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Balanced Scorecards
The focus of the Balanced Scorecard is to provide organizations with metrics against which to measure their success.
The Balanced Scorecard is a tool that management can use to turn business strategy into action by communicating strategic intent to the entire organization and motivating employees through measurement of key performance indicators. A manager can use the scorecard to monitor business performance against established targets on all levels of the organization.
The philosophy of the Balanced Scorecard is simple: The organization must set targets and measure the performance related to strategic and operational objectives. To do this the organization must develop a balanced picture of the organization - focusing on financial as well as non-financial issues, internal as well as external issues, and performance as well as outcome measures.
A Balanced Scorecard definition includes the following entities:
Business Objectives
Perspectives: According to Kaplan & Norton, perspectives include the scorecard measures:
Customer: Scorecard measures can include customer loyalty, customer satisfaction, service levels, and so on.
Internal business: Scorecard measures can include sickness, employee turnover, lead time, and so on.
Innovation and learning: Scorecard measures can include employee education programs, and so on.
Financial: Scorecard measures can include growth in revenue, and so on.
The Balanced Scorecard is part of the Enterprise Direction definitions, accessed in the Critical Success Factors/Critical Business Issues (CSF/CBI) tab.
See also
Strategy Maps and Balanced Scorecards