1. Balanced Scorecard Managerial Accounting Prepared by Diane Tanner University of North Florida Chapter 27

2. Measuring Performance  Measuring segment performance and manager performance are not the same  i.e., Responsibility accounting  Appropriate incentive structures should be chosen for the parties involved  Ideally should be linked to performance and based on a combination of short-term and long-term measures

3. Balanced Scorecard  A performance measure tied to the company’s strategy for success  A set of performance measures constructed for four perspectives of performance: 1. Financial 2. Customer 3. Internal processes 4. Learning & growth

4. Components of Balanced Scorecard Financial perspective – Includes the financial objectives of a company – Allows managers to track financial success and shareholder value Customer perspective – Focuses on customer satisfaction – Includes market share goals – Product and service attributes Internal process perspective – Focuses on operational goals – Includes processes necessary to deliver the customer objectives Learning and Growth Perspective – Focuses on the intangible drivers of future success – Human assets, shareholder capital and information capital – Skills, training, and culture

5. How Balance is Achieved 1.Performance is assessed across a balanced set of dimensions (financial, customer, internal processes, and learning & growth) 2.Quantitative measures are balanced with qualitative measures 3.There is a balance of backward-looking and forward-looking measures

6. 6 The End