In addition to trending and benchmarking, balanced scorecards are another way to evaluate an organization’s performance. With balanced scorecards, a board is given a better understanding of the organization’s operations as a whole. They are effective for gaining a complete picture of an organization.
Balanced scorecards integrate financial elements along with other key elements to compare an organization’s outcomes versus its goals. The Harvard Business School Press describes balanced scorecards as “provid(ing) executives with a comprehensive framework that translates a company’s vision and strategy into a coherent set of performance measures.”
These four quadrants are performance measures that can be used to monitor and improve an organization’s effectiveness. Within these quadrants are additional measurement suggestions. A particular organization may prefer certain assessments over others depending on its own unique success combinations.
Start developing a scorecard using the following steps:
Remember, the purpose of a scorecard is to give a full picture of the financial and non-financial goals and to establish a method for monitoring their effectiveness.