Balanced Scorecard Overview

The Balanced Scorecard is a management system that incorporates some of the best thinking tools into an integrated management system. As a management system the BSC aligns the strategic planning process with the strategic execution models and the further “chunks it down” into operational focus areas, while measuring the system at appropriate points. This integrated management system allows stakeholders to track progress on the delivery of aligned strategies with operational activities.

The Balanced Scorecard is extensively used in business, industry governmental structures and non-profit organisations.

The benefits of creating a “balanced” Balanced Scorecard Management System is

  • Improved alignment is achieved
  • Better communication internally and externally
  • Improved monitoring in a disciplined framework

The Balanced Scorecard was developed in the early 1990’s by Drs Robert Kaplan and David Norton as a performance measurement framework. The core of this thinking was to move the performance discussion form financial Measure which generally measure past performance to more relevant measures that reflect present activity. The Balanced Scorecard then became an important change model in how non-financial measures influence strategy execution and operational efficiency.

Over the years the Balanced Scorecard has evolved through from a simple performance framework to a fully integrated management system. This integrated management system when implemented in a disciplined framework can help organisations align the thinking in the strategic planning process with the strategic execution models and then further align the strategy with focused operational activities.  In using an integrated management system approach, measures are able to be used effectively at all stages of the Balanced Scorecard Management System, so that effective monitoring of progress and delivery can be tracked.

In many cases worldwide there is an over emphasis on the “Scorecard” component, without enough time spent on developing resiliency in the “Balanced” component part of the Management system.  This creates huge unintended consequences in the execution of the strategic management plan in an organisation and results in major misalignment factors which in turn affect the performance management system of the organisation. The importance of “Balancing” the thinking and content that feeds into the Integrated Management systems becomes a critical success factor in an effective Balanced Scorecard implementation.

In the present economic climate world-wide and within Governmental structures relevant risk management thinking is taking a higher priority in organisation Balanced Scorecard Management Systems. This is an important development in any organisation, but should not create an imbalance as an over correction of previous gaps in past strategic plans.

Written by

Senior Associate @Balanced Scorecard Institute Lead Coach @ PMI Africa