Balanced Scorecard | Its time to look at your business

The trendy term word to use in today’s business environment is “balanced scorecard”, but what is it and what can it do for my business? This article explains what a balanced scorecard is and attempts to describe the concept in plain English.

A Performance Measurement Tool

In simple terms, a balanced scorecard is best described as a performance management tool to help executives focus on the key elements that are driving their business. Usually the executive has a small number of key elements they are monitoring; these can be both non-financial and financially related measurements. Often it is heavily aligned with KPI’s (Key Performance Measures).

The Scorecard

One of the elements of a balanced scorecard is that it describes in detail the measures that are in place. There is no room for vague descriptions which staff will struggle to understand. It is designed to give a broader overview of the business and can relate from anything such as Human Resources to sales performance.

The great thing about introducing them for relevant areas of your business is that they can co-exist with other tools used to run your business e.g. strategic planning tools.

Balanced Business

Want to ensure that your strategy and vision are actually integrated into your day to day business, then the scorecard approach is the one for you. The scorecard encourages businesses to introduce a clear vision to their staff and by staff reacting to the objectives detailed in the scorecard, they are in turn contributing to the effectiveness of the business strategy.


The balanced scorecard approach takes into consideration the various areas within your company and knock on effects that one department has on another. You could of course have great success in one department , but this could be at significant detriment to another area; thus the balanced effect takes this into consideration and therefore all areas achieve their objectives. It is a key factor that information (data) is required in order for this business approach to work (see my article on business analytics).

Customer Satisfaction

What every company wishes to achieve is customer satisfaction whilst maintaining a good profit line. The balanced scorecard builds on this as a major influence of its outcome. The theory is heavily built on previous methodologies such as continuous improvement, Total Quality Management and other such like theories.


The scorecard consists of four primary segments, the explanation and clarification of the strategy of the organisation, putting in place the measures that will contribute to the realisation of the company’s strategy and setting targets; the alignment of strategic objectives and finally acting upon learning and feedback.

The Organisation

Strategic Performance Management automates the creation and deployment of a Balanced Scorecard – enabling managers to update the scorecard at regularly scheduled intervals.

The balanced scorecard consists of four sections: clarifying and translating vision and strategy; communicating and linking strategic objectives and measures; planning, setting targets, and aligning strategic initiatives; and enhancing strategic feedback and learning. In addition to the strategic management processes, two kinds of business processes may be identified: Mission-oriented processes.


If you are looking to implement the Balanced Scorecard then what you need to do is look at your strategy and what key measures will help you achieve that strategy. Look at your business and create a selection of key measures (with targets) that will contribute to your businesses success, These can be financial or non-financial (e.g. training for your staff).

Ensure that you have regular reviews and if your business circumstances change, then review the measures on your scorecards and bring them into alignment with your most current business strategy.

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