Question

1. How does the Balanced Scorecard approach differ from traditional approaches of performance evaluation?
2. Discuss the four perspectives of the Balanced Scorecard. In your discussion include a description of each perspective and why it is important. Provide one example of possible performance measure for each perspective.

Answer 1

Balanced scorecard approach differ from traditional approaches of performance evaluation as given below-

Balanced scorecard is for managing a business or organisation.

Balanced scorecard is a measures performance of company. It focus on achieving objectives. It compare current performance against targeted performance.

Whereas, traditional approach is not values company's performance. It means they don't motivate employees and do not provide quality products and services.

Balanced scorecard four perspectives-

Financial - Aim is to satisfy stakeholders in company such as, owners, employees, suppliers, government etc. Objective of this perspective is to achieve financial objectives. Example - Profitability, growth.

Customer - satisfying needs of customers so they can buy product and services to attain financial perspective. Example - increase customer satisfaction and bring a new product.

Internal business process - support financial and customer perspective. Example - sales process and product implementation process.

Learning and growth - support financial, customer, internal business process with ability to change, improve and innovate. Example - By acquiring knowledge, skills etc.