What is Balance Scorecard?

Balance Scorecard

The Balanced Scorecard is a strategic management framework that helps organizations monitor
and manage their performance in a comprehensive way. It was introduced by Robert S. Kaplan
and David P. Norton in the early 1990s. The Balanced Scorecard goes beyond traditional financial
measures and incorporates a mix of financial and non-financial performance indicators to
provide a more balanced view of an organization’s overall performance.

The framework typically includes four key perspectives:

 Financial Perspective: This includes traditional financial metrics such as revenue growth,
profitability, and return on investment.

 Customer Perspective: Focuses on measures that are important to customers, such as customer
satisfaction, market share, and customer retention.

 Internal Business Processes Perspective: Identifies key internal processes critical to achieving
the organization’s goals. This perspective looks at metrics such as process efficiency, quality, and
innovation.

 Learning and Growth Perspective: Emphasizes the importance of continuous improvement and
development of the organization’s capabilities. This may involve measures related to employee
training, skill development, and organizational culture.

By incorporating measures from these four perspectives, the Balanced Scorecard provides a more
holistic view of an organization’s performance. It helps ensure that actions and decisions are aligned with
the overall strategy and that the organization is not solely focused on short-term financial results.

Implementing a Balanced Scorecard involves defining strategic objectives and key performance
indicators (KPIs) for each perspective, setting targets, and regularly tracking and evaluating performance
against these targets. The Balanced Scorecard is widely used in various industries and sectors as a tool
for strategic planning and performance management.