We often hear about scorecards in sporting events and competitions but do you know that they are widely used even business? Over the years, the strategic planning and management system concept dubbed as the balanced scorecard has been embraced by a good number of companies. Organizations in the field of industry and business – and even government and non profit ones – have come to benefit from this unique concept. However, not too many of us quite understand this strategic planning and management system concept. And what many of us do not quite get is how this concept contributes to the overall success of organizations.
The balanced scorecard concept seeks to align the different activities of the organization to its vision and strategies. These activities often involve improving internal and external communications, as well as monitoring organizational performance in comparison with the strategic goals. It was first developed as a framework for performance measurement. Before it was conceptualized, performance was based on traditional financial metrics. With the concept of balanced scorecards, non-financial performance metrics were incorporated in evaluating performance to give a more balanced view of things.
This term was first coined in the early nineties however, this approach can trace its roots back to the 1950s and even way back to the early years of the 20th century. Over the years, it has evolved from being a simple framework for performance evaluation into a new form of strategic planning and management system.
The balanced scorecard approach is usually observed in organizations that value leadership for results. In this kind of organizations, the concept helps in transforming strategic plans from being merely attractive yet passive documents into marching orders that the whole organization should follow and work on in every working day. It exceeds its role of being a basis for performance measure and becomes a tool in identifying what needs to be done and evaluated. Through this, strategies can be implemented and executed more effectively.
Generally, the balanced scorecard concept encourages organizations to view performance and leadership from four perspectives. And in doing so, metrics can be developed and data can be collected and analyzed in relation to each of these perspectives. These perspectives are often referred to as learning and growth, business process, customer, and financial standpoints. And from these standpoints, strategies can be mapped out more clearly, and values for the organization can be created more effectively.Leadership For Results: The Balanced Scorecard Concept by Steve