The purpose of designing balanced scorecard is to establish a performance management system to realize strategic orientation, thus ensuring the effective implementation of enterprise strategy. Therefore, people usually say that the balanced scorecard is the most effective strategic management tool to strengthen the strategic execution of enterprises.
The balanced scorecard originated from the study of performance evaluation system by professors and consultants of Harvard University. After nearly 20 years of development, it has become a tool for strategic management of enterprises.
Extended data
The balanced scorecard reflects the balance between financial and non-financial measurement methods, long-term and short-term goals, external and internal, results and processes, and quantitative and qualitative. Therefore, it can reflect the comprehensive management situation of the organization, make the performance evaluation tend to be balanced and perfect, and is conducive to the long-term development of the organization.
1. Balance of financial and non-financial measurement methods: The balanced scorecard has not only financial indicators, but also non-financial indicators, unifying financial and non-financial indicators under strategic objectives.
2. Balance between short-term goals and long-term goals: The traditional performance evaluation system focuses on the financial measurement of past activities and controls short-term business activities to maintain short-term financial results, which leads enterprises to invest too much in short-term performance and too little in long-term value creation, especially in intangible assets that help enterprises grow, thus inhibiting their ability to create future value.
The four measurement aspects of the balanced scorecard overcome this weakness. By designing a set of indicators to monitor the position and direction of the enterprise in the process of advancing to the future goal, the enterprise can understand its all-round development in the future.
3. Balance between external (shareholders and customers) and internal (internal processes/learning and growth): Traditional performance evaluation methods usually only focus on internal enterprises, while the balanced scorecard extends the evaluation field to external stakeholders of enterprises, focusing on how to attract shareholders, how to satisfy shareholders and how to win customers.
At the same time, the balanced scorecard also takes intangible assets such as the internal process of the enterprise and the learning and growth of employees as the factors to evaluate the success of the enterprise, and as the necessary channel to turn knowledge into the driving force for development, so as to achieve the balance between internal and external measurement.
4. Balance between results and process: Enterprises should be clear about the results they pursue (such as profit and market share) and the reasons for these results-namely, motivation (such as investment in new product development, employee training and information update). Only by correctly finding these motives can enterprises effectively achieve the expected results.
The balanced scorecard is based on causality to divide the strategic objectives of enterprises and formulate several sub-objectives to achieve the strategic objectives of enterprises. These sub-goals are the goals of various departments. Similarly, the goals or evaluation indicators at all levels can be further subdivided according to causality until they finally form performance indicators and goals that can guide individual actions.
5. Balance between quantitative and qualitative: The traditional performance evaluation system mainly uses quantitative indicators (such as profit, employee turnover rate and customer complaints) because quantitative indicators are more accurate.
Although qualitative indicators are subjective and uncertain, sometimes it is not easy to obtain, but because of their high correlation and reliability, and can predict the trend of data, the introduction of balanced scorecard makes up for the defects of quantitative indicators and makes the performance evaluation system more practical.
Baidu Encyclopedia-Balanced Scorecard