Dsicuss about the Performance management in the healthcare.
The balanced scorecard refers to the strategic performance method that was developed by Robert Kaplan and David Norton. The aim of the model is to ensure that the mission and visions of an organization are implemented and thus functional (Hoque 2014). Thus, it makes the written aims to be operational. Apart from that, the approach offers information concerning the selected strategy in the business, in terms of applicability and the needed performance indicators. Several ways explain the reasons for the scorecard to be called balanced. One is that it assesses the key aspects of the business that is monetary, financial, customer, internal activities, and innovation (Cooper et al. 2017). Where the four concepts are extensively evaluated in an organization, it becomes easy to identify the needed aspects for the business to perform better. The model is also said to be balanced as it describes the manner in which a business perceives itself, and how others see it. Also, it evaluates performance based on the current and the future, indicating that it balances the present and foresees the future.
Using the balanced scorecard as a strategic performance model has both benefits and challenges. One of the benefits is that it helps organizations focus on actions to be taken to ensure better performance (Coe and Letza 2014). This is ensured where the model foresees the future making it possible to determine the needed changes to ensure a better outcome. The model also acts as an integrating tool for several organizational programs as it assesses all sectors of the business based on the four perspectives of the method. The other benefit is that it assists in the implementation of the written ideas concerning the wellbeing of the business (Hladchenko 2015). This is ensured by developing performance measures and targets, which are aligned with the mission and vision of the organization. Through the model, organizational level measures are broken into different sections, which make the management as well as the workers, to understand what is needed to be achieved in certain duration. The balanced scorecard eliminates the traditional view that an organization is isolated with independent functions, and makes it one entity with specific goals to be achieved.
However, using this model is disadvantageous because the organization has many performance indicators, where some could be easily forgotten, leading to imbalances (Khorev et al. 2015). Also, for the model to become effective, the four business perspectives must be balanced, which is practically difficult to ensure. For example, the senior management could be mostly concerned with the monetary perspective as it seems critical while comparing with the others. As a result, the model does not effectively play its role, as some sections are prioritized while others are left. On the other hand, the model has to be often updated for it to be effective (Zheng et al. 2016). This is to say that assessments in the organization have to be several, which not only wastes time while updating but also money as the concerned people are paid (Northcott & Taulapapa 2012, p. 180). Even though the model assesses the present and foresees the future, it is only achieved where updates are regular. Notably, considering that the indicators put in place are many, the meetings held are too many. Despite the negative effects, where the aspects of the model are well put in place, the method helps an organization significantly.
The balanced scorecards model has several characteristics that make it an effective performance strategy for businesses. Firstly the scorecard highlights an organization’s strategy by determining the cause and effect relationship (Busco and Quattrone 2015). The feature uses the perspectives of the model in finding out the effects of carrying out several activities. For example, where an organization wishes to lower its costs of manufacturing, and therefore increase the growth rate, the scorecard would pinpoint certain objectives as well as measures in the learning growth approach that could boost the internal organizational processes. Ensuring this, on the other hand, would lead to better buyers’ satisfaction, greater market share and higher income to the company. The other feature of the model is that it communicates the initiative developed by the members of the organization and translating it to a coherent state that is understandable and measurable performances (Kerai and Saleh 2017). By that, the stalk holders of the company carry out actions that depending on the scorecard analysis of the strategy planned. This is the feature that makes the planned strategy get implemented in an organization because of employees and the management work towards the strategy discussed in the scorecard. Therefore, for the model to be useful to an organization, it has to be developed in the planning stage of projects development so that the actions are taken later lead to the achievement of the strategy.
The balanced scorecard insists more on the monetary aims and measures, especially to the profit-seeking businesses (Xia et al. 2017). In most cases, the management of an organization stresses on innovation and customer satisfaction but tangible advantages are not evident. The model solves the issue by assessing the non-financial aspects in the business and interprets how the aspects would result to financial advantages to the business. In doing this, the model links the non-financial aspects to the financial and where the relationship is well balanced, monetary benefit is realized (Valmohammadi and Ahmadi 2015). This is to say that the scorecard model is concerned with the processes that do not bring money into the business but affects the money earned; indicating that improving the processes would result to more money to the company. Apart from that, the scorecard reduces the number of measures of performance used in a business by identifying those that are critical. This is to say that the model avoids the proliferation of aspects which directs the management to focus on the implementation of the critical measures. As said before, the model assesses the monetary aspects in the business, by handling the non-financials and identifying ways in which they would result to financial gain. The same idea is realized in this characteristic, where the model prioritizes some measures. Since it assesses concepts based on the mission and vision of an organization, the model prioritizes some plans and drops others that could not affect the businesses directly. This is to say that the organizations that use the model are benefited, in that only the needed actions are carried out, which increases the likelihood of achieving the set aims.
The other characteristic of the model is that it points out the suboptimal tradeoffs that leaders may make when they do not discuss operational and monetary measures at the same time (Gibbons and Kaplan 2015). For example, where a company focuses on innovation could decide that ensuring short-term monetary performance through the reduction of the money used on R&D. The usage of the scorecard model would signal that where short-term monetary performance is used, the long-term concept is negatively affected. The reason for this is that the R&D spending, as well as output, would have declined. This feature of the score, therefore, balances the current events and the future in ensuring that the aims developed at the moment do not affect the future well-being of the organization. The balanced scorecard also has the feature on the key performance indicators (KIPs) (Teklehaimanot et al. 2016). The main role of the indicators is to show whether the implemented strategies are functional or not. However, most businesses have faced challenges in differentiating between the key indicators and the operational measures. This is caused by the wrong idea that all areas of the organization should be measured and reported and thus making them key performance indicators. However, the right action is depicted in the title of the feature where the word key is included.
The key performance indicator is, however, a limited number of measures that reduce the complexity of measures in the business, by transforming it into aspects that are easily understood and thus implemented effectively (Opara et al. 2016). This could be well understood by the actions that doctors take, where they measure the temperatures of a patient, to determine the overall health state of the patient. The balanced scorecard uses the same approach, where key factors that result in the overall wellbeing of the organization are considered and plans developed (Bergeron 2017). With the mistake that is evident in most of the businesses, it is therefore important understanding the real definition of the key performance indicators. The indicators insist for the direct relationship, between what a business is trying to do, explain the strategic objectives and the measures put in place to assess the implementation of the said relationships. Notably, there are many operational measures in any organizations, but they should be taken to be good practice aspects and not key performance indicators.
As said earlier, the balanced scorecard takes the approach of a balanced view where the strategic objectives are defined using the four perspectives. While developing the key performance indicators, the strategic objectives should not be all listed in the high levels (Chen 2015). For example, aiming for increased profitability, revenue, and shareholder value is unhelpful. If such actions are taken by the business, it would mean that the concepts to be focused are too much and that the KIPs would be required to evaluate every aspect in the business which is not helpful. As at that, the aim of the key performance indicators is to ensure that a smaller number of things are carried out which are helpful at the moment and in the future, other than taking too many activities at a time that cannot be effectively handled. Several features of the KIPs should, therefore, be present if the aimed strategies in the business are to be attained. One is that the indicators should offer an objective way of finding out whether strategies are working. In this role, the indicators should point out both strong and weak points of a strategy where the weak points are corrected and the strong remains stable.
The indicators should also provide a comparison gauge where performance changes over time are evident. In this, the indicators have to show progress as time goes, to find out if changes are necessary by the leadership of the organization. Also, the attention of the employees should be focused on the issues that matter most regarding the success of the organization. In this case, the workers have to be aligned with the objectives decided, so as to ensure that the strategic objectives are followed by the stakeholders of the company, mostly the employees. The indicators should also give room for measuring of accomplishments and not solely for the work done. This is because, it is possible for activities to be conducted in an organization, but accomplishments are not evident, mostly where the activities carried out do not match with what should be done. As a result, the indicators should point out what is accomplished. A common language for communication should also be ensured by the KIPs. Language, in this case, refers to the aims that a business has. That is, the language to be used or activities conducted should be similar to the aims of the organization to be attained. Finally, the KIPs should reduce the intangible uncertainties in the business, as they have to assess the current situation and the future of the business.
The other feature of the balanced scorecard is on cascading, which refers to the translation of the organization’s wide scorecard called the Tier 1, down to the initial organizational units known as the Tier 2 and later to teams and persons, called the Tier 3 (Opara et al. 2016). Evidently, the divisions focus on all levels of the organization. On the other hand, the business alignment ought to be visible through aspects for example strategy map, measures, and aims as well as initiatives. The scorecard should, therefore, be implemented in boosting accountability evident by objective and measure ownership as well as the desired workers’ behavior which would be improved by recognizing and rewarding them after the achievement of particular plans. The cascading strategy as a feature of the scorecard focuses on the whole organization on strategy and establishing a line of sight between the activities that people perform and the desired outcomes. As the managerial system is cascaded down in the business, the aimed goals become operational as performance measures are put in place. Moreover, where accountability is enhanced in both the objectives and measures, ownership is defined in every level which boosts the communication throughput in the business. In short, the cascading strategy ensures that the actions taken by the people in the organization are aligned to the desired end results, based on accountability and ownership in every level of work.
The other aspect of the balanced scorecard is on the strategic objectives. These refer to the continuous improvement actions that are developed for implementation. The main aim of the objectives is to transform the mission and the vision of the organization to being operational. Objectives are useful in any organization, as it helps the employees and other stalk holders of the business aim similar goals which raise the chances of their achievement (artello et al. 2016). However, for the objectives to be achieved, the actions taken should be aligned with the goals, which are ensured by employing the key performance indicators. The objectives are therefore developed by understanding the mission and vision of the organization, then developing the strategies, by forming the strategic objectives and the necessary actions to be taken. Some of the strategic objectives in organizations are increasing revenue, boosting customer relations and raising the cost-effectiveness in the business (Gómez et al. 2016). Strategy mapping is the other feature of the balanced scorecard, which is useful in the methodology step. Mapping is used in visualizing and communicating the manner in which value is formed in the business. Therefore, a strategic map is a graphic that explains a logical cause and effect relationship, amongst strategic objectives.
Notably, the balanced scorecard is viewed based on four perspectives, which are financial, customer, internal processes, and growth. It is these perspectives that have to be balanced, for the usefulness of the model to be evident. To start with is the financial perspective that is vital to the shareholders and other monetary departments in an organization (Sushandoyo and Magnusson 2014). The perspective aims to answer the question on how attractive could be organization become to the shareholders and monetary backers. Notably, the approach is a quantitative benchmark determined by the figures of the past. The financial strategy also provides a reliable insight into the operational management as well as the sustainability of the selected strategy (Hallstedt et al. 2016). It is the added value of the other three approaches that boost the financial perspective because the improvement of the non-financial aspects leads to financial gain. Customer perspective is the other approach in the balanced scorecard model. Each company serves a particular need in the market, which is ensured by targeting a population, called the customers. It is the customers who influence the quality price of goods and services and the acceptable margins (Zhou et al. 2016). Organizations must, therefore, ensure that the needs of the customers are met and have the idea that they change with time. In addition, the presence of alternatives due to competitors plays a significant role, in determining the customers’ expectations. The perspective, therefore, the question of how attractive could be business become, to the customers.
Internal organizational processes are the other perspective in the balanced scorecard. The approach evaluates the aspects of the internal functions and the value they have added to the business (Ye et al. 2015). The most evident added value is influenced by the performance geared towards the satisfaction of the customers as well as the decisions made. The primary question answered by this perspective is on what should be done, to ensure that customers and shareholders of the company are satisfied. The approach is useful to any organization as the manner in which customers are served determines the value added to the company (Wu 2012, p. 310). Learning and growth is the final perspective in the balanced scorecard. The ability of an organization to learn and innovate is a clear indication that growth and improvement will be experienced by the company. In addition, the current environment of businesses is dynamic, where legislation and the economy keep changing as well as the competition going higher. The perspective, therefore, answers the question of how sustainable the organization would become in ensuring that the strategies put in place are achieved, despite the many changes in the surrounding (Perri and Peruffo 2016). Where the four perspectives are balanced, it becomes easy using the balanced scorecard in evaluating the performance of the business.
The scenario given involves a firm’s client, whose intention is to assess the budgeting system of the firm. Based on the discussed features of the balanced scorecard, it would be useful using it in the assessment. Notably, the perspective to be used here is financial. However, for the purpose to be achieved, customer, internal process, and growth aspects have to be considered. As said before, the scorecard must evaluate the relationship between the financial and non-financial aspects, for profits to be gained. Therefore, the client ought to consider how the firm satisfies the customers, the internal functions of the business and the growth rate. With that, it would be easy concluding whether the strategies put in place are effective. The other necessary thing needed is the development of key performance indicators. In this case, the firm has to determine measures that would be used in making sure that the strategies aimed and the actions are taken are aligned. For example, it would be assessed whether the budgeted amount of money is used right, and for the specified purpose. The key performance indicators ensure that short-term gains do not negatively affect the long-term objectives. For example, if increasing the prices would make the company earn more, but at the same time increase the ability of customers opting goods and services from another organization that offers cheaply, the scorecard predicts the danger and it is therefore solved. In assessing the short and long-term budgeting system in the firm, the key perspectives have to be balanced. With that, the balanced scorecard becomes useful and also effective. In conclusion, basing the paper on the balanced scorecard and its applicability to a firm aiming to assess the budgeting system, it is clear that ensuring that the four perspectives are balanced and the other discussed features, the model becomes useful in evaluating strategic objectives of an organization and their performance.
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