BALANCED SCORECARD

Balanced scorecard is a management technique used to measure performance. The important function of balanced scorecard is to align the working format of the organization towards the vision and mission of the organization. It is a strategy used to increase the internal and external communication of the organization. It was found by Dr Robert Kaplan and David Norton. Earlier it was used as tool to measure performance but now it has evolved as a complete tool for strategic management and measurement. The main function of balanced scorecard is to convert the strategy in the theoretical format into a practical one. It highlights the important characters that need to be highlighted in a financial. The basic drawback in this system is the lack of citation. It does not answer all the queries related to the financial decision. The balanced scorecard is very wide and difficult to implement it in a small organization. The balanced scorecard often includes the customer perspective, internal business process, finance, learning etc into its model before coming out with some suggestion.  In case of big organization each department have their own balanced scorecard, whereas in case of small organization they have a single balanced scorecard for all its units.

The balanced scorecard has four major perspectives they are,

• Financial perspective in case of financial perspective the balanced scorecard model gives more importance to the accuracy of the data and the timeliness of the data. It has included risk, assessment and cost benefit analysis to the normal financial data’s.  
• Customer perspective is an important leading factor in deciding the future of a company and hence customer feed back is given an important role in this model.  
• Business progressive perspective is an internal perspective of the running of the business. In short it can be termed as an evaluation of the managerial performance.  
• Learning and growth perspective includes the training of the employees, corporate and culture development inside the organization and at last self improvement of the managers of the organization.  

 For the above perspective four balanced things are defined properly those balanced things are,

• Objectives
• Way to measure the performance
• The prime target of the business
• Initiatives

Question

• What are the various perspectives in a balanced scorecard method?
• What are the advantages of this method?