Performance management is essential in any business. Not only that it is a good financial investment in your company, but it also improves other aspects, such as workforce, customer satisfaction or efficiency. A balanced scorecard monitors exactly those metrics that allow your organization to keep in line with a set of pre-determined goals. It is a KPI template using four perspectives, which aims to track those key elements that create the foundation of an effective business strategy. The data collected with this tool is then being used by managers and executives in long term decision making.

 

In order to track key performance indicators (KPIs), most companies use a balanced scorecard that presents a holistic view of the organizational metrics. This tool has become so popular nowadays that the amount of information available on different websites might lead to confusion rather than clarity and understanding. Therefore, what exactly are balanced scorecards?

 

The whole concept is basically tied to performance indicators and organizational goals. Balanced scorecards are a particular framework of KPIs that attempts to measure performance metrics and provide feedback to organization that will allow them to implement efficient strategies. This management technique cannot exist without pre-determined goals, as it aims to help companies stick with their own path to performance and success.

 

A balanced scorecard uses four perspectives that isolate separate areas which require to be analyzed. Its design is based on three non-financial topic areas that complement the regular financial needs of every company or organization. First of all, the customer perspective answers to the essential matter of how the company is perceived by its clients. It aims to track customer satisfaction and provide an opportunity for improvement.

 

Moreover, the internal process perspective selects those metrics that reflect the way these processes are covering internal operational goals. Another perspective is the learning and growth one and it invests in the future of the company by training employees and providing learning opportunities in order to add value to the human capital of the organization. Finally, the financial perspective chooses measures that reflect relevant financial gains of the company. These can be the cash flow, revenues, earning or sales.

 

As it can be seen, balanced scorecards are all about choosing measures and objectives. The four perspectives are not only interdependent, but they also function hierarchically. Only learning can conduct to growth, while innovation will lead to enhanced internal processes. These improve customer satisfaction, which results in increased financial gains.

 

These strategic instruments have started being used in business performance management years ago. Their importance has been pointed out by several researchers who have discovered a correlation between such instruments and increased performance. It is believed that performance measures’ origins have emerged quite at the same time as the evolution of complex organizations. This can only mean that one cannot exist and improve without the other.

Performance management is essential in any business. Not only that it is a good financial investment in your company, but it also improves other aspects, such as workforce, customer satisfaction or efficiency. A balanced scorecard monitors exactly those metrics that allow your organization to keep in line with a set of pre-determined goals. It is a KPI template using four perspectives, which aims to track those key elements that create the foundation of an effective business strategy. The data collected with this tool is then being used by managers and executives in long term decision making.

 

In order to track key performance indicators (KPIs), most companies use a balanced scorecard that presents a holistic view of the organizational metrics. This tool has become so popular nowadays that the amount of information available on different websites might lead to confusion rather than clarity and understanding. Therefore, what exactly are balanced scorecards?

 

The whole concept is basically tied to performance indicators and organizational goals. Balanced scorecards are a particular framework of KPIs that attempts to measure performance metrics and provide feedback to organization that will allow them to implement efficient strategies. This management technique cannot exist without pre-determined goals, as it aims to help companies stick with their own path to performance and success.

 

A balanced scorecard uses four perspectives that isolate separate areas which require to be analyzed. Its design is based on three non-financial topic areas that complement the regular financial needs of every company or organization. First of all, the customer perspective answers to the essential matter of how the company is perceived by its clients. It aims to track customer satisfaction and provide an opportunity for improvement.

 

Moreover, the internal process perspective selects those metrics that reflect the way these processes are covering internal operational goals. Another perspective is the learning and growth one and it invests in the future of the company by training employees and providing learning opportunities in order to add value to the human capital of the organization. Finally, the financial perspective chooses measures that reflect relevant financial gains of the company. These can be the cash flow, revenues, earning or sales.

 

As it can be seen, balanced scorecards are all about choosing measures and objectives. The four perspectives are not only interdependent, but they also function hierarchically. Only learning can conduct to growth, while innovation will lead to enhanced internal processes. These improve customer satisfaction, which results in increased financial gains.

 

These strategic instruments have started being used in business performance management years ago. Their importance has been pointed out by several researchers who have discovered a correlation between such instruments and increased performance. It is believed that performance measures’ origins have emerged quite at the same time as the evolution of complex organizations. This can only mean that one cannot exist and improve without the other.

Make a smart investment with a balanced scorecard http://www.balancedscorecardreview.com , which will allow you to design the metrics,  that will bring your company closer to an improved outcome for the future.