a strategic planning and management system that is used extensively in business and industry, government, and nonprofit 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.
Most companies don’t embrace the textbook approach to performance measurement by following the Balanced Scorecard to the letter. In the real world, most scorecards are unbalanced, reflecting the key drivers of a company’s success.
Establishing the right metrics to measure is a complex problem not only when deploying a balanced scorecard, but across the business performance space at large. The complexity of defining what to measure and measuring it accurately commonly forces organizations to adopt customized practices—not only with regard to the balanced scorecard, but in general, to the entire performance analysis practice within an organization. You’ll have better success if you adjust your metrics and measures to your specific needs.
Many organizations have come to realize—often through a good deal of frustration and delays— that in order for the scorecard to be effective they need to change its balance, or “unbalance” it. Sometime, it’s necessary to put more emphasis on, for example, the customer perspective, even though it will affect the state of the other three perspectives. Give the perspectives different weights and adjust the priorities according to your own strategies and corporate environment.
The emergence of new risks, business models, and economic and other factors within the corporate world promotes the addition of new perspectives to the original four. Two approaches that are worth mentioning are the social responsibility and environmental perspectives—many organizations are adopting these sets of standards as part of their current practice. (See The Unbalanced Scorecard: A Social and Environmental Critique and The (Un) Balanced Scorecard for a more detailed look.)
Organizations can find themselves struggling to align the balanced scorecard within their own corporate strategy for many reasons, but time pressure and negotiation often can play a major role. Deploying a balanced scorecard project demands research, as well as dynamic behaviour. Some companies avoid the legwork and end up determining only short-term goals. But your scorecards need to convert tactics into strategy and take a long-term focus.
There are two keys to useful performance measurement: an emphasis on end-to-end business processes and a focus on the drivers of enterprise results.