Balanced Score Card (BSC) was developed to move the trend of focusing on financial measurements to a more holistic system of metrics across equally weighted quadrants.
Balance Score Card Manifesto includes:
- Focus on knowledge growth: BSC focusses on bringing forth internal knowledge and growth within an organization.
- Multiple viewpoints: BSC looks at the same data from three levels- long term, short-term and immediate or day-to-day, to keep constant vision on both big and small picture simultaneously.
- Compatibility with other business process improvement techniques: Excellent compatibility with all popular business improvement methodologies.
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A Balanced Score Card travels measurement focus across four key business areas-
- Financial: Revenue, net profit, expenses, payrolls and other routine monetary metrics
- Knowledge growth & transfer: How are employees growing in their skills? What must an organization do to impart training and development to its human resource talent pool?
- Productivity: How efficient is the organization? Productivity scorecard measures productivity as percentage.
- Customers: Customer score card focuses on voice of customer (VoC), customer retention rates, customer satisfaction, customer loyalty etc. Note that with BSC principle, the 'Customer score card' goes beyond just number of customers.
Which companies can implement Balanced Score Card?
Balance Score Card is best for any organization that measures itself, employs people with special talents or is primarily composed of knowledge workers e.g. Research departments, contract research companies, entertainment industry, fashion business etc.
What’s your organization's score?
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About the Author: Shruti Bhat PhD, MBA, Certified Lean Six Sigma Black Belt