Concepts of balanced scorecard and performance measurement, Cost Accounting

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A college currently measures its performance by comparing the actual costs against its budgeted costs for the year.Now that the college is facing increased competition from Various colleges and private education providers, Deptt. professors has suggested that it needs to consider additional performance which measures such as those indicated by the Balanced Scorecard.

Explain the concepts of the Balanced Scorecard and how this approach to performance measurement could be used by the college.

The main concepts of the Balanced Scorecard is that

An organisation’s performance should not be measured on the basis of its financial results only.Other key performance indicators are improtantly relevant to an organisation’s success.
 
The balanced scorecard typically identifies Quadrants groups (or four) of performance indicator that would be suitable for most organisations, though each organisation is free to determine the performance indicators that are most relevant to its own needs. The typical quadrants are: customer perspective; internal business perspective; innovation and learning perspective; and financial perspective.
 
Many people believe that success in the non-financial performance measures will lead to success in the financial performance measures so that these other measures are leading measures whereas the financial measures are lagging measures.
 
The college could use the balanced scorecard to measure its success in other areas of its business. It is important for service businesses such as colleges to understand the wants of its customers and thus measures connected with the customer perspective are important. The
college may discover that particular types of courses are demanded by their customers and this may lead the college to develop new courses which can be measured using the innovation and learning perspective. 
 
The college can also look at how it operates its processes both in relation to its staff and its customers.  Improvements in these processes could be used to improve the financial results, perhaps, because costs savings can be made.


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