A balanced scorecard is a report that provides a multidimensional
perspective of organizational performance. It contains measures
reflecting four perspectives of the organization: financial, customer,
internal operations, and innovation and learning. For each dimension,
the balanced scorecard shows the organization's goals and specific
measures that reflect performance in
attaining those goals. Together, the four dimensions of the balanced
scorecard provide a much more comprehensive overview of
organizational performance than that provided by financial measures
alone [Rom15]. Companies can easily identify factors hindering
company performance and outline strategic changes tracked by
future scorecards. With the balanced scorecard, when viewing
company
objectives, they look at the company as a whole. An organization may
use the balanced scorecard to implement strategy mapping to see
where value is added within an organization. A company also utilizes
the balanced scorecard to develop strategic initiatives and strategy
objectives (
What Is a Balanced Scorecard (BSC), How Is It Used in
Business?
, 2022).
Companies are using the scorecard to:
• Clarify and update strategy
• Communicate strategy throughout the company
• Align unit and individual goals with the strategy
• Link strategic objectives to long-term targets and annual
budgets
• Identify and align strategic initiatives
• Conduct periodic performance reviews to learn about and
improve strategy. (
Using the Balanced Scorecard as a Strategic
Management System
, 2021)
Given that the balanced scorecard is multidimensional, there are so
many ways it can assist in decision making.
The four dimensions provide almost all the information management
would need for any situation, as outlined above.
References:
Romney, M. B., Steinbart, P. J., Summers, S. L., & Wood, D. A. (2020).
Accounting Information Systems
(15th ed.). Pearson Education (US).
https://mbsdirect.vitalsource.com/books/9780135573082
What Is a Balanced Scorecard (BSC), How Is it Used in Business?
(2022, April 6). Investopedia.
https://www.investopedia.com/terms/b/balancedscorecard.asp
Using the Balanced Scorecard as a Strategic Management System
.
(2021, March 8). Harvard Business Review.
https://hbr.org/2007/07/using-the-balanced-scorecard-as-a-
strategic-management-system
