance and may form part of the organisation's planning cycle. A BSC is focused around a number of different perspectives which include, e.g., financial, customer, community, internal processes and employees. This week's notes begin with a breakdown of the purposes of strategic performance measurement system (SPMS) with a focus on various financial measurement systems. Will then move to measures advocated in balanced scorecard (BSC) approach. There are 4 perspectives of balanced scorecard: 1. financial perspective 2. customer perspective 3. internal business perspective 4. learning and growth. · Read- Week 5 Notes · Complete Illustrative Example Questions Self-Check 4- Non-financial performance measures and balanced scorecard Essential Readings: · Chapter 14: Strategic performance measurement systems pp. 662-701. · Complete review question pg. 691- 14.23: Non-Financial Performance Measures
Complete the following self-study questions and case analysis: Chapter 14: Strategic performance measurement systems (pp. 662-701): · Review questions: 14.2, 14.10, 14.12, 14.20. · Exercises: 14.24, 14.25, 14.27, 14.28, 14.29. · Problems: 14.36, 14.37. · Mini Case Study 3