Page 55 - MODULE QUALITY TOOLS DMQ 30262

DMQ 30262

types of measures when determining their strategy. An internal measure may
indicate that a company is performing well; meanwhile the external measures may

show poor performance. Lowering defect rates may be in accordance with internal
strategy, however the company could be viewed negatively by the market and will
results in a falling stock price. This may be a sign indicating that the internal and

external strategies should be re-thought and/or re-aligned.

4.2.1 Steps To Make The Balanced Scorecard Work

The balanced scorecard requires that a company strategy be defined. The scorecard
does not define the best strategy for a company to take. No system can do that; it is
senior management’s responsibility and vision. The scorecard also cannot select the

best measurements of strategy. That is also senior management’s responsibility as
well as lower/middle management’s responsibility. The scorecard does require
management to focus on creating strategy and defining ways that performance can

be measured in accordance with the strategy.

The original authors of the balanced scorecard recommend that the scorecard to be

up-dated on a regular basis; it is a dynamic model. The scorecard needs to be
revised when changes in corporate strategy and/or corporate structure occurred. This

helps to prevent management from overlooking key dimensions of performance,
which may have an impact on the strategic goals of the company.

Two ways communication is essential when using the scorecard. Management must
communicate the company’s strategy to employees and how they expect employees
to perform in order to achieve the corporate goals. This is much better than vague,

ambiguous expectations that managers might have with regard to employee
performance. Managers must be clear and concise in communicating the strategy
and in setting the performance goals for their employees.

4.2.2 Shortfalls of the Balanced Scorecard

Part of the difficulty in using the balance scorecard is trying to automate the system.
The balanced scorecard measures items that are often difficult to relate and/or

measure. Financial measures are not a problem; they have been used effectively for
many years. It is the non-financial measurements that are difficult to establish and

measured.

KKTM Kuantan 54 DMQ 30262