Balanced Scorecard Approach

 

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)

 

BSC's Benefits include:

 

• 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