Introduction to the Balanced Scorecard

A new approach to strategic management was developed in the early 1990s by Drs. Robert Kaplan (Harvard Business School) and David Norton. They named this system the ‘balanced scorecard’.

The Balanced scorecard is a conceptual framework for translating an organisation’s vision into a set of performance indicators distributed among four perspectives: Financial, Customer, Internal Business Processes, and Learning and Growth.

Balanced scorecard indicators are maintained to measure an organisation’s progress toward achieving its vision; other indicators are maintained to measure the long term drivers of success.

Through the Balanced scorecard, an organisation monitors both its current performance (finances, customer satisfaction, and business process results) and its efforts to improve processes, motivate and educate employees, and enhance information systems – its ability to learn and improve.

The Balanced Scorecard Framework:
Translates vision and strategy
Defines the strategic linkages to integrate performance across organisations
Communicates objectives and measures to a business unit, joint venture, or shared service
Aligns strategic initiatives
Aligns everyone within an organisation so that all employees understand how what they do supports the strategy
Provides a basis for compensation
Provides feedback to senior management if the strategy is working