Balanced Scorecard

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If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it by H. James Harrington is justified in every aspects of a business environment (USACE, 2005). Measuring performance in an organizational perspective is equally important as its business operations. An organization running its operations without having performance measurement tools can be like a CEO functioning without formulating a strategic plan or an aeroplane flying without its compass. Therefore it can be portrayed that the primary intentions behind measuring performance is to get an idea of how the organization is performing and looking after the possibilities of further development. Performance management enables organizations to measure, plan and control activities in accordance with the predefined strategies. In simple words it facilitates organizations to achieve their desired goals (Johnson, 2007, p.1-2). Some of the major performance measurement tools that are being used in current business scenario include Balanced Scorecard, Economic Value Added (EVA), Activity Based Costing and Management, Performance Prism and Quality Management. However among the aforementioned tools, importance and usage of balanced scorecard will be principally highlighted through the entire report. While the saying ‘balanced scorecard was coined in the early 1990s’, the origin of this approach however is believed to be deep, and also embrace radical work of General Electric (GE) during the early 1950s. The work was basically based on reporting of performance measurement. Apart from this French process engineers have also contributed immensely towards the development of performance management tools. There work was during the early 20th century. In this context the engineers literally developed a dashboard in order to monitor performance levels in a simplified and efficient way. Despite of its early conception, it was originally developed at Harvard business school by Dr. David Norton and Dr. Robert Kaplan in the year 1992. During the initial phases after the development of balanced scorecard, it was merely used as the performance measurement tool or a performance measurement agenda. Nevertheless slowly with the passage of time balanced scorecard has been able to gain much more importance in the professional field. A number of companies incorporated balanced scorecard into their system of operation in order to facilitate effective and well-organized performance measurement system. Nowadays balanced scorecard is considered as a valuable strategic planning tool. It helps an organization to transform its strategic plan from