Balanced Scorecard

What is Balanced Scorecard ?

• strategic planning and management system

used extensively in
business and industry, government, and nonprofit
organizations worldwide
 Use ?

• To align business activities to the vision and strategy of

the organization

• To improve internal and external communications, and

monitor organization performance against strategic
goals
 History

Originated by,
Drs. Robert Kaplan (Harvard Business School) &
David Norton as a

performance measurement framework

Cont..
While the phrase balanced scorecard was coined in
the early 1990s, the roots of the this type of
approach are deep, and include the pioneering
work of General Electric on performance
measurement reporting in the 1950’s and
Cont..

The work of French process engineers

(who created the Tableau de Bord – literally,
a "dashboard" of performance measures)
in the early part of the 20th century
 Advantages ?
• Transforms an organization’s strategic plan from an
attractive but passive document into the "marching
orders" for the organization on a daily basis

• Provides a framework that not only provides

performance measurements, but helps planners
identify what should be done and measured
BSC Diagram
 Perspectives

Four perspectives:
 The Learning & Growth Perspective
 The Business Process Perspective
 The Customer Perspective

 The Financial Perspective

Cont..
Financial perspective :
Includes measures such as operating income, return on
capital employed, and economic value added.
Customer perspective :
Includes measures such as customer satisfaction,
customer retention, and market share in target
segments.
Cont..
Business process perspective:
Includes measures such as cost, throughput,
and quality. These are for business processes such as
procurement, production, and order fulfillment.
Learning & growth perspective:
Includes measures such as employee,
satisfaction, employee retention, skill sets, etc.
Cont..

Each perspective of the Balanced Scorecard

includes
• Objectives,
• Measures of those objectives,
• Target values of those measures,
• Initiatives
Cont..
• Objectives - major objectives to be achieved, for
example, profitable growth.
• Measures - the observable parameters that will be used
to measure progress toward reaching the objective. For
example, the objective of profitable growth might be
measured by growth in net margin.
• Targets - the specific target values for the measures, for
example, +2% growth in net margin.
• Initiatives - action programs to be initiated in order to
meet the objective
Cont..
Thank