Balanced Scorecard

A balanced scorecard refers to a strategic management performance metric used to identify and improve
various internal business functions and their resulting external outcomes. It involves the use of both financial
and non-financial measures to evaluate performance.
• The concept of BSCs was first introduced in 1992 by David Norton and Robert Kaplan, who took previous
metric performance measures and adapted them to include nonfinancial information.

Vision and Strategy

- It should be able to be translated into these four perspectives and its actually a mix of financial and non-
financial information.
Financial
Essentially, any key objective that is related to the company's financial health and performance may be
included in this perspective.
Revenue and profit are obvious objectives that most organizations list in this perspective. Other financial
objectives might include:
• Cost savings and efficiencies (for example, a specific goal to reduce production costs by 10% by 2020)
• Profit Margins (increasing operating profit margins, for instance)
• Revenue sources (for example, adding new revenue channels)
Customer
This perspective focuses on performance objectives that are related to customers and the market. In other
words, if you're going to achieve your financial objectives, what exactly do you need to deliver in terms of
your customers and markets)?
Included in this perspective you might find objectives for:
• Customer service and satisfaction (increasing net promoter scores, or reducing call center waiting times, for
example)
• Market share (such as, growing market share in a certain segment or country)
• Brand awareness (for example, increasing interactions on social media)
Internal Business Procedures
What processes do you need to put in place to deliver your customer- and finance-related objectives? That's the
question this perspective aims to answer. Here you would set out any internal operational goals and objectives
- or, in other words, what does the business need to have in place and what does the business need to do well in
order to drive performance?
Examples of internal process objectives might include:
• Process improvements (for example, streamlining an internal approval process)
• Quality optimization (such as, reducing manufacturing waste)
• Capacity utilization (using technology to boost efficiency, for instance)

Learning and Growth

While the third perspective is about the concrete process side of things, this final perspective considers the
more intangible drivers of performance. Because it covers such a broad spectrum, this perspective is often
broken down into the following components:
• Human capital - skills, talent and knowledge (for example, skills assessments, performance management
scores, training effectiveness
• Information capital - databases, information systems, networks and technology infrastructure (such as,
safety systems, data protection systems, infrastructure investments)
• Organizational capital - culture, leadership, employee alignment, teamwork and knowledge management
(for example, staff engagement, employee net promoter score, corporate culture audits)
Other Issues and Concepts
• A motivating work environment and reward system should take into consideration that workers are motivated
by both financial and nonfinancial rewards, employees are knowledgeable about the work that they do, and the
individuals, in themselves, are creative, ethical, and responsible.
• Management must ensure employee involvement in the changes to happen in the organization to promote
goal congruence.
• Task control refers to controls applied to check human behavior in the conduct of the job while results control
refers to controls applied to check employee performance on a certain benchmark.
• Ethical conduct must always be integrated in the whole process of the company's operations.
• Performance measurement and the rewards thereunto provides a clear statement of how an individual
employee contributes to the objectives of the organization and the rewards provided as a form of motivation to
continue doing well.
• There should be an ongoing regular monitoring of performance and feedback