July 20, 2024

Understanding Balanced Scorecard (BSC)

The term balanced scorecard (BSC) refers to a strategic management performance metric used to identify and improve various internal business functions and the external outcomes that result from them. Managers and executives gather and interpret data, which is critical to providing quantitative results.

What is Balanced Scorecards(BSCs)

Dr Robert Kaplan, an accounting professor, and Dr David Norton, a business executive, were the first to introduce the balanced scorecard. It was first published in the Harvard Business Review in 1992 in the article “The Balanced Scorecard”—Measures that Drive Performance.” Kaplan and Norton worked on a year-long project with 12 high-performing companies.

BSCs were initially intended for for-profit businesses, later adapted for nonprofit organisations and government agencies.

By isolating four separate areas that must be analysed, the balanced scorecard model reinforces good behaviour in an organisation. These four areas, also known as legs, are as follows:

Learning and Growth
Business Processes

The BSC collects essential information such as objectives, measurements, initiatives, and goals that result from a business’s four primary functions. Companies can quickly identify factors that impede business performance and strategic outline changes that future scorecards will track. To learn about what are some profitable Part-Time Business Ideas, click here.

The Balanced Scorecard Model’s Characteristics (BSC)

Data is gathered and analysed from four aspects of a business:

1. Learning and Growth

The investigation of training and knowledge resources is used to analyse learning and growth. This first leg is concerned with how well information is captured and how effectively employees use that information to gain a competitive advantage in the industry.

2. Business Processes

The quality of products manufactured is used to evaluate business processes. Operational management is scrutinised to identify gaps, delays, bottlenecks, shortages, or waste.

3. Customer Perspectives

Customer feedback is gathered to determine customer satisfaction with the quality, price, and availability of products or services. Customers provide feedback on how satisfied they are with current developments.

4. Financial Data

Financial Data such as sales, expenditures, and income are used to understand financial performance. Dollar amounts, financial ratios, budget variances, and income targets are examples of financial metrics.

Benefits of a Balanced Scorecard (BSC)

Scorecards provide management with valuable insight into their company’s service and quality and its financial performance. Executives can train employees and other stakeholders and provide guidance and support by measuring these metrics.

Another significant advantage of BSCs is that they help businesses reduce their reliance on inefficiencies in their processes. This is known as suboptimisation. This frequently leads to decreased productivity or output, resulting in higher costs, lower revenue, and a breakdown in company brand names and reputations.

Balanced Scorecard Examples (BSC)

Corporations can create their internal BSCs. Banks, for example, frequently contact customers and conduct surveys to assess how well they provide customer service. Bank managers can use this information to help retrain staff if there are service issues or to identify any problems customers have with products, procedures, and services.


Balanced scorecards enable businesses to collect and analyse data from four critical areas. Companies can save time, money, and resources by consolidating information into a single report, allowing them to better train employees, communicate with stakeholders, and improve their financial position in the market. To learn about Non-Biodegradable Waste, click here.

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Sneha Shukla

I am an admin at shayarikidiary. I like to share information and knowledge. I love expressing my thoughts through my articles. Writing is my passion. I love to write about travel, tech, health, fashion, food, education, etc. In my free time, I like to read and research. My readings and research help me to share the information through my thoughts.

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