The balanced scorecard (BSC) framework is designed to help a corporation align its strategy and measure performance for purposes of accountability and strategic decision making. Each employee in the organization must understand what each BSC metric value represents to improve their area of responsibility and the result.
It offers a holistic, non-financial, and non-ranking measure of organizational performance. A Balanced Scorecard is where employees “look beyond their noses.” It defines and visualizes what an organization stands for and describes where it currently operates. It concentrates on the organizational levels of core business processes and external customer perspectives and the individual departments and their internal functioning.
Benefits of Balanced Scorecard:
Four perspectives of a balanced scorecard are:
3. Internal business processes, and
4. Learning and growth.
A balanced scorecard is a management technique designed to bring together different viewpoints on an organization’s performance. It provides information that can help improve decision-making and move the organization toward its strategic objectives.
The balanced scorecard is a strategic approach to measure the effectiveness of HR management. It evaluates the non-financial performance measurements alongside the traditional financial metrics. A balanced scorecard is a strategic procedure for aligning organizational resources, processes, and results. The balanced scorecard specifically refers to strategy alignment at the enterprise level.
Here are some additional benefits of a balanced scorecard:
1. Communicates all key elements of strategy to top management and employees.
2. Helps in decision-making processes.
3. Provides a common language, framework, and process to evaluate performance.
4. Helps you to improve customer relationships.
5. It gives you a way to predict your future performance based on trends identified in past performance data.
A key performance indicator (KPI) is similar to a BSC but is not as comprehensive. KPIs measure specific aspects of an organization’s activities, while BSCs focus on several elements at once. In other words, KPIs are one aspect of BSCs.
Implementing the Balanced Scorecard is not an easy task because it involves the participation of all employees and the continuous development of all aspects of an organization. The Balanced Scorecard is most beneficial when used as a tool for evaluation, planning, and communication.