INFORMATION SYSTEM

The Balanced Scorecard is a strategic management framework that provides a comprehensive view of an organization's performance by focusing on multiple perspectives beyond just financial metrics. Developed by Robert S. Kaplan and David P. Norton in the early 1990s, the Balanced Scorecard helps organizations align their strategic objectives with key performance indicators (KPIs) and measure success in various areas. The framework typically includes four perspectives: financial, customer, internal business processes, and learning and growth.

 

 

Financial Perspective:

This perspective assesses the organization's financial performance and results. It includes traditional financial metrics like revenue growth, profitability, return on investment (ROI), and cost efficiency.

Objectives in this perspective focus on creating value for shareholders and ensuring the financial sustainability of the organization.

Customer Perspective:

The customer perspective emphasizes how the organization is perceived by its customers and stakeholders. It includes metrics related to customer satisfaction, loyalty, market share, and the acquisition of new customers.

Objectives in this perspective focus on meeting customer needs and expectations to drive long-term success.

Internal Business Processes Perspective:

This perspective looks at the internal processes and activities that are critical to delivering value to customers and achieving financial success. It involves identifying key processes, improving efficiency, and streamlining operations.

Metrics in this perspective might include cycle time, quality, productivity, and innovation, reflecting the organization's ability to deliver products or services effectively.

Learning and Growth Perspective:

The learning and growth perspective emphasizes the organization's capacity for innovation, improvement, and development. It includes metrics related to employee training, skills development, employee satisfaction, and innovation. Objectives in this perspective focus on creating a positive and supportive work environment that encourages continuous learning and growth.

                                             The Balanced Scorecard encourages organizations to balance their focus on these four perspectives to ensure a holistic approach to performance management. It provides a framework for translating the organization's vision and strategy into tangible, measurable objectives and initiatives. By using a variety of metrics from different perspectives, the Balanced Scorecard helps organizations avoid over-reliance on financial indicators and encourages a more balanced and strategic approach.

Implementing the Balanced Scorecard typically involves the following steps:

Clarifying Vision and Strategy.

Identifying Strategic Objectives.

Selecting Key Performance Indicators (KPIs).

Setting Targets.

Initiative Planning.

Communication and Feedback.

The Balanced Scorecard is a widely adopted strategic management tool used by organizations of various sizes and industries to align their activities with their strategic goals, enhance performance measurement, and drive continuous improvement.