Balance scorecards

Sharing is caring!

In an organization that cannot be measured, cannot be followed up and therefore cannot be managed. All the employees of an organization, regardless of their hierarchy, contribute to the fulfillment of the organizational goals, this is not exclusive of the managers of the companies.

Robert K Aplan and David Norton wrote in 1992 an article in the Harvard Business Review called ” The Balanced Scorecard.” Measures that Drive Performance that was presented as a revolutionary tool to align all the members of an organization towards the real achievement of the defined business strategies, all this through the monitoring of objectives measured through specific indicators.

We could understand the Balanced Scorecard (BSC) as a tool or methodology that helps achieve an integrated and strategic balance of the progress, growth, productivity, and competitiveness of an organization and that provides the direction the company in the future.

The basic premise of the BSC is that it allows converting the vision of the company into action by measuring a group of indicators that are grouped into four specific categories, through which you can get an overview of the entire business and the organization.

The four categories that make up the Balanced Scorecard are financial, customers, internal processes, and training, innovation and growth. BSC suggests that these four perspectives cover in their entirety the processes that a company needs to develop for it to work successfully. Let’s review the four perspectives:

  1. Financial perspective:

It corresponds to the indicators, which historically have been the most used, to measure the performance of a company since they reflect the specific situation of the investments and economic results of the business.

  1. Client perspective:

It allows the identification of the market and the client to which the products or services offered by the company are directed. It reflects the market situation in which the company competes and provides the information to improve the share of the market through the generation, acquisition, and retention of customers.

  1. Internal processes perspective:

The performance in the internal processes of an organization is what will allow the financial and client objectives to be achieved. This perspective helps managers to identify the strategic goals and indicators that are associated with the basic processes of the organization or company, such as costs, deadlines, limits, and efficiency of production, whose success depends on the satisfaction of financial and customer expectations.

  1. Innovation and growth perspective:

It is the most important perspective regarding long-term results; it allows to identify the infrastructure that is needed to create and maintain value in the business in the long term. This category includes the training and growth of 3 areas in the company: systems, people, and organizational climate. Indicators include the training of human talent, the software, and developments, the facilities, the technology and equipment of the company that is necessary for success in the three previous perspectives.

The perfect balance between the four categories is what gives the name to the Balance Scorecard since it is presented as a balance between the clients that are external elements and the internal ones that are the processes, innovation and growth, all tied to the financial results. BSC allows you to maintain control of the state of the organization and the way in which actions and processes are carried out to convert the vision of the company.

Leave a Comment

Your email address will not be published.