What is a balanced scorecard (BSC)?

 Facilitate effective and consistent communication

 The balanced scorecard is a management because everyone speaks a shared language of
system aimed at translating an metrics
organization's strategic goals into a set of  Drive focus around key requirements
organizational performance objectives  Facilitate reviews on a regular basis
that, in turn, are measured, monitored and  Ensure organizational alignment
changed if necessary to ensure that
an organization's strategic goals are met.
EXAMPLE:
 Financial results shed light on what has
Corporations can use their own, internal versions
happened in the past, not on where the
of BSCs, For example, banks often contact
business is or should be headed.
customers and conduct surveys to gauge how well
 The balanced scorecard system aims to
they do in their customer service. These surveys
provide a more comprehensive view to include rating recent banking visits, with questions
stakeholders by complementing financial ranging from wait times, interactions with bank
measures with additional metrics that staff, and overall satisfaction. They may also ask
gauge performance in areas such customers to make suggestions for improvement.
as customer satisfaction and product Bank managers can use this information to help
innovation. retrain staff if there are problems with service or to
 The balanced scorecard acts as a identify any issues customers have with products,
structured report that measures the procedures, and services.
performance of company management.
 It is meant to measure the intellectual
capital of a company, such as training, FEATURES OF A GOOD SCORECARD
skills, knowledge, and any other  A good BSC clearly defines the cause and
proprietary information that gives it a effect relationship of various objectives to
competitive advantage in the market. The its stakeholders and employees. The
balanced scorecard model reinforces description of company’s objective and its
good behavior in an organization by target should be clearly explained as to
isolating four separate areas that need to reduce the chances of any future conflicts.
be analyzed  A good balanced scorecard behaves as a
 Flexible: communication tool that clearly states a
 A good balanced scorecard is extremely company’s target and strategic objectives
flexible. It does not draw rigid boundaries to all its employees. And with the help of
around the strategic objectives. Instead, it this, every employee understands their
allows the management to make the role in the entire work circuit. Moreover,
necessary changes whenever the need thus balanced scorecard should behave
arises. like a guiding light for all the management
 members when they are stuck in an
What are the four balanced scorecard unfamiliar situation or when the goal
perspectives? becomes unclear.
The balanced scorecard approach examines  Should have predictive qualities:
performance from four perspectives. A good balanced scorecard should be able
 Financial analysis, which includes measures to tell if a short-term decision is going to harm
such as operating income, profitability the potential growth of the business. Because
and return on investment. sometimes the situations are such that some
 Customer analysis, which looks at investment managers are unable to have far-sightedness
in customer service and retention. and they end up investing in short-term plans.
 Internal analysis, which looks at how internal But a good balanced scorecard gives them a
business processes are linked to strategic clear picture of cause and effect relationship
goals. that helps them in understanding the outcome
 The learning and growth of their actions.
perspective assesses employee satisfaction
and retention, as well as information system.
Why use the balanced scorecard?
Kaplan and Norton cited two main advantages to
the four-pronged balanced scorecard approach.
1. First, the scorecard brings together disparate
elements of a company's competitive agenda
in a single report.
2. Second, by having all important operational
metrics together, managers are forced to
consider whether one improvement has been
achieved at the expense of another.

BENEFITS: