The balanced scorecard (BSC) is a strategy performance management tool.
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A sample balanced scorecard:
Area of Objectives Measure or Target Time Expectation Primary Responsibility
Customers
1.
2.
3.
Managers/Employees
1.
2.
3.
Operations/Processes
1.
2.
3.
Community/Social Responsibility
1.
2.
3.
Business Ethics/ Natural Environment
1.
2.
3.
Financial
1.
2.
3.
The critical characteristics that define a Balanced Scorecard are:
- its focus on the strategic agenda of the organization concerned
- the selection of a small number of data items to monitor
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The first generation of Balanced Scorecard designs used a “4 perspective” approach to identify what measures to use to track the implementation of strategy. `The original four “perspectives” were:
- Financial Perspective: encourages the identification of a few relevant high-level financial measures. “How do we look to shareholders?” including: cash flow, sales growth, operating income, return on equity.
- Customer Perspective: encourages the identification of measures that answer the question “How do customers see us?” including: percent of sales from new products, on-time delivery, share of important customers’ purchases, ranking by important customers.
- Internal business processes Perspective: encourages the identification of measures that answer the question “What must we excel at?” including: cycle time, unit cost, yield, new product introductions.
- Learning and growth Perspective: encourages the identification of measures that answer the question “How can we continue to improve, create value and innovate?” including: time needed to develop new generation of products, life cycle to product maturity, time to market versus competition.
In conclusion, “The Balanced Scorecard” is a strategy evaluation tool that allows a firm to evaluate strategies from four perspectives: financial performance, customer knowledge, internal business processes, and learning and growth. It includes examination of customer loyalty, manager and employee morale, operations and processes, business ethics, sustainability, social responsibility, community involvement, and financial issues. The word “balanced” derives from the balance of quantitative with qualitative objectives and measures. Too many firms rely only on quantitative ratios and such measures.
You can Develop a Balanced Scorecard for your company using this template:
Area of Objectives Measure or Target Time Expectation Primary Responsibility
Customers
1.
2.
3.
Managers/Employees
1.
2.
3.
Operations/Processes
1.
2.
3.
Community/Social Responsibility
1.
2.
3.
Business Ethics/ Natural Environment
1.
2.
3.
Financial
1.
2.
3.
