What Is A Balanced Scorecard?

By Author: Ariel Brady
Total Articles: 245
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The Balanced Scorecard looks at a small number of financial and non-financial objectives related to strategy. It then creates measures, sets targets for the measures and finally records and monitors them. It does this on a regular basis to determine success or failure. Only when measures are in place can projects can be considered.
It is in this area that the Balanced Scorecard differs from other strategic methodologies. It forces an organisation to think about how objectives can be measured first and then what projects can be put in place to satisfy the objectives. The basis behind this is to avoid creating projects to early and measuring success based only on project completion.
There are two aspects of this activity that need to be brought out:
1. The scorecard identifies a number of financial and non-financial objectives. These objectives are few in number and are critical to the sustainability or growth of the organisation. These objectives are related to four major categories to ‘balance’ the scorecard.
2. Measurement is a crucial part of the activity. Each objective must be measurable. ...
... These measures are often referred to as Key Performance Indicators (KPIs). They should include both leading and trailing measures.
The ‘balance’ that a Balanced Scorecard achieves is brought about by a focus on financial and non-financial measures placed into ‘Perspectives’. These are: Financial, Customer, Internal Processes and Learning & Growth.
The value of the Perspective approach is that it provides a framework to describe a business strategy and to focus on objectives and measures. These both inform us about progress and allow us to influence activities to achieve a business strategy. By using the framework as a diagram and physically plotting the most important objectives against perspectives it quickly focuses the mind onto what is really important.

Key to creating a good Balanced Scorecard is to use great technology to support it. QuickScore is a cloud based software package that is formally recommended by the Balanced Scorecard Institute. It has been used by hundreds of organisations to successfully automate their scorecards.
The three major benefits of using this methodology are: 1. Improved organisational alignment and communication, 2. Much better strategic planning and 3. Improved performance reporting overall.

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