What is a Balanced Scorecard (BSC)?
The Balanced Scorecard was proposed by Kaplan and Norton in 1992. Firstly, it was developed by for-profit organizations, but later it was adopted by nonprofit organizations (NPOs) and government organizations.
Kaplan and Norton Scorecard is a set of measures that give HR managers a comprehensive view of the business. It is used to identify and improve various functions and subsequent outcomes.
Four elements of Kaplan and Norton Scorecard
The balanced scorecard is measured with four main aspects of a business:
- Learning and Growth
This first leg is concerned with how effectively information is captured and used by employees to gain a competitive advantage in the industry.
- Business Processes
Are assessed by looking into how well products are made. Any gaps, delays, bottlenecks, shortages, or waste in operational management are identified through rigorous processes.
Are gathered to assess customer satisfaction with the quality, price, and availability of products or services Customers provide feedback on how satisfied they are with current products.
- Financial Data
Financial performance is measured using metrics such as sales, expenses, and income. Dollar amounts, financial ratios, budget variances, or income targets.
The Benefits of BSC
- It gives structure to your strategy. Kaplan and Norton Scorecard is a logical, structured method for assisting your organization’s leaders in ensuring that all areas of the organization are covered in a clear and concise manner.
- It simplifies the communication of your strategy. A good strategy map is intended to be communicated clearly and concisely.
- It assists employees in identifying key objectives and allows them to gain a better understanding of the strategic elements.
- When properly implemented, all divisions and departments should be aligned with a common strategy, and the Balanced Scorecard aids in this process.
Employees’ individual goals are linked to organizational strategy
Individuals could use the BSC to align their goals across the organization. For example, an employee who establishes regular performance goals for an annual personal review could align those goals with those of their division or department.
Banks may conduct the survey using BSC. It may include wait time and overall satisfaction. The HR managers can use it to find issues, improve performance, identify training needs, measure training outcomes, and devise future human capital development strategies. All of these HR activities finally increase revenues – the ultimate goal of every business.