What is Balanced Scorecard? And How to Use it?

Peter Drucker once said, “if you can’t measure it, you can’t manage it”. It holds true in almost every perceivable context, including organizational performance. In order to manage the performance of a firm, it is important to first measure it. By measuring the performance of the organization in different functional areas, the managers can identify the potential opportunities for further improvement.

The balanced scorecard is a theoretical framework designed to measure the performance of an organization based on four key parameters which are learning and growth, business processes, customer perspective and financial growth. The performance measurement on each of these four areas allows an organization to meet its vision and strategy. Thus, according to an explanation by PenMyPaper writing team, the balanced scorecard framework acts as a tool for internal audit, which allows a firm to assess organizational performance in a holistic manner, and not just based on financial numbers.

Why Do You Need Balanced Scorecard?

The sole purpose of the balanced scorecard framework is to offer performance measure which goes beyond just the traditional financial achievements. It challenges the orthodox approach of focusing only on financial results such as revenue and profitability, while assessing the performance of a firm. The balanced scorecard aims at including other parameters to the measuring system which also plays a crucial role in the business operation.

It is important to understand that this framework should be viewed as a qualitative research methodology for measurement, rather than just a scorecard for keeping logs, even though it is called a "scorecard". It compels an organization to identify its objectives and then determine the initiatives which can help to achieve the said objectives. Not only does it help the company to accurately measure the achievement of individual objectives, but it also enables them to avoid initiatives which do not have any contribution to those objectives.If you take an example of the Google culture, you can see that the organization is totally committed to the betterment of its employees through technology and ingenious thinking.

What is Balanced Scorecard All About?

As mentioned before, the balanced scorecardpresents four different parameters for performance measurement. Let us look at each one of them so that it can help to apply the framework in your own formal essay. Each of these parameters can be assessed based on respective objectives, measures, targets and initiatives. It should be noted that the balance score card helps in identifying the objectives and also tell us how we can achieve and how we can measure the results.

Customer: In almost every business venture, the customers act as the source of revenue. Therefore, it is extremely crucial to make sure that the company is able to satisfy them by meeting or exceeding their expectations. In order to perform better in this parameter, you need ask the question:

“how should we appear to our customers, in order to meet our target objectives?”

While answering this question you should come up with various new strategies and initiatives that can help achieving a strong positive image among the customers. You need to view the organization from the perspective of the customers to find out how they see the organization and how do you want them to see the organization. This as a result should help you to identify the actions needed to achieve what you want.

Financial: The financial performance refers to the ability of the organization to generate revenue and achieve profitability, in order to offered the expected returns to the shareholders and investors. This parameter can be measured by asking the question:

“how should we appear to our shareholders and investors, in order to achieve financial success?”

As it has quantitative research parameters, it is much easier to underpin the financial objectives and measure its achievement. The objectives typically involve increasing profitability in every aspect of the business operations. However, it is more important to determine the initiatives or projects which can facilitate achieving the financial objectives.

Internal Business Process: The internal business process refers to the objectives and measures which determine how well the business operations are being carried out and whether the value generation is able to meet the expectations of the stakeholders. In this case, if should be asked:

“which business processes we should excel at, in order to satisfy our stakeholders?”

In this case, it should be noted that improving the business processes can help in reducing costs, increase employee efficiency and satisfaction. Moreover, development of new processes can also help the organization in offer new value proposition to the customers, thereby strengthening its competitive advantage.

Learning and Growth: Finally, the learning and growth refers to the objective and measures of skill development and improving the human capital in order to achieve growth in business. It also involves development of infrastructure and new technologies, which can further strengthen the competitive advantage of the firm. This parameter can be assessed by asking the question:

“how well we are positioned to achieve future growth and sustenance of the business.”

Identifying the areas of learning and growth can help the company to streamline its investments into areas which can foster long term success.

Balanced Scorecard Template

In the previous sections we have discussed about what is balanced scorecard and its importance to organizations. Below my paper writer has depicted how you can implement a balanced scorecard. The best way to implement the balanced scorecard is in a clear tabular form, which makes it easier for the grader to understand your content.

As highlighted in the table above, the four parameters are highlighted in four respective rows and each of them will be measured in terms of the objectives, measures, targets, and initiatives. The objectives determine what you want to achieve in a particular parameter. For example, in case of the customer parameter, the objective can be to improve the customers' preference towards the brand. The measure will be the feedback given by the customers. The target refers to the definitive and measurable goal that the company needs to achieve within a fixed time. The initiatives are the projects or the action required to achieve the target. By filling each cell of the table, you will be able to present a comprehensive balanced scorecard of your chosen organization.

Balanced Scorecard Example

Nothing teaches better than an example. So, before you start looking around for the best essay writers online, let us check out an example. In the following table we have prepared a full-scale balanced scorecard on a fictitious e-commerce company. The objective here is to show you how to integrate the framework in your essay body.

The example presented above is a highly generic one, can be fitted into any organization. However, it should be noted that in your strategic management and marketing essay, the objectives, measures, targets and initiatives can be completely different. Depending on the nature of the business and the environment in which the company operates, the objective can vary greatly from one organization to another. Lastly, always make sure that the initiatives are realistic and the targets are measurable and time bound.

The balanced scorecard can also be used to develop a strategy map for the organization to achieve its vision. As highlighted in the flowchart below, the learning and growth of the organization can help in improving the skill set of the employees, which in turn can help to improve the internal processes of the firm. The improved internal processes can then facilitate in improving customer satisfaction and their brand preferences, which is finally reflected in terms of the better financial results.

Need Expert Help on Balanced Score Card? Hire our Professionals

The application of balanced scorecard in your paper can hold significant portion of your grade, as it is a vital theoretical framework in strategic management. Preparing a full-scale balanced score card on your own can be quite difficult for almost any student, especially if this is your first time learning about it. You can also find it complex to learn about other aspects of an organization, such as strategic alliances, competitor analysis, etc.That is why we bring you one of the best Online Assignment Writing Service, so that you never have to worry about your grades again.