What Is a Balanced Scorecard
The system involving management and strategic planning for the improvement of external and internal communications in various industries and businesses is termed as Balanced Scorecard. This is widely seen in both non- profit and government organizations across the globe which helps in the alignment of business activities of any sort. This helps to monitor the performance of the organizations against their strategic goals. Their extensive use in business is of wide importance and helps immensely in producing a framework for the measurement of the performance.
Balance Scorecard gives executives and managers a better balanced view of the performance of the organization. Initially it was just used as a framework meant for the measurement of performance but has gradually evolved into full strategic management and planning system. It provides measurement of the performance and also helps the planners identify the steps required to be taken and measured. Executives and managers are thus able to truly work out their strategies in a planned way.
It helps to recognize previous faults, vagueness and weaknesses of management approaches and helps to provide clearer prescription. This helps to gauge the performance in a much better way and make necessary amendments in their management approaches. This gives an idea to the companies as to what measures ought to be taken in order to produce better results. Financial perspectives thus become well balanced. The strategy and vision of the companies are well clarified and well executed by the executives and managers.
Balanced Scorecard also helps to provide feedback around processes involving both internal businesses and external outcomes so as to bring a continuous improvement in results and strategic performances. The strategic planning of an enterprise is transformed into the central nerve from mere academic exercise. This brings about an increase focus on results and strategy of businesses, companies and organizations.
Balanced Scorecard helps in the alignment of the strategy of the organization to the work done by people on a regular day-to day basis. The strategy and vision of the organization’s communications are markedly improved. Implementation of Balanced Scorecard helps to prioritize initiatives and projects. The future performance of the drivers is more focused and helps to retain the age old method of financial measurements.
The financial measurements earlier in use were inadequate for the creation of future value. This new improved method suggests that the organization must be viewed from four points of view, metrics must be developed and data must be collected and analyzed with reference to all the perspectives for better performance. An ongoing learning mode is now mandatory to be prevalent in knowledge workers. The growth and learning in all cases is very necessary for the essential foundation of any organization that runs on knowledge workers. This is the most essential element required for the success of the company.