The Balanced Scorecard helps you to make better decisions in today’s fast business pace. It monitors four distinct business perspectives: customers, financials, internal processes, and internal knowledge and growth. For each perspective you set and measure key objectives, to follow your company’s progress.
Download the Excel template that you can use to make your own Balanced Scorecard. Have a look at the example to get inspiration how this tool could be used.
After the business strategies are developed, they are deployed and tracked through the four ‘legs’ of the Balanced Scorecard. These four legs comprise four distinct business perspectives: The Customer Leg, the Financial Leg, the Internal Business Process Leg, and the Knowledge, Education, and Growth Leg. These four legs of the Balanced Scorecard are necessary for today's business executives and managers to be able to plan, implement, and achieve their business strategies:
How good are you at serving your customers? Set and measure your goals for attracting and keeping customers. For example, measure your customers' satisfaction with your products or services.
Is your company financially healthy? Set your financial objectives and keep track of how you are performing. For example, set and track your profit goals.
Internal Business Process
How effective and efficient are you at producing and delivering your products? Set your objectives for things like product quality, productivity of people and resources, speed of delivery and measure how they are doing over time.
Knowledge, Education, and Growth
How do you educate employees and gain new knowledge to maintain a competitive edge? Set objectives for how you keep your employees happy and employable. For example, set and track your employee education goals.
If you ignore any of these perspectives, it is like sitting on a stool with a broken leg. Eventually you will lose your balance and fall. To create a Balanced Scorecard, follow these steps:
- You have to identify a vision. Where is the organization going?
- Identify strategies and think about how you will get there.
- Define the objectives for each perspective, which means you have to ask what do we have to do well in each perspective.
- Define how to measure the objectives for each perspective.
- Now it is necessary to think of the evaluation of your Scorecard. Consider how to secure that the right things are measured.
Based on this work you should create action plans and plan reporting and operation of the Scorecard.