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Concept
Balanced scorecard
Summary
A balanced scorecard is a strategy performance management tool – a well structured report, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions.
The phrase 'balanced scorecard' primarily refers to a performance management report used by a management team, and typically this team is focused on managing the implementation of a strategy or operational activities – in a 2020 survey 88% of respondents reported using Balanced Scorecard for strategy implementation management, 63% for operational management. Balanced Scorecard is also used by individuals to track personal performance, but this is uncommon – only 17% of respondents in the survey using Balanced Scorecard in this way, however it is clear from the same survey that a larger proportion (about 30%) use corporate Balanced Scorecard elements to inform personal goal setting and incentive calculations.
The critical characteristics that define a Balanced Scorecard are:
its focus on the strategic agenda of the organization/coalition concerned;
a focused set of measurements to monitor performance against objectives;
a mix of financial and non-financial data items (originally divided into four "perspectives" - Financial, Customer, Internal Process, and Learning & Growth); and,
a portfolio of initiatives designed to impact performance of the measures/objectives.
Balanced Scorecard was initially proposed as a general purpose performance management system. Subsequently, it was promoted specifically as an approach to strategic performance management. Balanced scorecard has more recently become a key component of structured approaches to corporate strategic management.
Two of the ideas that underpin modern balanced scorecard designs concern making it easier to select which data to observe, and ensuring that the choice of data is consistent with the ability of the observer to intervene.
Organizations have used systems consisting of a mix of financial and non-financial measures to track progress for quite some time.
Official source
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