Ch 2 53 Designinga Balanced Scorecard for a Pharmaceutical Company Chadwink, Inc.

a. How does the Balanced Scorecard approach differ from traditional approaches to performance management?

The Balanced Scorecard gives an organization the ability to clearly communicate the mission and vision by picturing the strategy as measures. Highlighting four perspectives: financial, customers, processes, and learning and growth, the organization can focus on the measurement to ensure the entire group understands the information.

Traditional performance measurement, focusing on financial data (lagging) only, provides historical data instead of a way to evaluate the performance of various divisions. These measurements are not suited for helping implement future strategic plans or predicting future performance.

The Balanced Scorecard is different from other financial performance tools because it provides a map of a business’ strategic objectives. The Balanced Scorecard also factors in intangible assets such as customer loyalty and skilled staff. With the measurement systems in place, an organization can determine whether it is building or destroying its capabilities for future growth and profitability.

What, if anything, distinguishes the Balanced Scorecard approach from a “measure everything, and you might get what you want” philosophy?

Any measurement must support the company’s strategy and operations. The Balanced Scorecard measures organizational performance across four different, but linked, perspectives that are derived from the organization’s mission, vision and strategy. Without the measures being linked, they provide little value to the leadership and can confuse the strategy of the organization. The Balanced Scorecard also provides relevant information and feedback on how well a company’s strategic plan is working; this allows for easier adjustments to be made in the future. By limiting the number of metrics, the organization avoids information overload while laying out a chain and effect relationship.

b.

What parts of the...