Balanced Scorecard

In 1993, Robert S. Kaplan, a professor at Harvard, and David P. Norton created the Balanced Scorecard approach to measuring corporate performance. Beginning with the publishing of their book, six years later, this became a rapidly adopted and popular ap­proach. In particular, their approach was de­signed to measure financial (and some human) capital performance against corporate strategies and mission. This was one of the early attempts to align corporate strategies with corporate missions in a way that could be measured nu­merically and continuously in terms of dollars.

The Balanced Scorecard[79] measures perfor­mance in four main areas:

• Financial (Are the organization’s strategies and tactics creating financial value?)

Cash Flow, ROI, ROE, etc.

• Customer (Do the organization’s offerings provide value to customers?)

Customer satisfaction, loyalty, retention, etc.

• Internal Business Processes (Are the organization’s processes driving value in the first two areas?)

Accident ratios, effectiveness, activities, etc.

• Learning and Growth (Is the organization growing in terms of human, information, and organization capital?)

Investments and returns, employee turn­over, gender and racial ratios, etc.