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Balanced Scorecard

What is Balanced Scorecard?

A balanced scorecard is a management system of measuring organizational strategies with performance objectives. The balanced scorecard concept originated back in 1992 by Dr. David Norton and Dr. Robert Kaplan that comprised of 4 perspectives they are :

  • Finance
  • Customer
  • Internal process
  • Learning & growth

The best way to define objectives is to align the BSC with the organization’s objectives and enable all the departments to define their objectives with reference to it. Here is an example for your better understanding.

E-commerce business started analyzing its performance based on the perspectives of the balanced scorecard.

  • From the financial perspective, they measured the costs and sales.
  • From the customers' perspective, they measured whether innovation was brought and new products were introduced.
  • From the internal process perspective, they measured how projects were accomplished.
  • From the learning and growth perspective, they measured whether the product development staff acquired additional knowledge.


Frequently Asked Questions

Why is it known as a balanced scorecard?

A balanced scorecard gives a balanced perspective on all the categories such as financial, customer, internal process, learning, and growth. In simpler words, balanced scorecard gives a overall view on a company, business unit or a project.

What is a HRM balanced scorecard?

Balanced scorecard is an strategic way to manage the effectiveness of a HR management of a company. It evaluates both the financial and non financial aspects of a company.

What are the benefits of a balanced scorecard?

The benefits of balanced scorecard are mentioned below;

  • Helps in strategy planning
  • Gives clear insights into the overall performance
  • Enhances performance management
  • Gives better alignments


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How to create an effective BSC?

BSC helps you achieve your organizations strategic goals.It works in a bottom-up approach. To create an effective BSC, you should keep the following things in mind;

  • Identify the goals of your orgnization with respect to the perspectives
  • Strategy mapping of the objectives
  • Outlines the KPI’s
  • Include various perspectives and interlink them
  • Analyze and share

What are the disadvantages of a BSC?

The disadvantages of a BSC are mentioned below;

  • It requires excessive framework to implement
  • Strong leaderships can survive easily
  • Alignment between the employees can be difficult
  • Include various perspectives and interlink them
  • Rigid in nature for some companies

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