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`Balanced Scorecard - a management concept for future'

Ambrish Jha

Mumbai , Nov. 22

WHY is it difficult for successful companies to remain so on a continuous basis? Is it because companies only focussed on the financial numbers?

Yes, says Dr Anil Naik, a consultant and an expert on this concept called `Balanced Scorecard'.

"Balanced Scorecard gives a picture of the future," says Dr Naik. "There were many successful companies like Nirlon, Paragon Textiles, Mafatlal in the past. Where are they now? They failed because they could not devise proper strategy for the future," Dr Naik told Business Line on the sidelines of a seminar organised by Indian Electrical and Electronics Manufacturers' Association (IEEMA) here recently.

`Balanced', as the name suggests, calls for a balance between financial and non-financial measure, long term and short-term objectives and external and internal performance. `Scorecard' initially came into being as a measurement system, and gradually evolved into a core management system.

Dr Naik said Balanced Scorecard continues to emphasise on the financial performance measure but at the same time highlights future performance drivers, key initiatives to be taken and provides a framework for strategic management. It has been designed around four perspectives - financial, customer, internal and learning and growth.

In Balanced Scorecard, financial perspective is always important. But a healthy revenue growth, proper utilisation of assets and investment strategy are also must for any organisation.

Balanced Scorecard articulates customer and market-based strategy that will deliver super value to customer, build customer loyalty and bring superior financial results. It specifically looks at the value proposition that the organisation will deliver to the customer in target market segment. It propagates building better understanding and leveraging relationship with customers.

It identifies critical new internal processes in which the organisation must excel for future financial performance, Dr Naik said.

Learning and growth perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement.

According to Dr Naik, learning and growth constitute the essential foundation for success of any knowledge-worker organisation. "In the current climate of rapid technological change, it is becoming necessary for knowledge workers to be in a continuous learning mode," he said.

Government agencies often find themselves unable to hire new technical workers, and at the same time there is a decline in standards of training of existing employees. "This shows in the working of the government," he said.

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