The Balanced Scorecard A Strategic Management System Taken From an Article by Robert S. Kaplan & David P. Norton

The Balanced Scorecard A management tool for measuring organizational performance in areas critical to organizational success. Originally developed to measure organizational performance in four equally important areas: finances, customers, internal operations, and innovation and learning.

The Balanced Scorecard Provides a framework for managing the implementation of strategy while also allowing the strategy itself to evolve in response to changes in the company’s competitive, market, and technological environments.

The Balanced Scorecard Provides a framework/focus for coordinating many critical management processes for change and performance improvement: Departmental goal setting Individual employee goal setting Business planning Financial planning Capital allocation Strategic initiative development Feedback and learning

Balanced Scorecard Features Identifies, clarifies, aligns & provides meaning about the vision and strategy. Fosters communication about strategy and its meaning throughout the company. Assists in alignment of department and employee goals & actions with strategy. Helps link strategy with long-term targets, as well as short-term goals and budgets. Performance is reviewed at all levels for purposes of learning and improving strategy.

Translating the Vision The Scorecard can help translate the organization’s vision and strategic initiatives into understandable and meaningful objectives and action steps. The Scorecard can help develop identifiable and measureable evaluation metrics for determining attainment of objectives and progress.

Communication & Linkage The Scorecard can help promote communication throughout all levels of the organization about what is important. The Scorecard can help link organizational strategy to important activities at the worksite level.

Integrates Business & Financial Planning The Scorecard and its measures can help managers optimize resource allocation with strategy. The Scorecard can help managers set priorities for work activities.

Feedback And Learning The Scorecard can help managers monitor short-term results from the perspective of the customer, internal business processes, and learning and growth. The Scorecard can help managers evaluate strategy in light of recent organization and department performance. The Scorecard can help managers understand how to modify strategies to reflect real-time performance and learning.

Translating The Vision Communication And Linkage Balanced Scorecard Feedback And Learning Integrates Business &Financial Planning

Other Advantages The Scorecard signals what is important and what the organization is trying to achieve. The Scorecard can be linked to performance evaluation and reward. Helps employees identify what critical objectives must be met and tasks performed to achieve strategy. Provides a basis for performance feedback and accountability. Communication of the Scorecard can promote commitment & accountability.

Other Advantages The Scorecard drives integration of strategic planning & budgeting processes. Creates a framework for change management & performance improvement. Establishes short-term targets, or milestones, for change & improvement. Ultimate strategic review & feedback system used to test, validate, and modify underlying hypotheses embedded in business strategy.

The Scorecard Can Answer Key Questions Is our strategy sound? Is our strategy working? Are we successfully implementing our strategy? What adjustments should be made in our observations or conclusions about market conditions, customer value propositions, competition or internal processes or capabilities? What changes do we need to make in our strategy?