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The Balanced Scorecard is a strategic performance management tool that uses four perspectives (financial, business process, learning and growth, and customer) to evaluate business effectiveness. It was developed by Dr. Robert Kaplan and Dr. David Norton in the 1990s and can be used to create and evaluate business strategies.
The Balanced Scorecard is a strategic performance management tool used by companies to evaluate the effectiveness of their business functions. This tool was developed by Dr. Robert Kaplan of Harvard Business School in the United States and Dr. David Norton, and the term was coined in the 1990s. The Balanced Scorecard uses a strategic plan focused on four perspectives that the company can use to balance the different functions when developing business strategies: financial, business process, learning and growth, and the customer.
The first balanced scorecard perspective relates to the company’s financial operations. The financial perspective includes operating income, rate of return on capital investments. Financial information is important to businesses because any economic resources or business inputs must eventually be paid for by the business. Excessive use of external debt or equity financing can limit the company’s operating effectiveness because interest must be paid for such financing. The financial perspective refers to how shareholders view a company.
The second part of the Balanced Scorecard is the business process perspective. This perspective focuses on a firm’s business costing process for the allocation of goods and services, the quality of goods produced, how resources or economic inputs are acquired, and the fulfillment of customer orders. This perspective highlights how well the company operates and which functions may need improvement to increase productivity. It refers to how a company’s products and services meet customer needs.
The third part of the balanced scorecard is the learning and growth perspective. This perspective focuses on internal business operations and the company’s ability to maximize employee resources. Common measures in the learning and growth perspective include employee job satisfaction, retention rate for company employees, each employee’s skill sets, and each employee’s individual ability to effectively and efficiently complete tasks. business functions. Emphasize the importance of easy communication between employees, mentoring, mentoring, and effective teaching and learning new skills. The ability to train employees effectively is key to a company’s ability to change with technology and not only meet customer needs, but perhaps even anticipate them.
The final part of the balanced scorecard system is the customer perspective. This perspective is about how the company measures customer satisfaction, repeat sales, and target market or demographic analysis. Customers are an important part of the business process; Using the leading indicators described by the balanced scorecard customer perspective method can help companies understand how well they meet consumer needs and future consumer desires.
The Balanced Scorecard combines these four perspectives to help companies make decisions about creating competitive business strategies in the corporate environment. This management tool can also be used to evaluate current business strategies and make adjustments to improve strategy. Companies can also use the Balanced Scorecard to plan, set goals and develop feedback channels for use in business operations.
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