What is Balance ScoreCard
The Balanced Score Card (BSC) is a strategic planning and management system that organizations use not only to track their performance against operational objectives but also to ensure that they are aligned with their overall strategy. Developed by Drs. Robert Kaplan and David Norton in the early 1990s, the BSC has since become a foundational tool in strategic performance management across a myriad of industries globally.
Key Components of the Balanced Score Card
BSC breaks down into four distinct perspectives, which collectively provide a holistic view of an organization’s performance:
- Financial Perspective: Focuses on metrics such as profitability, revenue growth, and return on investment.
- Customer Perspective: Concentrates on customer satisfaction, retention rates, and market share.
- Internal Process Perspective: Evaluates operational efficiency metrics like process efficiency and quality.
- Learning & Growth Perspective: Assesses an organization’s ability to innovate and improve, with metrics related to employee training and corporate culture.
Examples of the Balanced Score Card in Action
Manufacturing Company
- Financial: Increase quarterly profits by 10%.
- Customer: Achieve a 95% customer satisfaction rate.
- Internal Processes: Reduce production cycle times by 15%.
- Learning & Growth: Train 90% of employees in new production technology.
Healthcare Institution
- Financial: Reduce operational costs by 5%.
- Customer: Attain a patient satisfaction rate of 98%.
- Internal Processes: Implement electronic medical records in all departments.
- Learning & Growth: Launch a continuous medical education program for all staff.
In essence, the Balanced Score Card offers organizations a balanced way to look at their operations from the most critical perspectives. It ensures that businesses are not just driven by financial metrics but also value their customers, internal processes, and capacity for growth and learning.
To read more — OKRs Vs Balance Score Card