What does a balanced scorecard help organizations monitor?

A balanced scorecard is a strategic management tool that allows organizations to monitor and evaluate their performance across multiple dimensions. It goes beyond traditional financial metrics to include various other aspects that are critical for long-term success. The key perspectives typically included in a balanced scorecard are financial, customer, internal business processes, and learning and growth.

By examining performance in these diverse areas, organizations can gain a more comprehensive view of their overall health and effectiveness. This multi-faceted approach helps organizations align their activities with their vision and strategy, improve internal and external communications, and monitor organizational performance against strategic goals. In addition, it facilitates a more holistic analysis of how decisions in one area can impact performance in others, leading to better strategic planning and resource allocation.

This balanced view ensures that organizations do not focus solely on financial outcomes, which can give a skewed perspective if other important factors, such as customer satisfaction or operational efficiencies, are neglected.