The balanced scorecard (BSC):

The Balanced Scorecard (BSC) is a strategic performance management tool - a semi-standard structured report originated by Drs. Robert Kaplan (Harvard Business School) and David Norton. It is supported by proven design methods and automation tools, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions.

While the phrase balanced scorecard was coined in the early 1990s, the roots of this type of approach are deep, and include the pioneering work of General Electric on performance measurement reporting in the 1950’s and the work of French process engineers (who created the Tableau de Bord – literally, a "dashboard" of performance measures) in the early part of the 20th century.

Design of a Balanced Scorecard ultimately is about the identification of a small number of financial and non-financial measures and attaching targets to them, so that when they are reviewed it is possible to determine whether current performance 'meets expectations'. The idea behind this is that by alerting managers to areas where performance deviates from expectations, they can be encouraged to focus their attention on these areas, and hopefully as a result trigger improved performance within the part of the organization they lead.

Balanced Scorecard

The organization through the four perspectives

• The Learning & Growth Perspective: This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. In a knowledge-worker organization, people -- the only repository of knowledge -- are the main resource. In the current climate of rapid technological change, it is becoming necessary for knowledge workers to be in a continuous learning mode. Metrics can be put into place to guide managers in focusing training funds where they can help the most. In any case, learning and growth constitute the essential foundation for success of any knowledge-worker organization. Kaplan and Norton emphasize that 'learning' is more than 'training'; it also includes things like mentors and tutors within the organization, as well as that ease of communication among workers that allows them to readily get help on a problem when it is needed. It also includes technological tools; what the Baldrige criteria call "high performance work systems."

• The business process perspective: This perspective refers to internal business processes. Metrics based on this perspective allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission).

• The customer Perspective: Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any business. These are leading indicators: if customers are not satisfied, they will eventually find other suppliers that will meet their needs. Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look good. In developing metrics for satisfaction, customers should be analyzed in terms of kinds of customers and the kinds of processes for which we are providing a product or service to those customer groups.

• The financial Perspective: Kaplan and Norton do not disregard the traditional need for financial data. Timely and accurate funding data will always be a priority, and managers will do whatever necessary to provide it. In fact, often there is more than enough handling and processing of financial data. With the implementation of a corporate database, it is hoped that more of the processing can be centralized and automated. But the point is that the current emphasis on financials leads to the "unbalanced" situation with regard to other perspectives.  There is perhaps a need to include additional financial-related data, such as risk assessment and cost-benefit data, in this category.

Since the Balanced Scorecard was popularized in the early 1990s, a large number of alternatives to the original 'four box' Balanced Scorecard promoted by Kaplan and Norton in their various articles and books have emerged. Most have very limited application, and are typically proposed either by academics as vehicles for promoting other agendas (such as green issues), or consultants as an attempt at differentiation to promote sales of books and / or consultancy.

Examples of the concerns raised by the development of the balanced scorecard. The use of Balanced Scorecard for appraisal/incentive use may:

• result in the 'forced distribution' of people into performing groups
•  lead to a 'one size fits all' strategy to performance management
• encourage organizations to evaluate performance using a bell curve method. This in turn can mean that a set percentage of staff will be categorized as 'under performing'.
• encourage 'peer ranking' resulting in assessment of performance relative to the performance of other employees, rather than fixed standards

Today, a lot of companies are using the balanced scorecard such as Veolia, BMW financial services, IBM, Philips electronic,... 

To go further:  

- A balanced scorecard website:

http://www.balancedscorecard.org/Home/tabid/36/Default.aspx

- A more complete explanation of the balanced scorecard:

http://www.google.fr/url?sa=t&rct=j&q=using%2Bthe%2Bbalanced%2Bscorecard%2B&source=web&cd=2&ved=0CDEQFjAB&url=http%3A%2F%2Fwww.balancedscorecard.org%2FPortals%2F0%2FPDF%2FBalancedPerformance_Article1.pdf&ei=UE2lTuWkC-rR4QT16ZXpBA&usg=AFQjCNEqx8oFSAho6Ea8uYNryJA6y0pcmg

- The example of Veolia:

http://www.balancedscorecard.org/LinkClick.aspx?fileticket=8Zup08adIQg%3d&tabid=36