Creating a Balanced Scorecard

The ‘Balanced Scorecard’ is a method of assessing organisational performance, developed by Kaplan and Norton in 1992. The authors believed conventional methods of assessment were outdated and hence attempted to develop a method that covers a broader range of business areas. The scorecard has become an essential method of measuring the success of your organisation’s strategy.

The indicators covered are split into two categories; financial and operational. Within these two categories the scorecard focuses on four key areas, financial, internal business processes, learning and growth and customer. Within these areas are specific measurable variables i.e. revenue growth, market share, delivery percentage, productivity etc.

The idea of the scorecard is to give a far more detailed assessment of performance than previous methods, which tended to generally focus on financial indicators. The authors argued that a company could be highly profitable, whilst drastically losing their market share or reputation and previous methods will only have revealed this when it was too late to recover. These indicators can then also be put into diagrammatic form to reveal where each areas of the business connects with the others.

This method of measuring performance has become an essential tool for implementing change and is far more effective than previous methods.

For more information, visit:

Ziegel, Eric R., R. Kaplan, and D. Norton. (1998). The Balanced Scorecard. Technometrics 40.3 (1998): 266. Web.