Balanced Scorecard System Fundamentals

Balanced scorecard system is an effective performance management system that can help business to monitor and track the performance of business strategies and objectives. Management team in many business are busy with the strategies and tactics, they neglect the results of the set goals. A good balanced scorecard system can provide business managers with the information they need so that they can make better decisions.


Four Aspects of Balanced Scorecard System

Balanced scorecard is an integrated performance management system that goes deep into the four crucial aspect of a business: the customers, finance, internal business process, learning and growth.

Balanced scorecard from customer perspective: The end users and customer are the key determine factors for the success of a business. Customer leg is to measures your customers’ satisfaction and their performance requirements. It basically ask the question, whether the products or services provided to the customers meet or exceed their expectations.

Balance scorecard from financial perspectives: The financial leg is to measure the financial aspects of the business. It is not enough for the business to meet the customer expectation, the business also need to have a good financial performance that meet the investors expectation.

Balance scorecard from process perspectives: This aspect of measurement is to define the key process that adds value to business as well as customers. It basically ask the question: what is the value creation process?

Balanced scorecard from learning and growth perspectives. This aspect is to track and measure the future potential growth and opportunities of the business. In today’s knowledge economy, the employees and talents are the most important assets of business. The learning and growth leg focus on the area.

Integration Approach to Measure Performance

It is essential to understand that the balanced scorecard take an integrate approach to measuring the performance of a business strategies. However, in real world, many business only focus on the two aspects: the financial and internal process. As a results, they miss the other key elements that are crucial for the sustainability of the business.

Balanced scorecard strategies need to closely link with your business strategies. It means that the management team needs to take the four legs into perspectives when formulating the business strategies. Executives and top managers needs to get an idea of how your strategies affect the four legs of the Balanced Scorecard and how your resources play a vital role in making those strategies work.