Balanced Scorecard for Better Strategy Planning and Management
March 3, 2022
Balanced Scorecard (BSC) is a performance evaluation and management tool that gives a quick and precise view of business Key Performance Indicators (KPIs). Using different KPI metrics, BSC identifies, analyses, controls, improve internal business functions, and measures external outcomes. Balanced Scorecard provides a quantitative analysis of various performance metrics through which organisations can interpret information and make better decisions. A balanced scorecard connects the dots between various strategic planning and management components.
Organisations use a Balanced Scorecard to :
- Define and enhance the business strategies
- Understand the vital elements of the business strategy
- Link strategic objectives to long-term goals, annual budgets and resource allocation processes
- Improve organisational vision and strategy
- Facilitate change within the organisation
The Balanced Scorecard essentially calls organisations to create internal metrics to assess their business performance in four key areas. They are Finance, Customer, Process and People.
Finance Goals - Analysis of financial goals that will have a positive impact on the organisation (revenues, earnings, return on capital, cash flow)
Customer Goals- BSC analyses metrics like on-time delivery, quality, customer satisfaction, market share, customer loyalty and others that the customers value the most.
Process Goals- BSC analyses the organisation's ongoing processes and identifies ways to align them with financial and customer goals (quality measures, productivity rates, timeliness). Assessing internal business processes helps the organisation understand how smoothly and efficiently the business is running.
People Goals- Capabilities that the employees should possess to achieve the overall organisational goals (morale, knowledge, turnover, use of best-demonstrated practices). It is about the general corporate culture.
