The Balanced Scorecard

The Balanced Scorecard (BSC) is a multi-dimensional framework for describing, implementing and managing strategy at all levels of an enterprise, by linking objectives, measures, targets and initiatives to an organisation’s strategy.  The scorecard provides an enterprise view of an organisation's overall performance by integrating financial measures with other key performance indicators around customer perspectives, internal business processes, and organisational growth, learning and innovation.

Since the concept was introduced by Dr Robert Kaplan and Dr David Norton in 1992, BSCs have been implemented at corporate, strategic business unit, shared service functions, and cascaded to team and individual levels at hundreds of organisations worldwide – in both the private and public sectors.  A recent international survey found that more than half of the top 1,000 organisations globally have adopted the BSC; in addition, it noted strong levels of satisfaction among BSC users.

Let’s clear up some common misconceptions.  The BSC is not a measurement system, with a static list of measures; it is a performance management process, which provides a framework for implementing complex programmes of change.  The BSC is not a strategy development process, but rather a strategy implementation tool: it enables organisations to clarify their vision and strategy and translate them into action.  And a good BSC has both quantitative and qualitative objectives and measures.

For organisations in the public sector, the original 4-perspective model in the diagram above is typically extended to a 5-perspective model, where the public perspective is additionally brought into consideration (“If we succeed, how will we look to the public?”).

The key components of a balanced scorecard are set out in the diagram below: