What is Balanced Scorecard?

The balanced scorecard is a new management concept which helps managers at all levels monitor results in their key areas. An article by Robert Kaplan and David Norton entitled “The Balanced Scorecard – Measures that Drive Performance” in the Harvard Business Review in 1992 sparked interest in the method, and led to their business bestseller, “The Balanced Scorecard: Translating Strategy into Action”, published in 1996.

Kaplan and Norton have recommended broadening the scope of the measures to include following four areas:

  1. financial performance,
  2. customer knowledge,
  3. internal business processes,
  4. learning and growth.

This allows the monitoring of present performance, but also tries to capture information about how well the organization is positioned to perform well in the future.

Some of the Benefits of using the balanced scorecard:

  1. Focusing the whole organization on the few key things needed to create breakthrough performance.
  2. Helping to integrate various corporate programs, such as quality, re-engineering, and customer service initiatives.
  3. Breaking down strategic measures to local levels so that unit managers, operators, and employees can see what’s required at their level to roll into excellent performance overall.

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