The Balanced Scorecard is a management tool that translates a company's strategy into specific, actionable and measurable goals and activities. By cascading these goals and activities down through the organization, level by level to the individual employee, it ensures that each and every individual effort is driving the company's strategic goals forward.

The scorecard is called "balanced" because it defines goals in four different areas: financial, customer, process, and learning and development (including innovation and employee development). This ensures that financial and non-financial goals are balanced against each other, leading to stronger success for the company.

Any business can benefit from some version of a scorecard (the complexity of which will vary depending on the size and diversity of the organization). Bain reports that the Balanced Scorecard was one of the top ten management tools used in 2010.

What are the advantages of using a Balanced Scorecard?

• Business activities are linked to the company's strategy; extraneous activities can be de-emphasized or eliminated.


• Success is measured in a balanced way by identifying and providing equal emphasis on financial and non-financial drivers.


• Each and every member of the organization understands how and why their contribution matters to the company.


• Employees are rewarded for activities that really drive the company's success

In a future post, we will take a more detailed look at the implementation of a Balanced Scorecard.