Question

Describe the balanced scorecard and explain the reasoning behind it.

Answer 1

A balanced scorecard is a strategic planning tool. It is used by the organisation to:-

a) Communicate what their goal is

b) Prioritize projects and products

c) Monitor progress towards their goals

BSCs are used extensively in business and industry, government, and nonprofit organizations worldwide. 50% or more of large US firms have adopted the BSC.

Throughout the process of creating the BSC, an organization must first decide their goals that can be broken down into four distinct perspectives:

1. Financial goals—“What financial goals do we have that will impact our organization?”
2. Customer goals—“What things are important to our customers, which will in turn impact our financial standing?”
3. Process goals—“What do we need to do well internally, in order to meet our customer goals, that will impact our financial standing?”
4. People goals—“What skills, culture, and capabilities do we need to have in our organization in order to execute on the process that would make our customers happy and ultimately impact our financial standing?”