Question

The balanced scorecard uses both financial and nonfinancial measures. Explain the purpose of the balanced scorecard and identify two examples of nonfinancial measures that might be included therein.

Answer 1

A balanced scorecard is a strategic management performance metric used to identify and improve various internal business functions and their resulting external outcomes. Balanced scorecards are used to measure and provide feedback to organizations. Data collection is crucial to providing quantitative results as managers and executives gather and interpret the information and use it to make better decisions for the organization.

Characteristics :

1. Financial
2. Internal business process
3. Learning and growth
4. Customer Perspective

Non Financial Measures of balance scorecard:

1. Internal business process measures are as follows:
   • Capacity utilization
   • Order response time
2. Learning and growth measures are as follows:
   • Hours of employee training
   • Employee satisfaction
   • Employee turnover
3. Customer perspective measures are as follows:
   • Customer satisfaction
   • Number of customer complaints
   • Market share

DC