Balanced Scorecard

Balanced Scorecard ¬†Balanced scorecard (BSC) is a strategic planning and management tool which is extensively used by the organizations¬† worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. The concept was originated in 1992 by Robert Kaplan and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics for providing management of the organization a balanced view of the organizational performance. Kaplan and Norton have described the BSC as given below. “The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation.” In the view of Kaplan and Norton the measurement is fundamental to the organizational management. If the organization is to improve the management of its intangible assets then it has to integrate the measurement of the intangible assets into the management system. The concept explain that if the managers can measure what they say and express it in numbers then they know something about it. But if they cannot measure it and cannot express in numbers then their knowledge of the subject is very limited and unsatisfactory. The concept is based on principle that the things cannot be improved unless they are measured. Though the ‘balanced scorecard’ phrase received its popularity in 1992, but this type of approach was followed even earlier by many organizations. Several organizations have used systems consisting...