Balanced scorecard

Definition

A balanced scorecard is a strategic planning and management system that organizations use to align business activities with the vision and strategy of the organization. It improves internal and external communications and monitors performance against strategic goals.

5 Must Know Facts For Your Next Test

1. It includes four perspectives: Financial, Customer, Internal Business Processes, and Learning & Growth.
2. The balanced scorecard helps in translating an organization's vision into clear objectives and measures.
3. It integrates financial measures with non-financial ones to give a more comprehensive view of organizational performance.
4. Organizations often use it to identify key performance indicators (KPIs) for monitoring progress.
5. The balanced scorecard encourages a balance between short-term and long-term objectives.

Review Questions

• What are the four perspectives included in a balanced scorecard?
• How does a balanced scorecard help organizations align their activities with their strategic goals?
• Why is it important to include both financial and non-financial measures in a balanced scorecard?

Related terms

Key Performance Indicators (KPIs):

Quantifiable metrics used to evaluate the success of an organization in meeting its objectives.

Strategic Planning: The process of defining an organization's direction and making decisions on allocating resources towards this strategy.

Performance Measurement:

The process of evaluating how effectively an organization is achieving its objectives using various metrics.