Balance Score card is a strategic planning and management system.

It’s a framework used to prioritise projects, products and services, measure and monitor progress towards strategic targets.

The BSC examines an organisation from four different perspectives to help develop objectives, measure key performance indicators, targets.

1. Financial (Stewardship)- here financial performance and use of financial resources is measured

Essentially, any key objective that is related to the company’s financial health and performance may be included in this perspective. Revenue and profit are obvious objectives that most organisations list in this perspective. Other financial objectives might include:

Cost savings and efficiencies (for example, a specific goal to reduce production costs by 10% by 2023)

Profit Margins (increasing operating profit margins, for instance)
Revenue sources (for example, adding new revenue channels)

How to reduce the cost of production can also be factored in this area as well

2. Customer/Shareholders- performance is viewed from the perspective of customer’s satisfaction and that of the shareholders as well.

Included in this perspective you might find objectives for:

Customer service and satisfaction (increasing net promoter scores, or reducing call centre waiting times, for example)
Market share (such as, growing market share in a certain segment or country)
Brand awareness (for example, increasing interactions on social media)

3. Internal process (business operations)- performance is related to product, service and key business processes.

What processes do you need to put in place to deliver your customer- and finance-related objectives? That’s the question this perspective aims to answer. Here you would set out any internal operational goals and objectives – or, in other words, what does the business need to have in place and what does the business need to do well in order to drive performance?

Examples of internal process objectives might include:

Process improvements (for example, streamlining an internal approval process)
Quality optimisation (such as, reducing manufacturing waste)
Capacity utilisation (using technology to boost efficiency, for instance)

4. Organisational capacity (Learning and growth)- Human capital, culture and infrastructure

this perspective is often broken down into the following components:

Human capital – skills, talent and knowledge (for example, skills assessments, performance management scores, training effectiveness)
Information capital – databases, information systems, networks and technology infrastructure (such as, safety systems, data protection systems, infrastructure investments)
Organisational capital – culture, leadership, employee alignment, teamwork and knowledge management (for example, staff engagement, employee net promoter score, corporate culture audits)

Research has shown that organisations that use a Balanced Scorecard approach tend to outperform organisations without a formal approach to strategic performance management. The key benefits of using a BSC include:

A. Measure key performance indicators that are fundamental to the organisational growth

B. Find out how aligned the company is to the strategy necessary for accomplishing the company’s vision and mission

C. Ascertain how related each processes are, and focus on the processes that can easily help the organisation to make more finances with is the main focus of the balance score card

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