Balanced scorecard (BSC)

Definition

A balanced scorecard (BSC) is a strategic management tool used to monitor and manage an organization's performance against its strategic goals. It incorporates financial and non-financial metrics across four perspectives: financial, customer, internal business processes, and learning and growth.

5 Must Know Facts For Your Next Test

1. The balanced scorecard was developed by Robert Kaplan and David Norton in the early 1990s.
2. It aligns business activities to the vision and strategy of the organization by monitoring performance metrics across four key perspectives.
3. The financial perspective focuses on traditional financial performance measures like revenue, profit margins, and return on investment.
4. The customer perspective evaluates customer satisfaction, retention, acquisition, and market share.
5. Internal business processes measure operational efficiency and effectiveness while learning and growth assess employee training, development, and knowledge management.

Review Questions

• What are the four perspectives of a balanced scorecard?
• How does the balanced scorecard help align business activities with organizational strategy?
• Who were the developers of the balanced scorecard?

Related terms

Key Performance Indicators (KPIs):

Quantifiable measures used to evaluate the success of an organization in achieving its objectives.

Strategic Management:

The process of formulating, implementing, and evaluating strategies to achieve organizational goals.

Performance Measurement:

The process of assessing progress toward achieving predetermined goals using various indicators or metrics.