Balanced scorecard - Definition & Meaning
What is Balanced scorecard?
Balanced scorecard is a framework which comes under the purview of strategic planning and performance management for an organization. The basic purpose it serves is to align an organization’s activities to its vision, mission and strategy. Balanced scorecard framework was proposed by Norton and Kaplan.
In addition to this, the framework also aids in the performance management of the proposed activities. This is achieved by laying down some financial and non-financial measures and attaching with them some target values against which the current performance of a business can be gauged and corrective actions can be taken. The most important point to note is that it provides both operational as well as financial control on the business as it includes non-financial measures as well in addition to the financial measures.
According to Norton and Kaplan who proposed the framework, we should view or rather measure an organization from four perspectives:
1. Learning and Growth: This refers to the activities pertaining to employee training and corporate culture.
2. The Business Process: This measure refers to the internal business processes which is the most important measure pertaining to the field of operations management.
3. The Customer Perspective: This measure mainly pertains to the marketing department which deal with the customer satisfaction indices.
4. The Financial Perspective: Finally, the financial perspective, which evaluates the activities from a financial standpoint.
Hence, this concludes the definition of Balanced scorecard along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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