ADVANTAGES OF THE BALANCED SCORECARD

ADVANTAGES OF THE BALANCED SCORECARD PERFORMANCE MEASUREMENT OF TRADITIONAL

Created jointly by Robert S. Kaplan and David P. Norton in 1992, the Balanced Scorecard has grown extraordinarily good shape and its application since it was first discovered; Balanced Scorecard is expressed as one of 75 most influential business ideas in the 20th century and relied upon thousands of organizations in a range of different types and sizes, and has affected many types of organizations / companies that exist around the world. Balanced Scorecard began as a measurement system that translates the strategy of the company / organization into a set of financial measures and non-financial interconnected, which is used to communicate strategy, forming alliances, informed decision making, giving strength to the performance management, and prioritize resource allocation.

Four Perspectives as a benchmark in the Balanced Scorecard compiled with a clear basis on strategy and competition situation. Focus Balanced Scorecard aimed only at a few key indicators can help management to focus on the vision and mission strategy.

Traditional performance measurement only report what has happened in the last period without showing how managers can improve performance in the period that will come. However, in the Balanced Scorecard serves as a benchmark or point of view of the company's success in the present and the foreseeable future. Different from the traditional performance measurement fragmented and isolated, the information revealed by the four perspectives or benchmarks on the Balanced Scorecard offers a balance between financial benchmarks / financial yardsticks such as earnings and operations such as new product development and creative innovations to the satisfaction consumers and the management itself. In general, the traditional management system focuses on the budget (budgets), so the implementation of corporate strategy is highly dependent on the available budget. This is in contrast with the Balanced Scorecard strategic management system that focuses on strategic management processes, so that the company's strategy through the Balanced Scorecard translates into targeted actions. As a consequence of differences in the practice of traditional management systems and the Balanced Scorecard strategic management system, reporting on the traditional management system is used solely as a means of control, while reporting on the Balanced Scorecard strategic management system is used as a strategic tool.