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A New Balanced Scorecard Measuring Performance And Risk Pdf

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Anthony R. Boston: Harvard University Press. Atkinson A.

7 Benefits of a Balanced Scorecard

The journal, published since , is the official publication of the Spanish Society of Cardiology and founder of the REC Publications journal family. Articles are published in both English an Spanish in its electronic edition. The Impact Factor measures the average number of citations received in a particular year by papers published in the journal during the two receding years. CiteScore measures average citations received per document published.

Read more. SRJ is a prestige metric based on the idea that not all citations are the same. SJR uses a similar algorithm as the Google page rank; it provides a quantitative and qualitative measure of the journal's impact.

SNIP measures contextual citation impact by wighting citations based on the total number of citations in a subject field. Both prior literature and reported managerial practices have claimed that the Balanced Scorecard is a management tool that can help organizations to effectively implement strategies.

In this article, we examine some of the contributions, dilemmas, and limitations of Balanced Scorecards in health care organizations. First, we describe the evolution of Balanced Scorecards from multidimensional performance measurement systems to causal representations of formulated strategies, and analyze the applicability of Balanced Scorecards in health care settings.

Next, we discuss several issues under debate regarding Balanced Scorecard adoption in health care organizations. We distinguish between issues related to the design of Balanced Scorecards and those related to the use of these tools. We conclude that the Balanced Scorecard has the potential to contribute to the implementation of strategies through the strategically-oriented performance measurement systems embedded within it.

However, effective adoption requires the adaptation of the generic instrument to the specific realities of health care organizations.. In a recent study, Bohmer 1 identified 4 habits that distinguish the most successful health care organizations and obtain the best outcomes. The 4 habits identified were: a setting objectives and outlining the means to achieve them; b a focus on the design of the organization, its policies, and its physical and technological infrastructure; c measurement and monitoring of outcomes, and d ongoing review of clinical practice in the context of available scientific evidence.

Whilst acknowledging the importance of each of these habits, in this article we propose to address several aspects related to the third habit ie, the issue of measurement in health care organizations. Our starting point is that a proper formulation of strategy goal planning and its subsequent implementation and evaluation measurement and monitoring of outcomes is critical to the lasting success of any organization.

From that starting point, the purpose of the present article is to review ways in which a specific management tool, the Balanced Scorecard BSC , can lead to improvements in strategic management and in particular to better strategy implementation and evaluation. More specifically, we will review the contributions, dilemmas, and limitations associated with adopting the BSC in health care organizations. In the first section, we introduce measurement and performance monitoring as a key aspect of strategic management in health care organizations and identify the BSC as a potentially useful tool, which is often used for this purpose.

We then describe the basic characteristics and evolution of the BSC and highlight aspects to take into account when considering its adoption as a management tool in health care organizations. In organizing the discussion, we distinguish between aspects related to the design of the BSC and aspects related to its use. Interest in strategic management in hospitals and health care organizations is not new. Back in the s, with the modernization of the health system, many health organizations began to adopt formal processes to formulate strategy.

A similar process has occurred in other countries. Although the formulation of strategies derived from strategic planning exercises is a key factor in the superior results achieved by some health care organizations, it is not in itself a sufficient basis for success. In fact, various studies indicate that most strategies that fail do not fail because they are poorly designed or planned, but because they are poorly implemented.

In that sense, at least in organizations of a certain size and complexity, formal systems to measure and monitor results are essential to guide and assess implementation. In the mids, the BSC began to gain popularity as a management tool that could be used to measure and monitor results from a novel perspective, thereby contributing to strategy implementation. Initially developed outside the health care arena, the BSC was used in health care from the late sonwards.

This association, along with the Ministry of Health and Long-Term Care, decided to adopt the BSC to evaluate the performance of the region's 89 hospitals, with the first application in In the first 2 editions, information was generated on the entire hospital.

Since , however, BSC have also been developed for the different hospital services emergency, critical care, nursing. In recent years, progress has been made in incorporating measurement and performance systems within strategic management. This is also true of the Spanish health care sector. Currently, the regional health services of all of Spain's autonomous communities have developed performance measurement systems based on indicators of cost, activity, and quality. Two experiences are particularly relevant here, although they are not the only ones.

First, one of the objectives within the Osakidetza Basque Health Service Strategic Plan was that all service organizations within the Osakidetza should have a strategic plan and a BSC by the end of that period. For its part, the Valencian Health Agency, which was legally constituted in , submitted its first strategic plan in January Indeed, the purpose of the BSC, as it was originally conceived, was to address problems relating to the measurement of organizational performance Figure 1.

As pointed out by Kaplan and Norton, the authors of the BSC, the systems traditionally used to measure results in the vast majority of organizations, centered exclusively, or almost exclusively, on financial indicators. In some sectors such as health in which non-financial indicators were widely used for operational clinical management, there was an undesirable dichotomy between the economic vision of the management teams and the clinical view of the health care professionals, and measurement systems were not able to effectively integrate or build bridges between the 2 visions.

The traditional systems used to measure results had several problems, although they can, for the purpose of simplification, be grouped into 2 blocks. On the one hand, either because of an over-emphasis on financial indicators or because financial indicators are not sufficiently integrated with other indicators, the traditional systems provide little in the way of multidimensional and integrated support for managerial decision-making. Financial indicators are, by definition, lagging indicators; they capture the impact of decisions taken but do not provide information on the drivers of financial outcomes nor how they might be used to achieve the desired results.

Moreover, the absence of effective integration between financial and other indicators provides mixed signals about the persistence of long-term success. On the other hand, an emphasis on exclusively financial results or the unstructured enumeration of different types of indicators does not provide management with a clear picture as to how well strategy is being implemented or what actions are needed to effectively implement it.

The first generations of BSC therefore proposed new avenues for measurement systems through a structured combination of financial and non-financial metrics with strategic implications. Expressed in its simplest form, a BSC will: a identify the key perspectives needed to provide a multifaceted view of organizational performance; b identify strategic objectives for each of those perspectives, and c select indicators and targets for each of the objectives though only after the strategic objectives have been established Figure 1.

It is true that other management tools that aimed to combine financial and nonfinancial indicators existed before the BSC eg, dashboards, etc. In this sense, one could argue that the first generations of the BSC were not, in themselves, a revolutionary innovation. However, despite their good intentions, most of the earlier attempts did not achieve their purpose and generally ended up focusing on indicators from a single dimension.

In the traditional dashboards of many organizations, the tendency was to concentrate exclusively on financial indicators. Within the health sector, traditional dashboards tended to focus on activity indicators.

Moreover, the deployment of schemes such as Management by Objectives led to a focus on strategic operational indicators. None of these earlier attempts provided a true structured combination of financial and nonfinancial metrics with strategic implications. How does the BSC avoid falling into the same trap? First of all, this trap is avoided because it is based around an explicit reflection on the different perspectives needed to provide an overview of multifaceted organizational performance.

In its initial formulation, the BSC aimed to establish objectives and indicators from 4 perspectives: a financial; b clients or users; c internal processes, and d learning and resource development. However, the tool is flexible both in terms of the number of perspectives that can be considered as well as with regard to which specific perspectives need to be incorporated to represent a particular organizational reality. A second way in which the BSC avoided the errors inherent in earlier proposals was simply by proposing a pattern or template that graphically highlights the presence of multiple perspectives Figure 1.

It is therefore less likely that managers who design or use the instrument will limit their choice to indicators with a single dimension. In short, the first generation of BSC implied the multidimensional measurement of results based on the integration of financial and nonfinancial indicators, and highlighted the advantages of this approach compared with the battery of exclusively financial, activity—or operationally-based—indicators or the mere unstructured enumeration of indicators.

As they developed their proposals, Kaplan and Norton realized that, although BSC represented a qualitative improvement in performance measurement systems, the first generation of these instruments did not fully ensure that the chosen indicators were indeed drivers of success in an organization or that the strategies actually ended up being implemented.

They therefore evolved the model by proposing that, when developing a BSC, the starting point should not be either the targeting or the selection of new metrics and certainly not the mere classification of an existing metric from a number of different perspectives. On the contrary, they suggested that for the second generation of BSC the starting point should include a narrative description of strategy, expressed in highly concrete terms. They therefore suggested that classification of the strategic objectives in the form of perspectives eg, financial, client, process, learning should help to identify causal relationships between objectives and, ultimately, allow effective graphical representation of the strategy.

Consequently, strategy maps became a basic component of the second generation of BSCs Figure 2. A strategy map is a graphic, highly visual representation of an organization's strategy; it is set out in a logical fashion, which helps to illustrate how the strategy will be implemented through a series of cause-effect relationships between objectives.

It also relates, for example, the development of resources people, technologies, information systems, etc. Strategy maps are therefore the foundation for the second generation of BSC although the specification of indicators often leads to a further review of the strategic map.

In other words, the mission of the second generation of BSC is to provide relevant indicators to measure the objectives outlined in the strategy map. The indicators are chosen only after strategic objectives are defined in the strategy map. In short, while early versions of the BSC prioritized the idea of multidimensional measurement of business performance, the second generation of BSC, with the introduction of strategic maps, evolved towards the description or narration of the strategy.

The BSC has become more widely used in health care organizations over the last decade. The first article by Kaplan and Norton on the BSC was published in , 15 and the first article specifically about the use of the BSC in the health sector appeared in The first articles on its use in the health care sector in Spain appeared in The authors found that younger executives and those with less time in their posts were more likely to use the BSC, and that they thought it made a positive contribution in terms of implementing strategies to control health care costs and provide greater managerial flexibility.

While use of the BSC has gradually increased in the health care sector in recent years, it has also become clear that, as a generic tool, it needs to be adapted to the realities of the sector and the realities of each organization. Fortunately, the BSC is sufficiently flexible to allow for variations to fit each strategic situation.

Nevertheless, several challenges or dilemmas arise when considering implementation of the BSC in a health care organization, above and beyond those issues that inevitably arise when starting any specific project with a BSC. We will consider those sector-specific issues here, and will distinguish between aspects related to the design of the BSC and those related to its application.

In that way, 2 sub-areas can be included ie, economic performance and improvements in population health. In the case of publically funded hospitals the client perspective has sometimes been extended to include other stakeholders Figure 3. Figure 3. Example of a strategic map with the financial perspective modified by results and the client perspective, by stakeholders. HR, human resources. In other adaptations, new perspectives were included.

In other experiments, one of the 4 perspectives included in the initial formulation of the BSC was replaced. A case in point was the hospital report on the Ontario Hospital Association cited above, in which the process perspective was replaced by a clinical management and outcomes perspective. As already mentioned, the first generation of BSC emphasized a balance between perspectives, leading to a focus on stakeholder satisfaction Figure 1.

None of the perspectives dominated the others, and it was this balance that facilitated a multifaceted profile that was useful in decision making and in measuring and monitoring the creation of long-term value. Interestingly, the balance between different perspectives that characterized the first generation of BSC gave way in the second generation of BSC to an approach that used a hierarchy of perspectives, via strategy maps.

In this approach, some perspectives are considered a means to achieving success in other perspectives ie, those that embody a company's final aim Figure 2 , Figure 3. Organizations need to determine which of these 2 approaches is better suited to their situation. Although the BSC model has evolved towards the incorporation of strategy maps, that does not necessarily mean that organizations adopting the BSC have to use a second-generation BSC with a built-in strategy map, even though there may be strong arguments for doing so.

Some organizations believe that the hierarchical approach employed in the second-generation models helps them to more effectively represent their business model, making it easier to choose indicators and targets and to reflect on the implications of decisions and actions throughout the map.

Using a Balanced Scorecard to Measure Your Key Performance Indicators

The journal, published since , is the official publication of the Spanish Society of Cardiology and founder of the REC Publications journal family. Articles are published in both English an Spanish in its electronic edition. The Impact Factor measures the average number of citations received in a particular year by papers published in the journal during the two receding years. CiteScore measures average citations received per document published. Read more.

Summary of the Balanced Scorecard Concepts

Similar to the OKR approach, balanced scorecards are a useful tool for measuring organizational performance based on a set of determined measurements. The balanced scorecard was originally developed by Dr. Knowledge of this approach spread widely in when they published a book, The Balanced Scorecard, and the method began to be adopted by many organizations, large and small.

6.3 Balanced scorecard

Key Performance Indicators KPIs are commonly used to help companies effectively manage and guide their progress. Like a compass, the key performance indicators help you determine if you are moving in the right direction. Balanced scorecards have long been used in strategic business management to track key performance indicators, and are designed to provide a framework to manage resources.

The Balanced Scorecard BSC is a planning and management system that is widely used in a variety of areas in the private and public sector, with the aim of ensuring that the activities of an organisation are in line with its vision and strategy, improving internal and external communications, and monitoring organization performance against strategic goals. In other words, the balanced scorecard will help planners to identify what should be done and how it should be measured:. The BSC enables organizations to clarify their vision and strategy, and translate them into action. At the same time it provides feedback regarding both the internal business processes and external outcomes in order to continuously improve strategic performance and results. Balanced Scorecard Institute, n. This method would be useful to RIS3, as it would allow the effects of specific strategies to be traced, determine how they are helpful or where they are lacking by implementing measurements to strategy objectives, based on the views of the stakeholders involved and customers affected, and improve on them in the future, in order to achieve a broader improvement in performance taking into account a wider framework that does not include financial performance. Furthermore, there is also the Public Sector Scorecard PSS , which has been developed from the due to the argument that the BSC still fails to measure important outcomes in the public and third sector organisations.

The journal aims to provide a forum for publication and dissemination of scientific research conducted in the fields of management, as well as promote the interconnection of academic research with practical reality. It is intended to disseminate the scientific results obtained by academics and professionals, both nationally or internationally. The journal is based on a process of double blind review. In the last twenty years the relationship between Management Control Systems MCS and strategy has become a relevant issue to management control investigation. This study aims to understand how managers use the Balanced Scorecard BSC to support the processes of implementation and formulation of strategy. The research adopts an exploratory case study approach and was conducted on a business unit of a large industrial Portuguese company.

Core HR & Master

Research has shown that organisations that use a Balanced Scorecard approach tend to outperform organisations without a formal approach to strategic performance management. The key benefits of using a BSC include:. The Balanced Scorecard provides a powerful framework for building and communicating strategy. The business model is visualised in a Strategy Map which helps managers to think about cause-and-effect relationships between the different strategic objectives. The process of creating a Strategy Map ensures that consensus is reached over a set of interrelated strategic objectives. It means that performance outcomes as well as key enablers or drivers of future performance are identified to create a complete picture of the strategy.


Provided by James R. Martin, Ph. The Balanced Scorecard concept involves creating a set of measurements for four strategic perspectives. These perspectives include: 1 financial, 2 customer, 3 internal business process and 4 learning and growth.

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Lucas D. 25.03.2021 at 19:03

The journal, published since , is the official publication of the Spanish Society of Cardiology and founder of the REC Publications journal family.

Nuntefile 28.03.2021 at 01:52

Performance Measurement using Balance Score Card and its Applications: A Review. January ; Journal effect alternative risk controllers able to protect the fi rm developed a new approach to strategic management.

Chrisexerti 29.03.2021 at 12:29

For example, the balanced scorecard,. a widely known strategic performance measurement sys-. tem, can be leveraged to support an ERM view of risk.

Klinicgrevun1974 01.04.2021 at 07:39

To measure the performance differences, researchers have Balanced Scorecard and Organizational Performance BSC is a comparatively new notion that ensures best performance practices and yields fruitful Jarzabkowski, P.; Kaplan, S.; Seidl, D.; Whittington, R. On the Risk of Studying Practices in.