Balanced Scorecard (BSC) is a strategic management system built through the integration of 4 different business perspectives into a calculation formula to help managers realize organizational goals. Besides being a measurement tool, it also amplifies the strengths of your organization.
The Balanced Scorecard developed by two Harvard Professors (Robert S. Kaplan and David Norton) was originally known as an aggregate performance measurement framework while still taking into account non-financial factors for more complete analysis and assessment of the “balance” of the organization. This balance is expressed between short-term and long-term goals, between financial and non-financial metrics, between performance indicators and performance indicators, among effective aspects of peripheral and intrinsic performance. Altogether, there are four aspects with causality that have a direct impact on an organization’s sustainability goals, including: Financial resources, Research and Development, Corporate internal processes, and Customer relationship.
Today, many businesses do not simply use balance scorecards to measure company performance. Instead, they employ a more sophisticated management system and full strategic planning. Therefore, the concept of the “new” Balanced Scorecard has also been revised into a method of turning the strategic plan of the organization from a case study into a long-term, daily journey.
You already know how important strategic planning is to the overall success of a business. But how to build a framework for implementing that strategy? If your current management system can’t figure out what to do and you’re tired of wasting time, now is the time to have a better solution. There are thousands of businesses using BSC to execute their strategies.
Scoring of scorecards helps to accurately evaluate the performance of each level, to determine appropriate and timely remuneration and commendation policies. At the same time, it helps to allocate resources scientifically and balance, thereby increasing productivity in a sustainable way. Here are the basic steps your organization can take when designing a balanced scorecard:
We’ll take a closer look at the steps for creating a balance scorecard later in the series.
Source: Clearpoint Strategy
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