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Balance Score Card

Balanced Scorecard

A Balanced Scorecard defines what management means by “performance” and measures whether management is achieving desired results. The Balanced Scorecard translates Mission and Vision Statements into a comprehensive set of objectives and performance measures that can be quantified and appraised. These measures typically include the following categories of performance:

Financial performance (revenues, earnings, return on capital, cash flow)
Customer value performance (market share, customer satisfaction measures, customer loyalty)
Internal business process performance (productivity rates, quality measures, timeliness)
Innovation performance (percent of revenue from new products, employee suggestions, rate of improvement index)
Employee performance (morale, knowledge, turnover, use of best demonstrated practices)
Usage and satisfaction among survey respondents

mgmt-tools-2015-balanced-scorecard

What Balanced Scorecards do:

Articulate the business’s vision and strategy
Identify the performance categories that best link the business’s vision and strategy to its results (e.g., financial performance, operations, innovation, employee performance)
Establish objectives that support the business’s vision and strategy
Develop effective measures and meaningful standards, establishing both short-term milestones and long-term targets
Ensure companywide acceptance of the measures
Create appropriate budgeting, tracking, communication, and reward systems
Collect and analyze performance data and compare actual results with desired performance
Take action to close unfavorable gaps
Related topics Bain capabilities
Management by Objectives
Mission and Vision Statements
Pay for Performance
Strategic Balance Sheet
Strategy
Performance Improvement

Companies use Balanced Scorecards to:

Clarify or update a business’s strategy
Link strategic objectives to long-term targets and annual budgets
Track the key elements of the business strategy
Incorporate strategic objectives into resource allocation processes
Facilitate organizational change
Compare performance of geographically diverse business units
Increase companywide understanding of the corporate vision and strateg

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