balanced scorecard methodology case study

Balanced Scorecard | Explained with Examples

The Balanced Scorecard is a strategic planning and management system used by organizations to align business activities with the vision and strategy of the organization, improve internal and external communications, and monitor organizational performance against strategic goals. It was originated by Dr. Robert S. Kaplan and Dr. David P. Norton in the early 1990s.

The Balanced Scorecard aims to provide a more comprehensive view of organizational performance beyond traditional financial measures by incorporating these additional perspectives. It serves as a framework for translating an organization’s strategic objectives into a coherent set of performance measures, providing a more balanced view of how well the organization is achieving its long-term goals.

The Balanced Scorecard suggests that an organization is viewed from four perspectives and to develop metrics, collect data, and analyze it relative to each of these perspectives:

Financial Perspective

The Financial Perspective is one of the four pillars of the Balanced Scorecard, a strategic management tool that translates an organization’s mission and vision into a comprehensive set of performance metrics. The Financial Perspective focuses on the financial objectives of an organization and measures the economic consequences of actions taken in the other three perspectives (Customer, Internal Business Processes, and Learning and Growth).

The primary purpose of the Financial Perspective is to ensure that the company’s strategy, implementation, and execution contribute to bottom-line improvement. Traditional financial metrics like revenue growth, cost reduction, cash flow, and return on investment (ROI) are common in this perspective, but they are often complemented by more forward-looking indicators that can predict future financial performance.

Key Components of the Financial Perspective:

• Revenue Growth and Mix : This involves looking at the overall growth of revenue and analyzing the mix of revenue sources to ensure a diversified and sustainable income stream.
• Cost Management : This includes measures for controlling and reducing costs, improving operational efficiencies, and optimizing the use of resources.
• Asset Utilization : This involves metrics that assess how effectively the organization uses its assets to generate revenue. Examples include return on assets (ROA) and return on equity (ROE).
• Investment Strategy : This focuses on how capital investments support the organization’s long-term strategy. Metrics might include the payback period, internal rate of return (IRR), or the economic value added (EVA).

Importance:

The Financial Perspective is critical because it clearly shows whether the company’s strategy and operations contribute to bottom-line improvement. It ensures that strategic initiatives are financially viable and align with shareholder expectations. However, relying solely on financial measures can be misleading, as they often reflect past actions and decisions. This limitation is why the Balanced Scorecard includes non-financial perspectives to provide a more comprehensive view of the organization’s performance.

Integration with Other Perspectives:

The Financial Perspective is closely linked with the other perspectives of the Balanced Scorecard. For example:

• Customer Perspective : Satisfied and loyal customers often lead to better financial outcomes through repeat business and referrals, which can increase revenue and reduce marketing and sales costs.
• Internal Business Processes Perspective : Efficient and effective processes can lower operational costs, improve quality, reduce cycle times, and enhance productivity, all of which can positively impact the financial bottom line.
• Learning and Growth Perspective : Investments in employee development, organizational culture, and information systems can lead to innovations and improvements that drive long-term financial performance.

By integrating the Financial Perspective with the other perspectives, organizations can ensure a balanced approach to strategy execution that supports sustainable financial success.

Customer Perspective

The Customer Perspective is one of the four dimensions of the Balanced Scorecard. It is a strategic management tool that helps organizations translate their vision and strategy into action across four key areas: Financial, Customer, Internal Business Processes, and Learning and Growth. The Customer Perspective focuses on identifying and measuring the value delivered to customers, which is crucial for achieving financial success and sustainable growth.

Key Objectives of the Customer Perspective:

• Customer Satisfaction : Understanding and measuring how well the organization meets the expectations and needs of its customers. This can involve customer satisfaction scores, service quality assessments, and customer feedback.
• Customer Retention and Loyalty : Tracking the organization’s ability to retain customers over time, often reflected in customer loyalty rates, repeat purchase rates, and customer lifetime value. High retention rates indicate customer satisfaction, leading to increased revenue and reduced marketing costs.
• Market Share and Acquisition : Measuring the organization’s success in attracting new customers and expanding its presence in targeted market segments. This can involve tracking changes in market share, the effectiveness of marketing campaigns, and the rate of new customer acquisition.
• Customer Value Proposition : Ensuring the organization’s value proposition aligns with customer needs and preferences. This involves understanding what customers value most: price, quality, service, innovation, or something else, and ensuring that the organization delivers on these dimensions.

The Customer Perspective is critical because it focuses on the customer, who ultimately judges the company’s products and services. In many industries, especially those with high competition, attracting, satisfying, and retaining customers is a crucial determinant of financial performance. Furthermore, by focusing on customer needs and expectations, organizations can identify new opportunities for growth and innovation.

• Financial Perspective : Satisfied and loyal customers often lead to better financial outcomes, such as increased revenue from repeat purchases, higher transaction values, and lower costs associated with customer acquisition and retention.
• Internal Business Processes Perspective : To deliver the value that customers expect, organizations need to excel at internal processes such as product development, manufacturing, delivery, and after-sales service. Improvements in these areas can enhance customer satisfaction and loyalty.
• Learning and Growth Perspective : Developing the skills and capabilities of employees, fostering a customer-centric culture, and investing in technology and systems that improve customer interactions are all critical for delivering value to customers. This perspective supports the organization’s ability to innovate and adapt to changing customer needs.

Metrics and Measures:

To manage the customer perspective effectively, organizations typically use a variety of metrics, such as Net Promoter Score (NPS), customer satisfaction indices, customer complaint rates, customer retention rates, and market share growth. These metrics help organizations track their performance from the customer’s viewpoint and identify areas for improvement.

By prioritizing the Customer Perspective within the Balanced Scorecard framework, organizations can ensure that their strategic objectives are aligned with customer needs and expectations, driving both customer and financial success.

Internal Business Processes 

The Internal Business Processes perspective is one of the four components of the Balanced Scorecard, a strategic management tool designed to provide a comprehensive framework for translating an organization’s vision and strategy into a coherent set of performance measures. This perspective focuses on the critical internal operations and processes an organization must excel at to meet its customer and financial objectives effectively.

Key Objectives of the Internal Business Processes Perspective:

• Operational Efficiency : This involves measuring and improving the efficiency of internal processes, which can include reducing cycle times, minimizing waste, and optimizing resource utilization. The goal is to deliver products and services faster, cost-effectively, and with higher quality.
• Process Quality : Ensures that internal processes can produce outputs that meet quality standards, leading to higher customer satisfaction and lower costs related to rework or defects.
• Innovation and Product Development : Focuses on the organization’s ability to develop new products and services, improve existing offerings, and bring these to market quickly. This can involve measures related to the number of new product launches, the success rate of new products, and the percentage of revenue from new products.
• Supply Chain Management : Optimizes the flow of materials, information, and finances as they move from supplier to manufacturer to wholesaler to retailer to consumer. Effective supply chain management can reduce costs, improve flexibility, and enhance customer satisfaction.

The Internal Business Processes perspective is crucial because it directs attention to the processes that impact customer satisfaction and the organization’s ability to achieve its financial objectives. By focusing on internal processes, organizations can identify inefficiencies and bottlenecks, improve quality, and drive innovation, all contributing to competitive advantage and long-term success.

• Customer Perspective : Excellence in internal processes directly impacts the quality, cost, and delivery of products and services, affecting customer satisfaction and loyalty. By improving internal processes, organizations can better meet customer needs and expectations.
• Financial Perspective : Efficient and effective internal processes can lead to lower operational costs, higher productivity, and improved profitability. Organizations can enhance their financial performance by reducing waste and improving process efficiency.
• Learning and Growth Perspective : The ability to improve internal processes often depends on the skills, knowledge, and capabilities of employees, as well as the organization’s culture and information systems. Investments in training, technology, and organizational culture can support continuous improvement and innovation in internal processes.

To manage and improve internal business processes, organizations might use a variety of metrics, such as:

• Cycle Time : The time required to complete a process from start to finish.
• Cost per Unit : The cost associated with producing a single unit of product or service.
• Defect Rates : The frequency of errors or defects in the outputs of a process.
• Process Throughput : The work or products produced within a given period.
• Capacity Utilization : The extent to which an organization’s total production capacity is used.

These metrics help organizations monitor their internal processes’ efficiency and effectiveness, identify improvement areas, and track progress over time.

By focusing on the Internal Business Processes perspective within the Balanced Scorecard framework, organizations can ensure that their internal operations are aligned with strategic objectives, contributing to overall performance and success.

Learning and Growth

The Learning and Growth perspective, also known as the “Organizational Capacity” perspective, is one of the four pillars of the Balanced Scorecard framework. This dimension focuses on the intangible assets of an organization, primarily its people, systems, and organizational procedures. The core idea is that long-term success is achieved through continuous improvement and the capability to innovate and change in alignment with market demands and opportunities.

Key Objectives of the Learning and Growth Perspective:

• Employee Skills and Knowledge : Emphasizes the importance of ongoing employee training and development to ensure the workforce has the necessary skills and knowledge to meet current and future demands. This includes technical skills relevant to specific job functions and soft skills facilitating effective communication, teamwork, and leadership.
• Employee Satisfaction and Retention : Recognizes that employee engagement and morale are critical to productivity and innovation. High employee satisfaction and retention rates indicate a positive organizational culture supporting personal and professional growth.
• Information Systems and Technology : Focuses on the role of technology in enabling efficient and effective business processes. This includes the hardware and software used by the organization and the systems and processes that ensure information is accurately captured, stored, and made accessible to decision-makers.
• Organizational Culture and Alignment : Pertains to creating a culture that supports the organization’s strategic objectives, encourages open communication, and fosters a sense of shared purpose among employees. Alignment ensures that everyone works towards the same goals and understands how their role contributes to the broader strategy.

The Learning and Growth perspective is essential for creating the foundation for achieving excellence in the other three Balanced Scorecard perspectives (Financial, Customer, and Internal Business Processes). It recognizes that an organization’s ability to innovate, improve, and meet customer needs over the long term depends on its people, systems, and procedures.

• Internal Business Processes : A skilled and knowledgeable workforce, supported by efficient information systems, can enhance process efficiencies, drive innovation, and improve quality, directly impacting operational performance.
• Customer Perspective : Engaged and well-trained employees are more likely to deliver superior customer service and contribute to developing products and services that meet evolving customer needs, thus enhancing customer satisfaction and loyalty.
• Financial Perspective : Investments in learning and growth initiatives can lead to long-term financial benefits, such as increased productivity, reduced operational costs, and enhanced revenue growth through innovation and improved customer satisfaction.

To manage the Learning and Growth perspective, organizations might use metrics such as:

• Employee Training Hours : The average number of training hours per employee, indicating the organization’s commitment to employee development.
• Employee Satisfaction and Engagement Scores : Regular surveys gauge how motivated, engaged, and satisfied employees are with their work and work environment.
• Turnover Rates : Particularly voluntary turnover rates, which can indicate the overall health of the organization’s culture and the effectiveness of its retention strategies.
• Technology ROI : The return on investment for technology initiatives, measuring how effectively technology investments support business objectives and process improvements.

By focusing on the Learning and Growth perspective within the Balanced Scorecard, organizations can invest in the capabilities and systems that will enable them to adapt, grow, and achieve long-term success.

Examples of balanced scorecard

To illustrate the Balanced Scorecard approach, here are examples for each of the four perspectives:

• Revenue Growth : Measures the year-over-year increase in income generated from the organization’s activities.
• Cost Reduction : Targets specific areas where operational costs can be minimized without affecting product or service quality.
• Return on Investment (ROI) : Calculates the efficiency of various investments in terms of their generated returns.
• Cash Flow Analysis : Evaluate the inflows and outflows of cash, ensuring the organization maintains a healthy liquidity position.
• Customer Satisfaction Index : Surveys and feedback tools measure customers’ satisfaction with the products, services, and overall experience.
• Market Share : Assesses the company’s proportion of total sales in its industry, indicating competitive strength.
• Customer Retention Rate : Measures the percentage of customers the company retains over a certain period, reflecting customer loyalty and satisfaction.
• Net Promoter Score (NPS) : Gauges customer loyalty by asking how likely customers are to recommend the company to others.

Internal Business Processes Perspective

• Quality Control Metrics : Monitors defect rates, rework levels, and adherence to quality standards.
• Cycle Time : Measures the time required to complete a business process from start to finish, aiming to increase efficiency.
• Process Cost : Analyzes the cost associated with each critical process, identifying opportunities for cost-saving improvements.
• Innovation Pipeline Strength : Evaluates the number and potential of new ideas or projects in development, indicating the organization’s future growth prospects.

Learning and Growth Perspective

• Employee Turnover Rate : Monitors the rate at which employees leave the organization, indicating the overall work environment and employee satisfaction.
• Training Hours per Employee : Measures the investment in employee development, correlating with improved performance and innovation.
• Skill Assessments : Regular assessments to ensure employees have the necessary skills and competencies for their roles and future company needs.
• Employee Engagement Scores : Surveys to gauge employee engagement and identify areas for improvement in the organizational culture.

These examples show how a Balanced Scorecard might be implemented in an organization. The specific metrics can vary significantly depending on the industry, the organization’s strategic goals, and challenges.

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8 Real-Life Balanced Scorecard Examples

Tricia Jessee

Tricia manages our implementation and onboarding team to ensure the success of ClearPoint customers.

Proof that the Balanced Scorecard is the right strategy management framework for you

Table of Contents

You already know that the Balanced Scorecard (BSC) is an extremely popular strategic framework—but you may be wondering, “Will it actually help my organization get the results we want?” That’s a fair question, and before you commit to an overhaul of your current strategy, you’ll want to see some real-life Balanced Scorecard examples.

Well, you’re in luck! Because below, we’ll discuss eight real organizations that have used the BSC—or some variation of it—to grow their company and their strategic success.

1. The Boys & Girls Clubs Of Puerto Rico (BGCPR)

In Puerto Rico, 57% of the island’s one million youth live below the poverty line. The BGCPR offers these young people the hope of a better future. Just over a decade ago, BGCPR nearly shut their doors due to an economic downturn. That’s when the CEO and president got to work restructuring the nonprofit and decided to adopt the Balanced Scorecard to manage their strategy and revitalize their organization. Their scorecard helped them establish managerial discipline and promote cultural change, leading to their rapid growth. Today, BGCPR has 11 facilities!

Read the full BGCPR case study .

2. Durham, North Carolina

For years, the city of Durham operated without a strategic plan. But during the economic downturn and with budgets cuts, Durham’s city manager convinced elected officials that the time was right to commence the strategic planning process. With a scorecard, the city of Durham was able to make more data-driven decisions and collaborate with the county government, enabling the two governments to pool resources, reduce or eliminate duplication of effort, and deliver a higher level of service to Durham residents.

Read the full Durham, North Carolina, case study .

3. Fort Lauderdale, Florida

After the recession, Fort Lauderdale needed to manage costs in a way that balanced strategic cuts with strategic investments. In response, the Fort Lauderdale city manager created an office to oversee the development of the city’s first-ever strategic plan and to manage process improvement. Fort Lauderdale residents were asked for ideas about how to improve the city over the next 25 years. This information, combined with internal goals, resulted in a new strategic system that connected departments through scorecards and presented them publicly in an unprecedented show of transparency.

Read the full Fort Lauderdale, Florida, case study .

4. LSU College Of Engineering

When Richard Koubek became dean of the LSU College of Engineering, he set forth Vision 2015, the college’s five-year strategic plan. This new scorecard-driven management process has propelled the college ahead in all of its strategies.

One area that has benefited greatly is the college’s external partnerships. Because the College delivered on its promise to provide Louisiana businesses and employers with first-rate engineers, the state’s economic development organizations have used LSU engineering as a magnet to recruit businesses to the state. IBM even opened a services venture in Baton Rouge.

Since implementing Vision 2015, enrollment for the College of Engineering is up 41% (twice the national average), and LSU now has the fifth fastest-growing engineering college in the United States.

Read the full LSU College of Engineering case study .

Rare began using the Balanced Scorecard to measure and manage its performance. With measures at the heart of its operations, this global conservation nonprofit has been able to achieve greater transparency and accountability—while expanding its scale, reach, and impact. With its scorecard in place, Rare has been able to draw upon its metrics to report biological impacts to constituents and to the public—something they couldn’t dream of before their scorecard implementation.

Rare’s strategy management process has helped the organization clarify its focus, and the organization’s metrics have played an important part in engaging donors. Within five years, Rare has gone from a $9 million per year operation to more than $20 million per year and has been named one of the top 100 NGOs in the world.

Read the full Rare case study .

6. Pacific Gas & Electric (PG&E)

PG&E wanted to present their data in a high-level view with the ability to drill down—and found their solution in the Balanced Scorecard. PG&E was able to use Balanced Scorecard (BSC) software to customize with their branding and design elements, and update their scorecard pages to allow for period comparisons. Each page is completely customized to their liking and includes current results, year-to-date and end-of-year data, and other forecast targets.

Read the full PG&E case study .

7. SBS Group

SBS Group—a consulting and IT services organization—needed a system to construct its strategic plan, manage initiatives and measures, and cascade to the field level, and knew the Balanced Scorecard could manage all of these areas.

Using scorecard software, SBS group was able to migrate their Excel-based scorecards into scorecard software, which provided a number of benefits. They could manage cross-scorecard collaboration, information sharing, employee-scorecard linkages, and more. They were also able to set up scorecards according to their preferences, define measures, and create initiatives. Altogether, SBS Group’s scorecarding capability has helped them assess and prioritize their initiatives.

Read the full SBS Group case study .

8. Certified Financial Analyst (CFA) Institute

The CFA team embarked on an effort to update the organization’s long-term strategy involving the entire organization and were able to advance their strategy, integrate their scorecard, and create a change agenda, workplans, and multi-year, high-level metrics. With the help of their scorecard, they were able to get leadership on board with aligning strategy and operations, and employees invested in CFA’s mission.

Read the full CFA Institute case study .

Download Now: Balanced Scorecard Excel Template

All eight of these organizations were able to see strategic success using the Balanced Scorecard framework . If you want to test the waters and build out a simple scorecard before committing to something more substantial. Try us out today!

How can a balanced scorecard help an organization?

A balanced scorecard helps an organization by providing a comprehensive framework that aligns business activities with the organization's vision and strategy. It facilitates performance measurement across multiple perspectives, such as financial, customer, internal processes, and learning and growth. This holistic approach ensures balanced consideration of all key areas, improves strategic planning, enhances communication, and drives organizational performance.

How does a balanced scorecard work?

A balanced scorecard works by translating an organization's strategic objectives into a set of performance measures across four perspectives:

- Financial: Measures financial performance and profitability. - Customer: Assesses customer satisfaction and market share. - Internal Processes: Evaluates the efficiency and quality of internal operations. - Learning and Growth: Focuses on employee development and organizational innovation. These measures are tracked and analyzed to monitor progress toward strategic goals, identify areas for improvement, and ensure that all parts of the organization are aligned with its strategic vision.

How do you create a balanced scorecard in Excel?

To create a balanced scorecard in Excel:

- Define Objectives: Identify the strategic objectives for each of the four perspectives (Financial, Customer, Internal Processes, Learning and Growth). - Develop Metrics: Establish specific, measurable metrics for each objective. - Set Targets: Determine target values for each metric to define success. - Collect Data: Gather the necessary data to measure performance against the metrics. - Create the Template: Set up an Excel template with columns for objectives, metrics, targets, actual performance, and status indicators. - Input Data: Enter the collected data into the template. -Analyze and Visualize: Use Excel features such as charts and conditional formatting to visualize performance and highlight areas needing attention. - Review and Adjust: Regularly update the scorecard and review progress, making adjustments as needed.

What is a balanced scorecard example?

A balanced scorecard example could look like this:

- Financial Perspective: Objective: Increase revenue growth Metric: Revenue growth rate Target: 10% annual increase Actual: 8% increase

- Customer Perspective: Objective: Improve customer satisfaction Metric: Customer satisfaction score Target: 90% Actual: 85%

- Internal Processes Perspective: Objective: Enhance operational efficiency Metric: Average processing time Target: 3 days Actual: 4 days

- Learning and Growth Perspective: Objective: Foster employee development Metric: Employee training hours Target: 40 hours per year Actual: 35 hours per year Each perspective includes specific objectives, metrics, targets, and actual performance, providing a comprehensive view of the organization's strategic performance.

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How To Implement The Balanced Scorecard Framework (With Examples)

Despite being one of the most effective strategy tools, the Balanced Scorecard (BSC) often remains underutilized or misunderstood. 

Consequently, many strategy leaders struggle to impact the organization’s performance or quickly adjust business strategies to changing conditions.

In this article, we’ll provide a detailed guide to the Balanced Scorecard Framework, covering: 

• Key benefits of the Balanced Scorecard
• Debunking a common misconception for better results
• How to implement a Balanced Scorecard
• How to use Balanced Scorecard for strategy tracking and execution 
• How to apply Balanced Scorecard approach with Cascade

But what exactly is a Balanced Scorecard? Let's dive in. 👇

What Is A Balanced Scorecard?

The Balanced Scorecard, a famous strategy framework by Robert Kaplan and David P. Norton, debuted in Harvard Business Review in the 1990s. Since then, it has been used by thousands of organizations, and is a staple in business and strategic management courses.

The Balanced Scorecard serves as a management system, guiding organizations in aligning strategic initiatives with operational objectives and improving business performance. This framework emphasizes the development of Key Performance Indicators (KPIs) across four critical areas for faster and better decision-making.

What Are The 4 Perspectives Of A Balanced Scorecard?

The Balanced Scorecard (BSC) divides its strategic approach into four key perspectives: financial, customer, internal business process, and learning & growth. Each plays a pivotal role in ensuring a holistic view of organizational success.

Financial perspective

In this perspective, financial performance measures indicate whether an organization's strategy and execution are improving its financial goals. Typical scorecard financial metrics include:

• Revenue growth rate
• Operating income
• Return on equity
• Return on investment

Customer perspective

This perspective should focus on measures that deliver value to the customer. These scorecard metrics can include:

• % of sales from new products
• Customer lifetime value (CLV)
• Customer complaint resolution time
• Customer churn rate
• Net promoter score (NPS)

Internal business process perspective

In this perspective, prioritize internal metrics that impact customer satisfaction most. Optimizing these metrics ensures operational improvements that boost performance in a customer and financial perspective. This would include measuring things such as:

• Productivity per employee
• Cycle times 
• Quality control defect rate
• Innovation rate

Learning and growth perspective

This area of the balanced scorecard focuses on KPIs that encourage continuous improvement, innovation, and learning. Examples of metrics include:

• Employee satisfaction score
• Number of training hours per employee
• Employee turnover rate
• Alignment with organizational culture
• % percentage of leadership positions filled internally

📚 Recommended reading: Strategy Officer KPIs: 3 Ways CSOs Can Prove Their Value

Benefits Of Balanced Scorecard Implementation

The four perspectives of the Balanced Scorecard serve several purposes.

• They ensure a focus on the main drivers of success, such as customer satisfaction and operational efficiency. 
• They compel organizations to assign tangible metrics to each perspective, boosting accountability .
• They serve as a management framework for communicating the organization’s strategy to stakeholders. For example, 'We are doing x because it helps us succeed in the Customer perspective of our scorecard. '
• They help identify competitive advantages and areas for improvement .

In 1997, one study by the Insitute of Management Accountants found that 64% of U.S. companies use the Balanced Scorecard. This trend continues to this day, according to Bain & Company’s 2023 survey of 1,000 executives and managers.

Interestingly, many of our strategy execution platform users unknowingly align with its principles, reflecting its intuitive appeal. We often talk with them about the Balanced Scorecard and discover they're unaware they've implemented it.

However, they have arrived at their conclusions naturally that their efforts and measures should focus on roughly the same four perspectives that the Balanced Scorecard suggests.

The ultimate gain lies in sharpening focus across leading and lagging KPI indicators , ensuring a balanced approach to short-term and future objectives.

Problems With Balanced Scorecard Implementation

As with any popular strategic framework, the Balanced Scorecard has picked up its fair share of critics. The main criticisms of the Balanced Scorecard highlight its:

• Time-consuming setup.
• Complexity leading to misunderstanding. 
• Rigidity amidst changes in the business environment. 
• Overemphasis on financial measures. 
• Neglect of external market dynamics.

Despite criticisms, mastering the Balanced Scorecard's strategic depth—beyond mere reporting—unlocks significant organizational advantages.

People think of the Balanced Scorecard as four perspectives you simply 'slot' your strategic goals into. When they visualize the Balanced Scorecard, they think of it like this diagram:

This diagram shows how four simple perspectives link together to form a Balanced Scorecard. In each perspective, there are Strategic Objectives , Projects , and KPIs , which you then work toward achieving.

The goal is to balance each perspective and improve organizational performance.

This traditional method assumes that each perspective is independent of the others. Nevertheless, this approach to implementing the Balanced Scorecard is fundamentally flawed. 

Through years of trial and error, it turns out that how we order them matters. The modern balanced scorecard demonstrates how each perspective builds on the previous one.

The truth is that proper implementation, respecting the order of perspectives, transforms BSC into an unparalleled tool for strategic alignment and performance enhancement.

The Right Way To Implement The Balanced Scorecard

Proper implementation of the Balanced Scorecard begins with approaching the diagram from the bottom up, ensuring a solid foundation for each subsequent layer.

Visualize the Balanced Scorecard as a strategy map , where each step, starting from Learning & Growth, systematically guides you toward the ultimate goal: increased profitability.

There is also a different way to look at this. 

As with leading and lagging KPIs , the Balanced Scorecard is a series of leading and lagging perspectives. 

Learning and Growth, Internal Processes, and Customer will be your leading perspectives, as these perspectives facilitate the delivery of your primary lagging perspective: Financial performance . It's termed 'lagging' because it results from actions taken in the other three perspectives.

This profit-centric view, however, faces scrutiny. Critics point out its potential misalignment with organizations like nonprofits, government entities, or innovators such as Google and Meta, whose missions extend beyond financial results. 

These entities strive for innovation, user experience, and social or environmental responsibility goals that a narrowly profit-focused framework like the Balanced Scorecard might only partially support.

How to use this approach to implement BSC 

Begin your BSC implementation journey with actionable steps that are designed to drive performance:

• Assess your current business performance using core business metrics . 
• Identify and address roadblocks and risks for each BSC perspective.
• Prioritize business activities in the order they must be tackled to allow the most rapid progression through the stages.
• Build a strategic roadmap to close the current and desired state gap. 
• Map out and understand cause-and-effect relationships between different strategic objectives.

When mapping dependencies, consider how a company's ability to learn and grow directly impacts its ability to manage its internal processes. By refining your internal processes, not only do you enhance customer service and lower costs, but you also set the stage for increased sales. 

This direct impact on your bottom line demonstrates how strategic enhancements lead to achieving broader financial objectives, a testament to the BSC's efficacy.

Balanced Scorecard Example

Your Balanced Scorecard should be integrated into two main phases of the strategy lifecycle: strategic planning and strategy execution . 

We will show you examples using Cascade, our strategy execution platform , but you can also use an Excel spreadsheet.

Thanks to its flexible structure, Cascade supports various strategy frameworks , with the BSC being a popular choice among our customers. See how to set it up here .

📚 Recommended reading: The Only Balanced Scorecard Software You’ll Ever Need (2023)

Balanced Scorecard for strategic planning

One of the most effective places to implement the Balanced Scorecard is in your strategic planning process. 

As the first and most crucial step in implementing a Balanced Scorecard methodology, this will lay the foundation for everything your organization will do in the future.

Here’s how you can implement the Balanced Scorecard from a strategic planning perspective with Cascade in 2 steps:

Step 1: Use Focus Areas as your perspectives

This Balanced Scorecard implementation methodology involves orienting your whole strategic plan around the Balanced Scorecard. You will set each perspective as a strategic Focus Area and then align Objectives, Projects, and KPIs directly underneath it. You’ll end up with a strategic plan that looks something like this:

💡Tip: Shared Focus Areas in Cascade align every plan with your Balanced Scorecard’s four focus areas—finance, customer, internal processes, and learning and growth—ensuring horizontal alignment and seamless collaboration across teams towards common goals. 

Step 2: Add Objectives, Projects, and KPIs for each perspective

The implementation doesn’t stop with the setup of your focus areas. You need to make sure each of your perspectives has a good mix of:

• Strategic objectives (overall outcomes)
• Projects (specific initiatives)
• KPIs (measures of success)

💡Tip : With Cascade's Alignment & Relationships maps, you can easily see how the objectives and initiatives from the different perspectives of your plan work together to achieve your strategic goals.

👉🏻 Streamline your strategic planning process with our free Balanced Scorecard Strategy Template .

Balanced Scorecard for strategy tracking

Moving from strategic planning to strategy tracking, let's explore using a Balanced Scorecard for performance management and progress monitoring. 

This is a crucial element of every strategy execution . You must integrate your Balanced Scorecard into governance by embedding it in weekly team meetings and board reports for continuous strategic alignment and improvement.  

Here’s how to do it in Cascade: 

Create a Balanced Scorecard Dashboard

Start by creating a Balanced Scorecard Dashboard for your strategic reporting . In the dashboard, you should see your score for each of the four perspectives and a summary of your key objectives, projects, and KPIs. It should look something like this:

💡 Tip: Keep your dashboard fairly high level; for complex strategies with multiple layers, opt for dedicated dashboards for each strategic plan.

Create Balanced Scorecard Reports

The dashboard offers a snapshot of progress, but for in-depth analysis, switch to a tabular report featuring detailed updates and commentary for each perspective. Your report should look something like this:

This detailed report format is invaluable for deep dives during your strategy review meetings .

💡 Tip : With Cascade, you can manually track and update your metrics or take advantage of automation to make the most of your time —no one likes to spend hours on progress updates. You can integrate Cascade with the tools your teams use, pull data from multiple systems, and add context in real time.

📚 Read this article to find out how to use Cascade as your balanced scorecard software. 

Balanced Scorecard + Strategy Execution Software = 🚀

Intrigued by the Balanced Scorecard approach? Enhance your strategic efforts with a strategy execution platform that simplifies planning and execution. 

Cascade excels at bringing your Balanced Scorecard to life. It offers a cohesive approach to strategic management and provides a unified platform that amplifies accountability, fosters alignment, and drives tangible business results.

If you'd like to learn more about how Cascade can help you implement the Balanced Scorecard, book a demo today .

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What is a balanced scorecard? Examples and template

Some managers may choose to focus on financial data to measure success. Others may focus on operational processes or customer satisfaction.

Instead of focusing on measuring only one aspect of a business, the balanced scorecard takes a holistic approach.

After all, a single measure can’t accurately represent all elements of a business. By using a scorecard, managers can get a balanced view of financial performance, operational processes, and customer satisfaction.

What is a balanced scorecard?

A balanced scorecard provides a comprehensive overview of how a company is performing currently. It takes into account finances, operational processes, customer satisfaction, and employee performance. Using a balanced scorecard can help managers find issues and improve business outcomes.

Ultimately, a balanced scorecard is a tool to help drive strategy, implement business actions, and improve financial performance.

What are the benefits of a balanced scorecard approach?

A balanced scorecard seeks to uncover the answers to four questions:

• How do customers see us?
• What must we excel at?
• Can we continue to improve and create value?
• How do we look to shareholders?

Here are a few more benefits of using a balanced scorecard:

Improves focus

Puts all measures in one document, forces consideration of all operational measures, improves communication with senior managers, removes control bias.

The balanced scorecard forces managers to choose only a few critical measures to determine performance. Many companies suffer from data overload and don’t know how to glean actionable insights from all of the data they collect. A balanced scorecard provides only key information, which helps you to avoid getting bogged down with too many numbers and figures.

Since balanced scorecards focus on critical data, it makes it easier to bring several elements into a single management report. A balanced scorecard contains everything a manager needs to make informed decisions. It can help managers focus on customer-oriented products, improve quality, and better internal processes.

Because operations, finances, and customer satisfaction are presented together, you’re forced to consider how each aspect affects the other. Sometimes, you might make a decision purely on financial data without considering that the result may lead to poorer internal processes and lower customer satisfaction. A balanced scorecard helps prevent this scenario because the data is available to you.

Implementing the balanced scorecard is hard to do without involving senior management. These people often have a better understanding of the company’s vision and processes. This improvement in communication often helps remove underlying assumptions about a company’s performance and goes beyond only focusing on financials.

Traditional performance management measures are designed to dictate what they want employees to do and gauge whether they are doing it. This approach doesn’t always work well in modern business because the standard way of doing things may become obsolete within a year.

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Instead, the balanced scorecard puts vision and strategy at the center. It works to establish goals and pull employees toward a shared company vision. The balanced scorecard lets managers view interrelationships and lets employees determine the best course of action to meet company goals.

What are the 4 perspectives of a balanced scorecard?

The balanced scorecard is comprised of four perspectives:

Financial perspective

Customer perspective, internal process perspective, learning and growth perspective.

Each perspective focuses on a different aspect of an organization’s business strategy. Let’s dig a little deeper into what these perspectives provide to the balanced scorecard:

The financial perspective hones in on how the company looks to shareholders. Assuring shareholders they are receiving a return on their investment is crucial to the growth of the company. Executives may analyze data regarding the company’s financial performance and determine whether the company is profitable and make adjustments for improvement.

To sell your product or service, customers need to have a desire satisfied. The customer perspective determines customer satisfaction with the company’s current products and services. The more satisfied the customers are, the more likely they are to stay customers.

Data collected for this perspective can include customer feedback and competitor analysis. Based on the results, you can start to offer new products, promote high-satisfaction features, or improve product quality.

A proper analysis of business processes answers what you are good at doing and what you are bad at doing. Finding these answers can help you fix issues with bottlenecks, product delays, and other performance problems. It can also help you determine core competencies.

Essentially, this perspective aims to find opportunities to run at maximum efficiency.

Also known as the organizational capacity perspective, this area focuses on employees and their ability to produce work that improves and creates value for the company. It examines whether employees are receiving the training and resources they need to do their job. It also analyzes company culture and leadership performance.

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Balanced scorecard examples

Let’s look at a couple of real-world examples of balanced scorecards:

Case study 1: Improving financial performance with a balanced scorecard

A company is looking for ways to improve its financial performance. However, it focuses purely on financial metrics to make these evaluations. This means they miss out on discovering how internal processes, customer satisfaction, and employee productivity can have an impact on its bottom line.

By taking a balanced scorecard approach, it notices an opportunity to use the excess capability to market its existing products to a new, relevant audience. This adds revenue to the company with only moderate expenses. Periodic financial reports prove that this new campaign improved sales and overall market share.

Case study 2: Enhancing customer satisfaction through a balanced scorecard approach

In this example, a company has made vast improvements in its delivery performance and overall product quality. But over the course of three years, the company didn’t have financial improvement and saw its value go down.

So what happened? By using the balanced scorecard, the company can notice that it failed to recognize the aspect of customer satisfaction and the demand for new products. Executives will need to rethink their strategy and consider the ways it can better meet the needs of their customers.

How to create a balanced scorecard (with template)

To make your own balance scorecard, follow these eight steps:

• Define purpose — Determine what you want to achieve with a balanced scorecard and identify the business unit you will be analyzing
• Interview senior managers — The facilitator will interview senior managers to get their perspectives on the company’s strategic goals and performance measures
• Discuss with executive management — Top management will define the mission and strategy as well as what measures will be used to determine success
• Interview senior managers — Senior managers are interviewed a second time to review and consolidate input to create a first draft of the balanced scorecard
• Hold a manager workshop — All levels of managers gather to discuss the mission, strategy, and the first draft of the balanced scorecard. They may begin to implement an action plan or create stretch performance goals
• Hold a senior executive workshop — Senior executives approve of the balanced scorecard and develop stretch performance goals for measures
• Initiate an action plan — Based on the balanced scorecard, an implementation plan is created and communicated to everyone in the organization
• Review balanced scorecard — The balanced scorecard is not a one-and-done plan or a long-term goal list; it needs to have periodic reviews to ensure management is properly using excess capacity or removing it. Otherwise, operational improvements won’t help the bottom line

When everything is said and done, your balanced scorecard should look something like this:

Keep in mind, even the most efficient balanced scorecard doesn’t guarantee success. It only takes a company’s strategy and turns it into a measurable action plan. However, you can make better-informed decisions when it takes into account all variables of the scorecard instead of only focusing on one or two aspects.

A balanced scorecard creates value for the average employee. The measures are designed to motivate employees to fulfill the company’s strategic vision. While the balanced scorecard establishes goals, it leaves employees and managers to adopt behaviors and actions they deem appropriate to reach those goals.

This approach provides flexibility in a work environment that is constantly changing and evolving. Since the goals are created in a holistic manner, it will ideally lead to better financial performance as the company improves operations, customer satisfaction, and employee productivity.

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Case Study – How to Implement the Balanced Scorecard

• February 15, 2022

• Sourabh Hajela
• Executive Editor - CIO Strategies

This case study explores in-depth (100+ pages) the use of the Balanced Scorecard Methodology (BSC) to support strategy driven business decisions. The study does in depth into the development and implementation of the balanced scorecard in the enterprise. However, the highlight is the identification of limitations in BSC and recommendations on plugging those holes. Excellent Read!

Don’t Miss These Related References:

• How to Implement the Balanced Scorecard
• e-Book: How to Implement the Balanced Scorecard
• Balanced Scorecard Case Study - Healthcare
• IT Balanced Scorecard Case Study (Healthcare)
• Case Study- Balanced Scorecard for Strategic Effectictiveness

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What is it?

The Balanced Scorecard concept, popularised by Robert S Kaplan and David P Norton, is a performance management tool that encompasses the financial measures of an organisation and key non-financial measures relating to customers or clients, internal processes, and organisational learning and growth needs. It places these into a concise ‘scorecard’ that can be used to monitor performance.

Early implementations of the Balanced Scorecard tended to focus on including a balance of measures in the four domains

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What Is a Balanced Scorecard?

• 26 Oct 2023

Think of your business’s most valuable assets. Talented employees, customer relationships, brand loyalty, research capabilities, and a strong company culture may come to mind. Yet, the things that often create the most value are intangible and difficult to measure and track.

When crafting business strategy , you must account for intangibles and give them as much weight as financial goals. In the online course Strategy Execution , Harvard Business School Professor Robert Simons introduces the concept of the balanced scorecard to help you do just that.

Here’s a primer on the balanced scorecard and three steps to apply it to your organizational strategy.

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The balanced scorecard is a tool designed to help track and measure non-financial variables. Developed in 1992 by HBS Professor Robert Kaplan and David Norton, it captures value creation’s four perspectives.

“The balanced scorecard combines the traditional financial perspective with additional perspectives that focus on customers, internal business processes, and learning and development,” Simons says in Strategy Execution . “These additional perspectives help businesses measure all the activities essential to creating value.”

The four perspectives include:

• Financial perspective: Do your plans and processes lead to desired levels of economic value creation? Metrics include sales revenue, operating expenses, net income, and investment in assets.
• Customer perspective: Does your target audience perceive your product, services, and brand in the desired way? Metrics include quality, delivery speed, and customer service experience.
• Internal business process perspective: Do your organizational processes create value for customers? Metrics to track are related to operations and customer management, innovation, regulatory, and social processes.
• Learning and growth perspective: Does your organization support and utilize human capital and infrastructure resources to meet goals? Areas to consider are human capital (people, talent, and knowledge), information capital (databases, networks, and technology), and organizational capital (leadership capabilities and cultural alignment to company goals), each with its own set of metrics.

You should use the balanced scorecard in tandem with a strategy map , a visual way to illustrate the cause-and-effect relationships underpinning your business strategy.

“Without a strategy map, what you’re calling a balanced scorecard is really just a list of measures,” Simons says in Strategy Execution. “And those measures may or may not tie back to your intended strategy. Without a strategy map to tell the story, people in your organization will have no clue where those measures came from.”

The purpose of a balanced scorecard is to add actions to your strategy map and clarify which goals make others possible.

To get started, here are three steps to crafting your organization’s strategy map and balanced scorecard.

Related: How One Television Producer Is Putting Her Strategy Execution Skills into Action

How to Create a Balanced Scorecard: 3 Steps

1. craft a strategy map.

Before creating your balanced scorecard, you must craft a strategy map to base it on. Start by listing the scorecard’s four perspectives in this order:

• Financial perspective
• Customer perspective
• Process perspective
• Learning and growth perspective

“Learning and growth” will be the foundation, so position it at the bottom of your strategy map.

Next, list your goals in each category using action verbs. What do you intend on doing? For example, in the “learning and growth” category, you could write “train staff on a new content management system.” Next to “customer perspective,” you could write “increase customer satisfaction.”

These goals are what Simons calls “critical performance variables.” For your strategy to succeed, you must achieve them.

“This exercise is asking you to imagine what variables are so serious that—if you failed to deliver on them—you could imagine your entire strategy collapsing,” Simons says in Strategy Execution . “These are the critical performance variables that you must monitor if you want your business to succeed.”

Finally, draw arrows pointing upward between each perspective category, so “learning and growth” points to “process,” which points to “customer,” which points to “financial.”

“The arrows are the most important part of a strategy map,” Simons says in the course. “They reveal cause-and-effect relationships so that everyone in a business can understand the theory of value creation. The outputs from one stage are the inputs to the next.”

2. Select Measures

Once you’ve created your strategy map, start your balanced scorecard by selecting how you’ll measure progress for each objective.

Assess measures using three questions:

• Does the measure link to my strategy map?
• Is it objective, complete, and responsive?
• Does it link to economic value?

For example, if your objective is to “increase customer satisfaction,” measures could include:

• Number of referrals
• Number and speed of resolved support tickets
• Number of testimonials
• Net promoter score (NPS)

Link these measures to the goal in the strategy map to objectively measure, change, and tie them to your organization’s economic value.

Selecting the right measures is critical because, as the balanced scorecard’s creators note in the Harvard Business Review , “What you measure is what you get.”

“You can have the best strategy in the world,” Simons says in Strategy Execution . “You can communicate that strategy to employees in different ways—town hall meetings, videos, company newsletters. But at the end of the day, what everyone pays attention to is what they're measured on. So, you need to be sure that measures throughout the business reflect your strategy, so that every employee will devote their efforts to implementing that strategy.”

However you decide to measure objectives is where your team will focus its efforts, so choose wisely.

Related: 5 Strategy Execution Skills Every Business Leader Needs

3. Set Targets

The final step to creating your balanced scorecard is setting targets. What metrics must you hit to achieve your goals using your selected measurements? Consider the metric you want to reach and within what timeframe.

In the case of increasing customer satisfaction, targets for each sample measurement could be:

• Number of referrals: Garner 500 referrals next year
• Number and speed of resolved support tickets: Resolve 75 percent of support tickets within 48 hours
• Number of testimonials: Gather 100 testimonials next year
• Net promoter score (NPS): Target an average score of eight or above by 2026

Setting targets helps quantify what successful strategy execution means for each measure.

In Strategy Execution , Simons notes that, when looking at your balanced scorecard, the further you move to the right, the more you can objectively measure and reward performance. The further you move left, the more performance is subjective.

Set challenging but achievable targets. Remember that not accomplishing your “learning and growth” goals can impact the rest of your strategy map.

Building and Leveraging Your Strategy Toolkit

After creating your strategy map and balanced scorecard, the last, ongoing step is tracking and reporting progress toward each objective.

Use both to align on strategy, flag areas needing more attention, and highlight how goals connect. Everyone’s efforts funnel into a specific part of the strategy critical to the team’s overall success.

The balanced scorecard is just one tool to help execute your organization’s strategy. By opening up to new ways of thinking about strategy, you can reach business goals and advance your career as a strategic leader.

Are you interested in designing systems and structures to meet your organization’s strategic goals? Explore our eight-week Strategy Execution course, and other online strategy courses , to hone your strategic planning and execution skills. To find the right HBS Online strategy course for you, download our free flowchart .

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The Evolution of Balanced Scorecard in Healthcare: A Systematic Review of Its Design, Implementation, Use, and Review

Frida betto.

1 Department of Industrial Engineering, University of Padua, 35122 Padua, Italy

Alberto Sardi

2 Department of Management, University of Turin, 10124 Turin, Italy

Patrizia Garengo

Enrico sorano, associated data.

Not applicable.

During the last few years, the interest in performance measurement increased within the healthcare sector. Due to the COVID-19 pandemic, healthcare systems needed to boost performance measurement systems to become more resilient and improve their capability in monitoring key performance indicators. Since the 1990s, the Balanced Scorecard (BSC) model has been widely used among private and public organizations as it is the most adopted model to measure performance. The current paper aims at understanding the evolution of BSC in healthcare. The systematic literature review has been carried out by searching keywords according to PRISMA guidelines. By analyzing papers through one classification of BSC adoption phases, the results reveal that studies focused mainly on the BSC design process, rather than BSC implementation, use, or review. However, there is no agreement about the perspectives to be adopted in healthcare. Concerning BSC implementation and use, on one side especially leadership, culture and communication enable the BSC implementation. On the other side, monitoring and strategic decision-making are the most widespread objectives for using BSC. Concerning BSC review, however, the paper highlights a need for additional research. Finally, the paper provides further research opportunities concerning the phases suitable for implementing a BSC in healthcare.

1. Introduction

During the last two years, healthcare systems needed to develop resilience to cope with the COVID-19 pandemic [ 1 ], control resources, and align targets to their mission in order to continue to effectively deliver care [ 2 ].

For many years, pushed by international public reforms [ 3 , 4 , 5 , 6 , 7 , 8 , 9 ] or national accrediting bodies [ 10 ], healthcare systems and organizations have developed performance measurement systems to improve the efficiency and quality of health care [ 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 ]. During the last two years, the pandemic outbreak put even more pressure on the necessity to monitor the internal processes, patient flows, etc., in order to support the efficiency and quality of delivered care services [ 21 , 22 , 23 ]. The monitoring of key performance indicators was essential in meeting organizations’ objectives [ 24 ]. Moreover, the COVID-19 pandemic made clear the necessity to gain real-time information about patients in the department, number of attendances, etc. in order to adapt the organization to the required changes [ 25 ].

During pandemics, organizations need to mainly lead the data useful to manage people and patients [ 26 , 27 ]. In that context, such in other previously analyzed contexts (see [ 28 ]), the strategy can be defined as an entrepreneurial strategy [ 29 ] where the leader, in this case, the strategic task force, takes decisions autonomously. Consequently, organizations need to align their strategic objectives with the day-to-day operations by creating or adjusting their monitoring system to manage organizations and deliver care.

In this context, performance measurement systems play an essential role. Performance measurement is a “process of quantifying the efficiency and effectiveness of an action” [ 30 ] in order to monitor it or to “align unit goals with the organization’s strategy” [ 31 ].

One model for measuring performance and supporting strategy implementation is the Balanced Scorecard (BSC) [ 31 , 32 ]. Since the 1990s, reforms at the international levels are asking for new management models for measuring and monitoring performance [ 10 , 33 ]. BSC has become a tool supporting the alignment of organizations’ mission, vision and strategy to action by leveraging on performance measurement. The BSC “translates a company’s strategy into specific measurable objectives” and, in this way, the core of the BSC is the strategy and vision of the organization and not control [ 32 ]. A few years later, Kaplan and Norton [ 34 ] and Kaplan [ 35 ] deepened the design of BSC for nonprofit and governmental settings. Traditionally, a BSC model is a “balanced” set of financial and non-financial measures that gives information from four perspectives, i.e., financial, customer, internal business and innovation and learning (or learning and growth) [ 32 ].

Nowadays, the Balanced Scorecard is widely spread in healthcare organizations [ 36 , 37 ]. In the last years, private healthcare systems reached high costs, thus costs and value measurement are essential [ 38 ]. Additionally, for many years, public health organizations have been pushed to apply effective management systems to measure performance [ 39 ].

However, issues related to BSC adoption have been still underlined by literature, as described below.

In order to investigate the BSC research, the authors adopt a recognized framework developed by Bourne et al. [ 40 ]. In their study, Bourne et al., identified from previous literature three main phases of performance measurement system implementation, i.e., design, implementation and use; besides, they underlined also the essential role of updating and reviewing processes of measures and targets. Even if they built the classification basing the study on the manufacturing sector, the framework is not context-dependent. By adopting Bourne et al. [ 40 ]’s framework, the authors analyzed the BSC implementation process as a whole.

Moreover, in an uncertain and continuously evolving environment, the design of the adopted BSC needs to be updated to cope with the external changes and the target and performance indicators need to be reviewed to be aligned with the organization’s strategy. The traditional BSC perspectives [ 32 ] are not always able to catch the new needs, such as the environmental dimension [ 41 ], or integrated care and humanization [ 42 ]. As a consequence, specific redesign of BSC perspectives aligned with the organization’s strategy and planned updating processes for measures and targets should be carried out by the organizations.

Concerning the implementation of BSC, since the beginning of the 2000s, several authors have investigated not only the drivers but also the barriers to implementing BSC [ 36 , 41 , 43 , 44 ]. Inamdar et al. [ 45 ] described the challenges faced by applying the Balanced Scorecard in a healthcare organization (e.g., the need for obtaining executive time and commitment, making the scorecard simple and easy to use). Recently, other literature reviews [ 46 , 47 ] emphasized the importance of stakeholder engagement. As drivers of successful BSC implementation, some authors listed trust, leadership support, etc. However, further research is required to explore the drivers of BSC implementation such as the involvement of patients in the BSC reporting and development strategies that overcome the simply customer satisfaction questionnaires [ 46 ]. Notwithstanding the increasing interest in patient-centered care or community building, a recent review [ 46 ] identifies that, even though needed, “the patients are not engaged to support patient and family-centered care”.

Regarding the use of BSC among healthcare institutions, only a few research explicitly emphasizes how organizations use BSC [ 42 , 48 ] according to the adopted classification of BSC usage [ 49 ]. Related to the public sector, an empirical study highlighted that organizations have to assess several mandatory targets, they used BSC for legitimacy seeking [ 48 ]. Another case described how organizations have sought to use BSC for strategic decision-making and monitoring internal processes [ 50 ]. However, the studies available are not enough to understand how healthcare organizations are using BSC (only a few papers declare explicitly how they use BSC in day-to-day activities). Consequently, further investigation is needed to shed light on this research field.

Due to the current events caused by COVID-19 pandemics, the above-mentioned gaps related to BSC design, implementation, use and review, need even more urgent answers for deepening how to support healthcare organizations in assessing performance.

To address the research gaps, the paper aims at answering the research question below: How has research on the design, implementation, use, and review of BSC in healthcare settings evolved over the years?

In light of the development plans required for healthcare systems resulting from the COVID-19 pandemic [ 51 , 52 , 53 ], the study highlights the state of the art of the BSC model. By mapping the development of BSC over the years it provides two main contributions: it describes how BSC has been designed and implemented in healthcare organizations to favor an efficient and effective use of resources and it provides a comprehensive overview for future empirical research in this area.

Drawing from Bourne et al. [ 40 ]’s classification of BSC adoption phases, the paper systematically reviews literature, without limiting the timeframe, to analyze the perspectives adopted in BSC design, the barriers and drivers to implement BSC, the several uses and the review processes of the BSC. By providing insight into the BSC evolution in healthcare, the findings could offer avenues for future research both in the academic world and also among policy-makers who could become aware of how healthcare organizations use BSC.

The paper is structured as follows. Section 2 deepens the methodology adopted for the review. Section 3 reveals the findings developed after the data analysis and Section 4 discusses them to provide the avenues for future research. Finally, Section 5 provides the main conclusion of the review and the research limitations.

2. Materials and Methods

To strengthen the transparency and rigor of the review, the research process has been driven by the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) methodology [ 54 , 55 ]. PRISMA is an accepted approach developed in 2005 that provides a checklist to guide systematic literature reviews [ 54 , 55 ].

In line with the above-mentioned checklist [ 54 , 55 ] and other recent systematic reviews based on PRISMA [ 47 , 56 ], the following section deepens the review’s phases to select and analyze the selected articles.

2.1. Eligibility Criteria

According to the research objective, i.e., to investigate the evolution of the Balanced Scorecard in the healthcare context, the following criteria have been adopted:

• Article characteristics: papers must be written in English and published in scientific journals. The authors’ objective is to analyze the evolution of the BSC in healthcare, thus the involved studies must be mature and approved by the scientific community to ensure a deeper comprehension of their results. Including only scientific journals, however, could introduce an academic bias.
• Topic: papers must be focused on the Balanced Scorecard to improve organizational performance of the system, healthcare organization or healthcare service. Included studies have to incorporate the BSC concept as evaluated by Kaplan and Norton [ 34 ]. Moreover, included studies must emphasize at least one of the four phases of the BSC, i.e., BSC design, implementation, use, or review [ 40 ].
• Typology of healthcare setting: papers do not must be focused on a specific setting (e.g., hospitals, health systems). To map the BSC evolution in healthcare, it is noteworthy indeed also to evaluate the evolution of research interest in the different settings related to the healthcare context.
• Research methodology: according to PRISMA guidelines, selected papers can develop either empirical research or a literature review. Including both review and empirical papers allows to include record findings of previous literature reviews related to BSC in healthcare (see PRISMA flow diagram [ 55 ]).

Consequently, the following sets of papers were excluded:

• Papers not focused on healthcare settings, such as hospitals, primary services, and local health authorities. Thus, papers focused on other settings referred both to healthcare (such as healthcare supply chains) or to other settings (manufacturing, oil and gas, etc.) are not included in the analysis.
• Papers not focused on BSC as a model for measuring performance or as a strategic tool.
• Papers not focused on the BSC adoption phases, i.e., design, implementation, use and review according to Bourne et al. [ 40 ]’s research.

2.2. Information Sources and Search Strategy

The records have been selected by searching on Scopus, Web of Science (WoS), and PubMed electronic databases. The identification via databases was carried out in April 2022. To map the evolution of the Balanced Scorecard in the healthcare context, the selection was not limited to a fixed time frame.

According to the database, each search string selects records by keywords (Scopus, WoS) or title (PubMed). PubMed string has been limited to the title for narrowing the bias related to the identification of records (e.g., papers focused on clinical evaluation of specific patients’ diseases) and consequently identifying only records consistent with the review aim. Moreover, each search string (see Table 1 ), limits the records to papers only written in English. The limitation of the English language was carried out in all the search strings to identify only papers that can be understood by the research team.

Search strings ( 1 author keywords (AK); 2 keywords plus (KP)).

Table 1 provides evidence related to the strings used for selecting the dataset.

As Table 1 reveals, the terms used in the search strings highlighted the two main topics of the review: the balanced scorecard and the healthcare setting.

Regarding the balanced scorecard, the selected words are “balanced scorecard”, “balanced score card” (it is a less common way to write BSC, although incorrect), and BSC (the acronym of balanced scorecard).

Regarding the healthcare context, the selected words are health (as catches also health system, health facility, etc., but it introduces several biases such as works related to health conditions, health finance, etc.—see next section for more details), hospital, hospitals, hospitalization/hospitalisation. The last four words have the same root word; however, they have been made explicit in order not to introduce another bias related to hospitality (which refers mainly to the tourism context).

2.3. Study Selection and Data Collection Process

According to the PRISMA flow diagram [ 55 ], the article selection process develops into identification, screening, and eligibility steps in order to identify the papers included in the review.

Each step was performed several times by the authors. The record search process has been reiterated several times as it needed to be revised and discussed among the research team. Once the objective of the review was identified, the keywords were discussed and selected only after testing the search strings. Then, the screening and eligibility steps were developed together with the research team in order to identify effective exclusion criteria.

Figure 1 shows the review’s flow diagram consistent with the PRISMA guidelines (last access: May 2022).

Flow diagram of the review.

As Figure 1 illustrates, during the identification phase of the flow diagram 505 records were firstly sorted based on the search strings, and then, after duplicate and conference/book removal, 343 records were selected.

The abstract reading, during the screening phase, was carried out according to the exclusion criteria selected by the research team. According to the exclusion criteria described in Section 2.1 , the first exclusion criterion (i.e., Reason 1 in Figure 1 ) led to the removal of 63 records; the rationale for this criterion refers to the bias introduced mainly by the keyword “health*” embedded in the search strings (as explained in Section 2.2 ) because it includes non-healthcare-related articles in the 343 identified records (e.g., banking, wastewater, petroleum, manufacturing, etc.).

The second exclusion criterion, i.e., Reason 2 in Figure 1 , refers to the papers that do not focus on the balanced scorecard as a strategic tool to enhance organizational performance. Table 2 lists the number of papers excluded according to Reason 2.

Excluded papers according to the second criterion during the screening phase.

After the abstract reading, in line with the PRISMA guidelines [ 57 ], the screening phase proceeded with the full-text reading of the 153 papers. The rationale of the third exclusion criteria is consistent with the framework, explained in the following section, adopted to analyze data.

The 40 selected papers deepen BSC design, implementation, use, or review and enable the research team to answer the research question.

2.4. Data Items and Framework Adopted

The analysis of the 40 papers was carried out by gathering information related to:

• Publication year;
• Country where the empirical research was developed, or, in the case of conceptual/review paper, the country of the corresponding author;
• The methodology adopted: case study, survey, review, etc.;
• Typology of service: private, public, no profit;
• Unit of analysis: health system, health organization/hospital/health facility, department, or specific care service.

The above-listed items were used to map the evolution of BSC research in healthcare. Then, to deepen the BSC pathways in healthcare the research team adopted the framework displayed in Figure 2 .

The framework adopted for data analysis.

Figure 2 reveals the framework adopted to analyze papers. As BSC literature outlines, there are four phases in the BSC adoption [ 40 , 58 ]:

• Regarding the BSC design, the analysis aims at emphasizing the adopted perspectives and the main key performance indicators used;
• Regarding the BSC implementation, the focus is on the drivers and barriers that push or hinder the implementation of BSC;
• Regarding BSC use, the research team adopted a highly cited work that distinguished BSC use in monitoring, strategic decision making, attention focusing, and legitimization, also recently adopted in an empirical study focused on BSC in a hospital [ 42 ];
• Regarding the BSC review, in line with [ 40 ], the review process includes a set of mechanisms for reviewing targets and standards and processes for a periodical review of the set of measures adopted.

Drawing from Figure 1 , the 40 selected papers were analyzed and the main findings are presented in the following section.

The findings reveal how BSC research in healthcare has evolved across the years. The first section describes the results according to the criteria explained in Section 2.4 , then the analysis deepens the description of the results in line with Figure 2 .

3.1. Descriptive Analysis

The 40 selected papers are published in scientific journals belonging to either “business, management and accounting” or “medicine” research areas ( Table 3 ). This is consistent with the inclusion criteria used to select papers.

Scientific journals of the published papers.

The following subsections show the classification of papers by the selected data items (see Section 2.4 ).

3.1.1. Publication Year

According to Section 2.4 , the publication years have been investigated. Notwithstanding the huge timeframe between 1999 and 2022, Figure 3 illustrates the trendline continues to increase over the years (see red line).

Distribution of papers by year.

The linear trendline is based on the linear regression model solved by the ordinary least square (OLS) method [ 59 ]. In Figure 3 , it has been pointed out that the regression equation and R 2 represent a goodness-of-fit for the linear regression model. The more R 2 is close to 1, the more the model fits the data. In this case, R 2 is very low, thus the correlation between the timeframe and the published paper is weak. However, the linear trendline shows a positive slope, consequently, the interest in the investigated topic is increasing.

3.1.2. Countries

To map the evolution of papers, it is worth assessing in which countries articles have investigated BSC in healthcare.

The countries were grouped by country areas:

• Asia includes empirical research developed in Afghanistan (2), China (3), India (1), Indonesia (1), Iran (1), Malaysia (2), Thailand (1), and Vietnam (1);
• Australasia includes empirical research developed in Australia (3) and New Zealand (1);
• Europe includes empirical research developed in Germany (1), Greece (1), Hungary (1), Italy (5), Netherlands (1), Portugal (1), Spain (2), and Sweden (2);
• North America includes empirical research developed in Canada (3) and the USA (4);
• UK includes empirical research developed in the UK (5).

Figure 4 illustrates the number of published papers classified by geographical areas. Papers based on empirical studies developed in Europe represent the largest set.

Distribution of papers by country areas.

To deepen the analysis, the authors investigate also the papers published in the five geographical areas over the years (see Figure 5 ).

Distribution of papers by country areas and years.

As shown in Figure 5 , there is a prevalence of studies placed in Asia and Europe in the last ten years (85% of papers analyzed in 2012–2022 were placed in Asia and Europe). Whilst analyzed papers placed in Europe have been published since 2004, those placed in Asia started their evolution four years later showing an increasing interest in BSC in the 2013–2020 timeframe (57% of papers analyzed in that timeframe were placed in Asia).

Finally, it is worth noting the prevalence of papers related to the UK and North America is decreasing. As Figure 5 depicts, in the timeframe 1999–2009 the analyzed studies placed in the UK and North America represent 64.7% of the total, while from 2010 to nowadays they represent only 4.3% of the total. Their evolution began before the others (e.g., from 1999–2003 there are only North American studies) and in the last few years, the interest in the topic evolves towards specific applications. USA and UK before applying the exclusion criteria reached the highest numbers of published papers (e.g., in Scopus 39 related to the USA and 19 to the UK), though most of them have been excluded during the paper selection process according to the research questions of this study. However, further clarification is required. As shown in Table 2 , most of the excluded papers were related to evaluating human resources, instruments, specific patient flows, etc., thus they have been excluded. This is consistent with the evolution of papers over the years, the UK and mainly the USA began to investigate BSC in healthcare former than the other countries. Now, after more than 20 years, they continue to examine BSC but related to specific processes or uses that overcome the organizational and strategic levels.

3.1.3. The Methodology Adopted to Implement the BSC

The methodology reveals how the authors formulate the research questions and how the empirical study has been carried out. Therefore, to analyze the evolution of papers concerning BSC in healthcare settings, the investigation of the methodologies adopted brings to the understanding of how and where the studies evolve.

Following Yin’s [ 60 ] classification of methodologies and adding the review, it is worth noting that the authors investigated BSC in healthcare mainly adopted case study methodology (see Table 4 ). Conversely, archival studies [ 61 , 62 ] and action research [ 63 , 64 ] have been seldom adopted.

Methodologies adopted by the selected papers classified by country areas.

The classification of paper methodologies by country reveals Europe, North America and UK as the country areas where research has been focused mainly on case studies ( Table 4 ).

In addition, to understand the evolution of research methodologies over the years, the graph represented in Figure 6 has been developed. The case study methodology is the most adopted. According to Yin [ 60 ], case studies can be used either in explorative research if the research is new and phenomenon driven or to answer questions concerning how and why a research topic develops. Case studies have been adopted in different ways. Oliveira et al. [ 65 ] adopted a longitudinal case study in order to understand how BSC is implemented in healthcare settings and whether BSC includes neo bureaucratic traits. In the same way, other authors adopted longitudinal case studies for understanding the evolution of BSC over a fixed timeframe in the same hospital [ 42 ]. Case studies have been adopted to investigate the BSC design [ 45 , 66 , 67 ]. In other cases, participative case studies [ 50 ] and action research [ 63 , 64 ] contribute to developing a BSC.

Distribution of papers by methodologies and years.

Additionally, surveys and archival studies evaluate the performance gained through the use of BSC [ 62 , 68 , 69 ] or assess the diffusion of the BSC model [ 70 ] within the health system.

Moreover, as the topic is getting mature (the review’s period is more than 20 years), papers based on review [ 36 , 46 , 47 , 71 , 72 ] represent 30.8% of the total in the last five years, whilst before (1999–2016) the papers analyzed based on review were the 11.5% of the total. Finally, even if the selected papers based on the other methodologies are few, surveys are increasing whereas action research and archival studies are decreasing ( Figure 6 ).

3.1.4. Typology of Service

Another item included in the analysis is the typology of service that healthcare organizations or services deliver ( Table 5 ). Four categories have been examined: private service, public service, non-profit organizations (NPO) and non-governmental organizations (NGO). 28 papers considered public services: the majority of paper belongs to Europe, Asia, and the UK where health services are almost everywhere public.

Typologies of service of the selected studies classified by country areas.

Finally, the other 13 papers belong to private services, NPO, and NGOs. In three empirical studies, the typology of service has not been specified.

3.1.5. Unit of Analysis

Finally, the last investigated item refers to the unit of analysis the selected papers adopted. Table 6 sums up the number of papers that adopted a unit of analysis classified by geographical area. As shown in Table 6 , the units of analysis have been classified by macro levels: systems, health authorities, hospitals, primary health services and department units. The results reveal that the hospital level is the most investigated one over the areas ( Table 6 ) and the years ( Figure 7 ). In all the geographical areas of the analysis, the empirical studies investigated mainly the hospital level to analyze BSC in healthcare.

Distribution of papers by units of analysis and years.

Units of analysis adopted by the selected papers classified by country areas.

Even by exploring the evolution of units of analysis over the years, the predominance of hospital-level as a unit of analysis remains always clear. The papers focused on hospitals as the unit of analysis represent 55% of the total.

3.2. The BSC Phases

The adoption of a BSC follows four phases [ 40 ]. As explained in the BSC, this review analyzes papers by exploring the BSC phases (see Figure 2 ).

The subsections below deepen the results related to each phase of a BSC adoption.

3.2.1. BSC Design

Regarding the BSC design phase, the analysis explored the adopted perspectives investigated by different authors in designing the BSC. The analysis sheds light on the most known and adopted perspectives i.e., financial, process, customer and learning and growth perspectives. Even if 30 years passed from Kaplan and Norton’s [ 32 ] first work on BSC, the authors still recognized these four perspectives as the most suitable for effective BSC implementation (see Table 7 ).

Perspective identified after the analysis.

The financial perspective has been adopted by most of the studies that focus on BSC design [ 50 , 68 , 69 , 77 ]. Empirical research suggests financial indicators based on costs, such as costs of drugs and materials, training costs [ 68 ], general system and organization costs [ 50 , 63 ]; expenditures [ 39 , 84 ]; revenues and income [ 50 , 84 ]; efficiency and productivity [ 63 , 76 ]; and some more financial related indicators, such as liquidity and capital [ 64 ], financial accessibility and viability [ 63 ], net profit margin [ 39 ] and capital turnover [ 83 ].

Financial perspective maintains an essential function in monitoring organizations and services over the years notwithstanding the typology of delivered service (private or public) or the unit of analysis. However, even if healthcare organizations need to fulfil government constraints about budget, expenditures, costs, etc. [ 50 , 68 , 84 ], the financial perspective is not at the top of BSC perspectives. In line with Kaplan and Norton [ 34 ], in public and NPO organizations, the mission is at the top of BSC perspectives [ 34 , 68 ].

Moving from the financial to the process perspective, 18 papers include it in the BSC design. The process perspective includes indicators based on capacity, such as length of stay [ 68 , 76 ], bed occupancy [ 39 , 68 ], bed turnover [ 68 ]; quality, such as SDO (i.e., the Italian acronym for the discharge form) quality [ 50 , 66 ], postoperative recovery time and infection rate [ 83 ]; efficiency, such as efficient production, distribution and logistics [ 83 ], internal efficiency [ 50 ]; human resources, such as availability of staff [ 39 , 63 , 66 ], staff satisfaction [ 39 , 63 ].

Moreover, as Table 7 shows, the process perspective named process-related perspectives embodies other perspectives strictly related to processes. For example, emergency areas and emergency services [ 42 ] relate to the traditional process perspective but have been highlighted by the authors as the regional government identified emergency areas as a weakness.

In the same way, the customer-related perspective embodies customer, stakeholder satisfaction and workforce perspectives. This perspective has been studied by 20 papers. Indicators concerning customers include patient [ 39 , 61 , 68 , 76 ] and, in general, stakeholder satisfaction [ 67 , 85 ], waiting time [ 83 ], burden of medical expenses [ 84 ], etc.

Concerning healthcare, several studies [ 68 , 71 ] place customer perspective at the top of BSC perspectives, whereas another focuses on a more specific perspective related to customers, i.e., stakeholder satisfaction [ 50 ], and places it at the top.

Although learning and growth is the fourth perspective belonging to the traditional BSC built by Kaplan and Norton [ 32 ], a lower number of studies adopted it rather than the other three perspectives above mentioned. The learning and growth perspective refers to non-financial measures (as well as the customer and internal processes perspectives), mainly based on personnel structure [ 84 ], employee training [ 39 , 76 , 83 ], and staff satisfaction [ 68 , 83 ]. It is worth noting that staff satisfaction indicator belongs either to learning and growth [ 68 , 83 ] or to “stakeholder satisfaction” perspective [ 50 ] (which includes both employees and patients, which was grouped here under the customer-related perspective set), or to process perspective [ 39 ].

“Learning and growth” shed light on skills and competencies the staff have to reach, such as number of studies [ 68 ], number of participation in conferences [ 39 ], adaptation to new technologies [ 76 , 83 ], training, but also on the satisfaction of staff derived from work [ 68 , 83 ].

Notwithstanding the recognized relevance of this perspective in traditional BSC [ 32 , 34 ] and in BSC built for healthcare, several studies neglect it. Gao et al. [ 84 ] mentioned learning and growth as the last of the four perspectives due to low interest in research and teaching processes in the involved Chinese county hospital. In other cases, “learning and growth” has been removed narrowed to the specific healthcare context. For example, Catuogno et al. [ 50 ] investigated a research hospital and they removed learning and growth and identified other perspectives, such as “research process” and “stakeholder satisfaction”. The mission of this kind of organization, i.e., research, needs a specific focus on research that has been emphasized by the research process perspective. However, inside it, some belong to “learning and growth” indicators, such as scientific articles.

In addition to the four traditional BSC perspectives, empirical studies on BSC in healthcare analyze others that have been described below:

• Community-related perspective. It groups the perspectives related to community, external environment assessment, and fair access. They consider waiting times [ 48 , 86 ], response to emergencies [ 86 ], equity factors [ 48 , 61 ]. The studies that include the community perspective focus on the health system or service and consequently place great attention on population needs [ 61 ]. Otherwise, they emphasize the needs for outpatient and inpatient even within healthcare organizations by modifying traditional perspectives.
• Quality-related perspective. It groups the perspectives related to appropriateness and quality [ 48 , 66 , 74 ], organizational excellence [ 85 ], surgical performance [ 42 ], humanization [ 42 ], and health outcomes [ 48 ]. Three papers focus on the appropriateness and quality of the organization. Broccardo [ 66 ] includes this perspective in order to evaluate the appropriateness of Diagnosis-Related Groups (DRG) and also the average weight of hospital stay, strictly related to other indicators belonging to the financial perspective [ 68 , 76 ]. In other studies, appropriateness is related to the quality of delivered care, such as chronic and acute care management, and inappropriate use of surgery [ 48 ]. In this case, these factors could be associated with the process perspective, as focused on care processes.
• Innovation perspective. Groene et al. [ 75 ] identified innovation as the perspective to promote communication, train staff, assess satisfaction, establish regular self-assessment, etc. There, the innovation perspective replaced learning and growth and indeed the strategic objectives are very similar.
• Strategy-related perspective. It groups the perspectives related to the mission and achievement of strategic objectives. Soysa et al. [ 67 ] highlight the function of Mission, i.e., to improve Learning and Growth. Other authors renovate the function of mission and strategy function to drive the other perspectives [ 42 , 69 ].
• Efficiency-related perspective. It groups the perspectives related to health improvement and efficiency [ 48 ], integration and responsiveness, patient attraction waiting times, capacity for service provision, and environmental performance [ 41 ]. For example, Edwards et al. [ 61 ] identified capacity for service provision as a perspective that enables health services to procure medicines, equipment, clinical guidelines, etc. Moreover, Chang identified a dimension of efficiency concerning how financial resources need to be spent. This is one case in which the financial perspective has been replaced by another, i.e., efficiency, to evaluate day case rate, length of stay, etc.

Moreover, to investigate the evolution of perspectives over the years, the authors deliver the graph in Figure 8 . The process and financial perspectives show a prevalence over the other identified perspectives over the years (they represent 39.25% of the total).

Distribution of papers by BSC perspectives and years.

Moreover, still a great deal of attention is required to process financial and learning and growth perspectives; those perspectives mainly focused on people are the most neglected by the selected sample of papers. Surely, the lower attention on community related-perspective is consistent with the low number of papers focusing on systems and primary care, as shown in Table 6 . On the contrary, the decrease in customer related-perspective sheds light on a lack of focus on human resources.

The design of BSC has been investigated by 34 of the 40 papers. Even though the traditional perspectives of the BSC, i.e., financial, customer, processes and learning and growth, are the most adopted, numerous authors investigated other perspectives over years. In line with the explanation of indicators and purposes of the new perspectives, it is worth noting that they are not completely independent from the four main ones. Some indicators, such as training, length of stay, etc., are in common. Authors that adopt new perspectives shed light on specific facets, for example efficiency to emphasize how the organization use financial resources [ 42 ] or community to emphasize how the community perceives the health services delivered [ 61 ].

3.2.2. BSC Implementation

Regarding BSC implementation, this study investigates the drivers and barriers identified from the review and summarizes them in Table 8 . The items identified are very specific, and often mentioned only in one paper. The authors did not classify them as not losing the meaning provided by the empirical studies.

Drivers and barriers identified from the selected papers.

Regarding the drivers, communication, leadership support and training, were the most emphasized. Communication, as well as meetings to define responsibilities, have been considered both as a driver to develop BSC and in turn as factors that BSC boosts [ 46 , 65 ]. Additionally, leadership has been identified by many studies as a driver for the implementation of the BSC [ 46 , 61 ]. However, if the commitment and the participation are low, leadership act as a barrier. Many studies consider leadership a negative factor because there is a lack of ownership [ 43 ], a lack of managers to replace administrators [ 43 ] or a lack of champions [ 41 ].

In the same way and strictly related to leadership, also organizational culture plays an essential role in the BSC implementation phase. Organizational culture has been analyzed in relation to performance measurement both in private [ 88 ] and in public organizations [ 89 ]. Here, related to BSC, it has been considered both a barrier and a driver. On the one side, some authors consider it a barrier [ 41 ] if there is a command and control culture not prepared to implement a tool to measure performance. For example, in [ 44 ], the medical staff perceived the BSC only as a tool for controlling clinicians.

On the other hand, culture is a driver if there is a collaborative culture and people participate in short-term solutions [ 65 ], participation is high [ 80 ] and people have been trained [ 43 , 65 ] and involved in the BSC implementation process [ 85 ].

The results, i.e., the barriers and the drivers of BSC implementation, reveal firstly that only 12 of the 40 papers mentioned them analyzing BSC adoption in healthcare settings. Secondly, the barriers and drivers are represented quite frequently by the same factors. Organizational culture and leadership, for example, can be a driver if the culture is democratic and participative and leadership is transactional (in line with the definition of Bass and Avolio [ 90 ]). Otherwise, if there is a command and control culture or a laissez-faire leadership style, BSC could be difficult to be implemented.

3.2.3. BSC Use

To analyze the use of BSC, the classification provided by Henri [ 49 ] and implemented in other healthcare studies [ 42 ] have been adopted. Henri focused on four main use of BSC. Even if only a few papers explicitly mention the use of BSC, the authors were able to provide, if possible, the analysis of BSC use consistent with Henri’s [ 49 ] definition.

In line with Henri [ 49 ], there are four typologies of performance measurement use. Firstly, monitoring acts as a diagnostic control (see Simons [ 91 ]) and thus BSC measures and reports performance. As recently discussed by Bassani et al. [ 42 ], the most widespread use of BSC is monitoring. Given the fact that most of the papers on BSC in healthcare focus on BSC design, monitoring use has been emphasized. However, few studies explicitly mention the BSC use. Pham et al. [ 69 ] evaluated the financial and non-financial measures based on BSC to assess performance in specific Vietnamese mountainous areas. Soysa et al. [ 67 ] developed a BSC-based scoring system to provide performance measures. Papers focused on BSC design and assessment of performance implicitly make a monitoring use of BSC [ 67 , 69 , 72 ].

Secondly, attention focusing acts as interactive control. Workers should focus their attention on specific objectives. This BSC by reflecting a focus on specific objectives related mainly to the process dimension. In this review, “attention focusing” use, even not explicitly mentioned (apart from [ 42 ]), has been identified in the studies that put great emphasis on process measurement. For example, in [ 65 ] the implementation and use of BSC were timed by regular meetings, specific objectives were fixed, and the staff was responsible for its objectives.

Thirdly, strategic decision-making acts in fixing strategic decisions for problem-solving. As shown before, some authors emphasized strategy and mission values and identified them as stand-alone perspectives [ 42 , 67 , 69 , 87 ]. Amer et al. [ 47 ] recently classified BSC generations and define the second generation of BSCs as those focused on a strategy where users align the objectives to the strategy and mission of the organization. In this way, Bassani et al. [ 42 ] and Oliveira et al. [ 65 ] argue that BSC is used to align specific objectives to the organization’s strategy.

Lastly, legitimization acts to justify past actions or decisions. Kollberg and Elg [ 92 ] in their study emphasize the legitimization use of BSC for information sharing and reporting, while Chang [ 48 ] negatively considers legitimization use. In his study, the analysis focused on the NHS performance assessment framework and the relationship between the central government and local health authorities. Chang highlighted that if there is no communication between the central level and peripheries, measurement systems can be used only to legitimize actions and not to improve the systems [ 48 ].

To map the evolution of BSC over the years, Figure 9 provides a graph of where published papers were distributed by years and BSC use.

Distribution of papers by BSC use and years.

Monitoring and strategic use of BSC are the most widespread in line with the traditional use of BSC [ 32 , 93 ].

3.2.4. BSC Revision

The BSC revision implies scheduled revisions of indicators and targets thanks to planned meetings and information-sharing processes. This last phase of BSC adoption has been seldom mentioned in the papers. This is consistent with the great attention on the first phase of BSC, i.e., the BSC design.

Studies focused on the design and implementation of BSC are not enough mature to develop a clear understanding of BSC revision processes.

Only five papers include explicitly also BSC review [ 41 , 47 , 74 , 75 , 80 , 94 ]. The major focus is on the BSC revision to align the objectives of the indicators to the organization’s strategy and mission [ 41 , 47 ].

4. Discussion

The findings reveal that research on BSC in healthcare contexts is still directed toward the BSC design process. The majority of papers (34 of the 40 papers) paid particular attention to the BSC perspectives. In line with Gonzalez-Sanchez et al. [ 36 ], the analysis shows that papers focus mainly on the traditional four perspectives, i.e., financial, customer, processes, and learning and growth. Notwithstanding the maturity of the BSC model which emphasizes the balanced nature of the perspectives, financial is still the most analyzed (see Table 7 ). As a matter of fact, even if the prevalent typology of delivered service is public, the healthcare settings at all levels (systems, organizations, primary services, etc.) need to put great attention to financial indicators such as expenditures [ 39 , 84 ], financial accessibility and viability [ 63 ], and net profit margin [ 39 ].

This is in line with the monitoring use of BSC, implicitly underlined by many authors [ 67 , 69 ].

However, although the financial perspective remains prevalent over the years, the process-related perspective is rapidly increasing in the number of published papers that analyze it [ 39 , 63 , 66 ]. This is in line with the “attention focusing” use of BSC, where workers are motivated to achieve specific objectives (adapted from Henri’s definition [ 49 ]). Indicators such as bed turnover, post-operative infection rate, etc., describe specific objectives to be achieved at the strategic level but also the operational level within the single service or department.

In addition to the most frequently analyzed perspectives, the review sheds light on the other five groups of perspectives. As highlighted in the Findings section, several indicators match financial, process, customer or learning and growth indicators (e.g., weight of hospital stay belongs to financial [ 68 , 76 ] and community [ 66 ] perspectives). The paper highlights that BSC research is still mainly focused on BSC design, and, even if new perspectives emerge to emphasize some strategic objectives of organizations or systems, they are quite similar to the four traditional perspectives. They are often a subset of financial, customer, learning and growth, or process perspectives.

Thus, some future research avenues could be addressed.

Given the emphasis put on the BSC design, future research could analyze why there is no agreement between the perspectives. Even though the indicators are different between organizations and settings, the perspectives are not consistent with a specific healthcare setting. For example, the community perspective has been adopted by healthcare organizations [ 86 , 87 ] and by primary health services [ 61 , 80 ]. At the same time, the community perspective embodies some indicators belonging traditionally to the customer perspective [ 61 ].

Concerning barriers and drivers in implementing BSC, the findings shed light on a lack of a standardized way to rank the factors that enable or restrain BSC. Some drivers match each other, for example, communication [ 46 , 74 ], absence of duplicated information and meetings are closely related. Similarly, leadership support can foster process understanding [ 43 ], collaborative culture [ 65 ] and participation [ 80 ]. The same happens with barriers. The lack of organizational culture ready to accept change is closely linked to the perception of BSC as a control tool, to a narrow view of BSC, etc. In addition, papers focus on similar factors, viewing them as barriers or drivers of BSC implementation, such as leadership and organizational culture, depending on how they are perceived.

Although analyzed by several studies [ 36 , 41 , 61 , 65 ], there is a need for further research for identifying a standard way to explicate barriers and drivers of BSC implementation. Thus, future research could focus on management practices that enable BSC implementation at the different organizational levels (i.e., systems, organizations, primary care services, units/departments).

Concerning the use of BSC in healthcare organizations, only a few papers declare the BSC use that the organizations/systems did. Although the review identifies 13 papers concerning monitoring and 11 concerning strategic decision-making use of BSC (in line with the framework provided by Henri [ 49 ]), the papers do not explicitly refer to how the organizations use the BSC. The remaining papers, on the other hand, did not reveal even implicitly how organizations use the BSC. Thus, future research can stress more explicitly how diverse healthcare settings use the BSC.

Regarding the last phase of BSC adoption, i.e., BSC review, only a few papers explicitly mentioned it [ 41 , 47 , 74 , 75 , 80 , 94 ]. Future research needs to focus on this fourth phase, even though during the initial phase of BSC design, the review process is essential, meetings and participation in short-term decisions [ 65 ] can favor the implementation of BSC.

Finally, concerning the current situation, where healthcare organizations are coping in the last two years with the COVID-19 pandemic, it would be interesting empirically investigate the different outcomes achieved in the organizations that already implemented a BSC model and in those that used other measurement systems. Given the importance of gaining real-time information during a crisis [ 26 , 27 ], it would be interesting to analyze the effectiveness of BSC in this specific context. In the same way, it would be interesting to understand which BSC measures are useful during a pandemic context to endure quality and efficiency in delivering care. Notwithstanding the positive outcomes derived from BSC implementation and use, as in the review of Amer et al. [ 47 ], no studies have been found related to the effects of BSC during pandemics.

5. Conclusions

The paper addresses the research question, i.e., how BSC evolved over the years in health settings, by mapping the development of BSC adoption phases [ 40 ] over the years in healthcare. Through the review’s framework illustrated in Figure 2 , the BSC’s main perspectives, the barriers and drivers in implementing BSC, and the use and review of BSC have been analyzed. Although the prevalent interest in BSC research is on the design, the review analyzes several papers that focus also on the barriers and drivers, and the use of BSC (even not explicitly). However, only a few papers analyze the review process of BSC, by shedding light on the low maturity of BSC in healthcare contexts.

Moreover, the analysis of the review on BSC in healthcare settings, differently from the recent review of Amer et al., [ 47 ] reveals that it is not possible to identify three generations of BSC. By adopting the review’s framework ( Figure 2 ), BSC adoption phases [ 40 ], i.e., design, implementation, use and review are strictly related. As the findings reveal, for example, a specific focus on process perspective is followed by an increase in the “attention focusing” use of BSC. The liaison is represented by the recognized relevance of leadership support to promote a collaborative culture in implementing BSC.

Although the findings give room for several future research avenues, as discussed in the previous section, the review has some limitations. Concerning methodology, in the review have been selected search strings based on keywords in Scopus and Web of Science and on the title in PubMed. This choice, even if adopted in other reviews [ 95 , 96 ], has limited the results. Consequently, future research could run the search strings by investigating also the title and abstract (regarding Scopus and Web of Science). Moreover, the involvement of academic journals only can introduce an academic bias. Thus, future research could consider also conference papers, books, and grey literature.

Finally, the authors identified BSC as the focus of their research because it has been the most adopted model over the years. However, future research could verify through a literature review what are the other tools/models the healthcare settings use to measure performance, or if they are not adopting tools.

Funding Statement

This research received no external funding.

Author Contributions

Conceptualization, F.B., P.G., A.S. and E.S.; methodology, F.B. and P.G.; validation, F.B., P.G., A.S. and E.S.; formal analysis, F.B.; investigation, F.B.; writing—original draft preparation, F.B.; writing—review and editing, F.B., P.G. and A.S.; supervision, P.G. and E.S. All authors have read and agreed to the published version of the manuscript.

Institutional Review Board Statement

Informed consent statement, data availability statement, conflicts of interest.

The authors declare no conflict of interest.

Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Balanced Scorecard to Improve Human Capital Management: Case Study in a Portuguese Company

• First Online: 14 April 2022

Cite this chapter

• Jéssica Perestrelo 3 &
• Pedro Novo Melo 4 , 5  

Part of the book series: Management and Industrial Engineering ((MINEN))

324 Accesses

Balanced Scorecard allows to assess if the organization performance is aligned with its strategy, enabling management to redirect the organization and proactively act when a deviation from the defined targets occurs. This strategy focus, coupled with its results, provides management a direct feedback loop, which enables a concise action. This project documents an implementation of the Balanced Scorecard (BSC) tool, focused on the Human Capital perspective. The research method applied was a case study, in a consultant company, constituting an action-research. This work includes a literature review regarding this field of knowledge, which presents the tool and focus on the Human Capital perspective; a presentation of the organization under analysis, which includes its policies, key performance indicators, and defined strategy; and the documentation of the multiple phases of the Balanced Scorecard implementation process in the organization. New performance indicators were proposed. It was concluded that a conflict may be present among the two organization strategic drivers and two of the HR critical results and two HR efficiency processes were highlighted.

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Perestrelo, J., Melo, P.N. (2022). Balanced Scorecard to Improve Human Capital Management: Case Study in a Portuguese Company. In: Machado, C. (eds) Challenges and Trends in Organizational Management and Industry. Management and Industrial Engineering. Springer, Cham. https://doi.org/10.1007/978-3-030-98048-1_6

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Everything You Need to Know About the Balanced Scorecard

By Joe Weller | July 27, 2017

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Your company is unique. Along with being unique, your company, like the marketplace, is always in a state of change. Capturing the nature of this flux while taking all levels of an organization into account can be a challenge for even the most experienced management team. Today, one of the best and most readily available tools to assist with this process is the balanced scorecard . Balanced scorecards can be complex in design, but are simple in practice. They bring your strategic planning into stark relief and allow you to develop measures - down to the lowest level - that align with your business approach.

In this guide, we will walk you through what a balanced scorecard is, including how it divides into four perspectives. We then delve into the components of each scorecard perspective, the strategy map, and how a scorecard looks in the context of a closed-loop system. We’ll also discuss the history and future of the balanced scorecard, with some some guidance from our expert. Next, we look at the scorecard in a few different industries — information technology, human resources, and accounting — and how it applies to these different businesses. Most importantly, we discuss who on your team should develop a balanced scorecard and what tools you should use to put it into practice. Finally, we give you some extra resources that you can look at for further study.

What is a Balanced Scorecard?

A balanced scorecard (BSC) is a management tool used for strategic planning. Generally speaking, a BSC is a standardized report that details performance management measures. With a BSC, you have the ability to describe and measure your company strategy and then track how you achieve results. This is a big-picture view with lower-level, specific, defined measures to attain that big picture. Instead of gauging how well your company is doing based on how much revenue is coming in in the short term, a BSC helps you build a sustainable business for the long haul - by doing so, the BSC gives you a truly “balanced” picture of your company. You will design your BSC when you have already developed at least part of your company strategy, but a BSC does not create your company strategy for you. However, it can help if you’ve only partially completed your strategy, because it can reveal the inconsistencies and holes in your team’s initial thinking. In addition, a BSC reports not only financial performance measures but also nonfinancial performance measures.

The BSC framework itself is based upon leading and lagging indicators. Leading indicators are drivers - those that help you look ahead toward achieving your goal - and should be predictive in nature. By contrast, lagging indicators are outcomes - those that tell you what has already happened - and should confirm your long-term trends. A good BSC has a healthy mix of leading and lagging indicators. 

To measure outcomes, you’ll use key performance indicators (KPIs), the metrics that show whether your company is achieving what it set out to do. Some examples of leading indicators are the number of new innovations, the growth in new markets, and the number of patents. Some examples of lagging indicators are revenue growth, earnings before interest, tax, depreciation, and amortization (EBITDA), and operating income growth. However, regardless of the indicators you choose, there should only be a small number per scorecard so you can focus your efforts.

The Four Perspectives of the Balanced Scorecard

The BSC breaks your business down into four different perspectives that measure your company’s condition. These perspectives are often called four legs. The four legs concept posits that each leg is equally important - losing one would render a whole business unstable. Each leg symbolizes a different group of stakeholders to whom your company is responsible. These stakeholders consist of the following groups: financial, internal business processes, the customer, and learning and growth. These perspectives are dependent on each other and build from your culture of sharing and development to the financial health of your company. 

• Learning and Growth: This perspective focuses on the people, information, and organization and how you can improve upon and create more value in these elements. This category also refers to your company’s ability to constantly improve, innovate, learn, and be competitive. The remaining three perspectives grow out of this leg. 
• Internal Business Processes: When we look at this perspective, we are really asking, What must we excel at? In order to please our customers and stakeholders, we must first implement processes that enable us to do so. Further, we should optimize these processes to improve quality and efficiency. Process data can show you exactly where any problems with the product or service lie. 
• Customer: Your customers’ perception of how your company is performing is the key to keeping it alive. Management should focus on the specific measures to please customers, rather than the strategic goal of pleasing customers. These specific measures should fall into five categories: timeliness, quality, performance, service, and cost. 
• Financial: This perspective covers the revenue or financial performance of your company (i.e., what your shareholders see). You outline your profit targets, budget, and cost-saving measures in this perspective. The performance of this perspective is usually strong when the other three perspectives are strong.

The Components of the Balanced Scorecard

For each perspective, there are four main BSC components that you must define:

• Objectives: These are your high-level organizational goals. Taking into account your already-developed company strategy, you should be able to come up with 10-15 strategic objectives that you are trying to accomplish. You can use a SWOT analysis to define these objectives. (The SWOT is a review of your business’s strengths and weaknesses, opportunities, and threats.) Your objectives should be S.M.A.R.T.: specific, measureable, achievable, realistic, and time-specific. 
• Measures: After you define your business’ objectives, you need to focus on its measures. The measures help you determine whether you are on track to achieve your objectives (you can think of measures as KPIs). Each objective should have no more than three KPIs that indicate whether you will achieve your objective. Strong KPIs should be objective enough for you to determine whether the strategy is working, use language that everyone in your company understands, measure accomplishments, show success (not just a useless metric), be able to show change over time, and reduce uncertainty.
• Targets: You should write your targets so that they relate directly to each of your KPIs. For each KPI, you should have an associated value. Your targets should be ambitious but achievable. 
• Initiatives: In your BSC framework, your initiatives should be the action items and projects that you need to help your company succeed with its strategy. These projects have a start and end date. You should identify them when writing your BSC and set them up when implementing your BSC. Your initiatives mean the difference between your company’s reality and its stretch targets.  

Your scorecards can take on many shapes and designs, so you have the leeway to design a scorecard that reflects your unique company culture. You may also want to amend it to address the specific population that you’re serving. For example, a government organization serves customers, not citizens. You can simply adjust your wording to customize your scorecard. In addition, you may want to include your company logo and colors. A blank scorecard could look like this to start:

Here is an example of what a scorecard for a research company might look like:

The Purpose of a Strategy Map vs. a Balanced Scorecard

Many experts feel that a strategy map is just as important as a BSC (if not more so) in certain situations. Created by the same experts who created the BSC, a strategy map shows your company’s strategy-linked objectives. The difference between a BSC and a strategy map is that the strategy map shows the cause-and-effect relationship between the perspectives and the components. Together, the strategy map and the BSC help your company successfully execute your strategy. The two also speak to what you want to accomplish and how you plan to accomplish it. You can also use a strategy map on its own. The benefits of strategy maps include the ability to:

• Effectively capture and communicate your strategy
• Manage your team’s performance better
• Pinpoint your company’s focus, drivers, and choices
• Create a better BSC
• Take your focus from operations to strategy

Some experts recommend that you design your strategy map before you complete your scorecard. The ideal time to fill in the strategy map is after you have determined your BSC objectives but before you’ve filled in the measures. The same four balanced scorecard perspectives apply to the strategy map (financial, customer, internal business processes, and learning and growth). The primary difference here is that with a strategy map, you show the direction (causal relationships). For example, we could expand a portion of our earlier balanced scorecard for the research firm: 

The Balanced Scorecard in a Closed-Loop Management System

A closed-loop management system is a structure that uses feedback from the ongoing operations to improve processes. This feedback could be information from the same or from a different area of the value chain - either way, it helps to improve processes earlier in the loop. The system includes six stages:

• Strategy development
• Strategy translation
• Organizational alignment
• Operational planning
• Monitoring and learning
• Testing and adaptation of the strategy 

Robert S. Kaplan , co-creator of the balanced scorecard and Senior Fellow, Marvin Bower Professor of Leadership Development, Emeritus at the Harvard Business School, discuss using this closed-loop management system together with your company’s strategic planning and operations execution as a complement to the BSC. In other words, the closed-loop system constantly improves upon the strategic plan and the operating plan. As the BSC is a part of the management system, it continually improves upon that as well.

The History of the Balanced Scorecard

Experts consider the concept of the BSC in professional organizations one of the most significant management ideas of the past 75 years. First introduced in the early 1990s by Kaplan and David P. Norton (also of the Harvard Business School), professional organizations around the world use it today. The difference between the scorecard and other tracking mechanisms is that it combines financial and nonfinancial measures, where traditional measurers only track financial measures.

The first generation of the BSC was a 4 box approach . The four boxes included the same categories that they do now (financial, customer, internal business processes, and learning and growth). However, instead of possessing four components, this inaugural version of BSC simply recorded goals and measures for each perspective. This first generation showed causality, but organizations did not use the causality for any specific purpose. Many organizations still use first-generation scorecards as their model. 

Second-generation BSCs evolved because some professionals felt that the first-generation BSC descriptions were too vague and the interpretations too liberal. The changes were small but amounted to a new definition of a BSC. The authors added a more process-oriented method to determine the key measures. From the goals and measures recorded for each perspective, the authors added strategic objectives to better align with businesses’ own strategies. Finally, the authors added definite causal linkages between each perspective and component. 

The third-generation BSC was developed in the late 1990s., and is distinguished from the previous versions by its components and the design process. The new components of the third-generation BSC include a vision statement, definitions for the strategic objectives, targets for the measures, and the strategy map to go along with it, and the design process requires involvement from the company management. This is to ensure that the strategic objectives are cohesive and take primacy. 

Since the third generation was introduced, the concept has been expanded for nonprofit and public-sector entities, strategy and operations have been linked in a closed-loop management system, and strategy management has been developed.

The Future of the Balanced Scorecard

The biggest factor for the success or failure of a company’s BSC is always the leadership. Therefore, many BSC experts believe that the future will bring more research on what makes good leaders. Good leadership not only supports and grants buy-in on the development of the BSC, but also acts as its cheerleader, pushing its strategic objectives. 

Although the ability to evolve with modern management concepts has kept the BSC relevant, experts have suggested certain changes that may or may not be appropriate to your company’s particular makeup. One of these includes using predictive analytics alongside the BSC. Predictive analytics detect future trends in business and help leaders determine what KPIs can collect useful data. 

Ultimately, though, most of the experts say that the future of the BSC is based upon the individual industries: as industries evolve, so will their scorecards. For example, in the energy sector, the scorecards will look increasingly at more sustainable objectives. In the technology industry, the objectives on the BSC will include those more commonly seen in other industries. This will reflect the convergence of multiple industries and the concept of technology convergence.

The Popularity of the Balanced Scorecard

Even in its early iterations in the 1990s, the BSC was unsurpassed as a management tool. Today, remarkably, it is still the most popular performance management tool in companies worldwide, according to experts Darrell Rigby and Barbara Bilodeau . There are many different iterations of the BSC on the web. However, the purpose of the BSC is not just to fill in the blanks and post a piece of paper on the wall; rather, the BSC is a development process for your company. Designing it and filling it in is an exercise in evolving your business strategy. The early failures of the BSC were due to consultants who filled them in without insider business knowledge and stake. The beauty of the BSC is that it ties directly to strategy execution to align everyone in your company, provides transparency into company intent, and adapts to your business.

Information Technology and the Balanced Scorecard

Over the last few decades, Information Technology (IT) professionals have realized that a company’s IT strategy and business strategy must be aligned. We normally track five types of IT metrics on a company’s BSC. These metrics include:

• Financial Performance: This category reflects the spending on IT projects and service.
• Project Performance: This category looks for new funding streams from IT development projects and savings from IT improvements.
• Operational Performance: This category measures the higher-level view of IT operations, such as availability and outage length. It is not concerned with daily performance.
• Talent Management: This metric category evaluates how attractive the department is to new talent and how satisfied current IT staff are with their positions. 
• User Satisfaction: This category analyzes the user perspective, including how the customers of the IT department (such as the rest of the company) rate the department’s performance.

In the four perspectives, this translates to the following:

• Financial: Design metrics that show how IT optimizes its efficiency and how it enhances its impact on the business’ outcomes
• Customer: Design metrics that show quality service and give the business innovative solutions
• IT Internal Business Processes: Design metrics that show how IT maintains a reliable infrastructure, gives an effective support system, and offers and delivers transformative applications
• Learning and Growth: Design metrics that show how IT promotes a customer-focused culture, enhances its staff experience, and develops the IT staff competencies

Human Resources and the Balanced Scorecard

Human resources (HR) is another key department that you should align with the overall company strategy. HR scorecards should focus on leading indicators. In this way, you can bring in the staff you need and plan for the future of your company. Your HR scorecard should also identify what is doable vs. what is deliverable. The HR BSC follows much the same path as the overall company BSC since HR is a higher-level function within any organization. It should also utilize the same four perspectives:

• Financial: The metrics for HR should delineate return on investment (ROI), such as the cost per hire, the value-add per employee, and the cost of recruiting. 
• Customer: In the context of HR, this means the company’s employees and the potential employees. This set of metrics should look at how you are increasing the attractiveness of the company. This includes how satisfied your employees are, how many applications your company receives, how many applicants you reject, and how well the recruiting process works. 
• HR Processes: This is the row on the HR BSC that may look different from that on the traditional BSC. This section focuses mainly on how your business is improving its culture, how you are developing and retaining staff, and how you are attracting quality candidates. 
• Learning and Growth: For these metrics, you are looking at how you are developing your workforce, the techniques and training that can help you improve your processes, and whether there are technology purchases you should make to stay competitive.

Accounting and the Balanced Scorecard

Accounting firms are service-based organizations. Just like other service-based firms, they should analyze their operating goals and strategies on a regular basis to ensure that these two elements are moving in an intentional direction. However, in choosing metrics for their BSC, accounting firms should make sure the four perspectives deliver accounting-specific metrics to gauge their performance. For the four perspectives in this case, the metrics to consider during development are as follows:

• Financial: The metrics for accounting should consider your firm’s objectives and implement the tangible financial outcomes of your strategy. These may include fee revenues, professional salaries, margins, and reduced receivables. 
• Customer: This perspective should illustrate the way that your firm would satisfy its customers. Customers of accounting firms are generally looking for short job turnaround time and work well done. Your metrics can convey the status of these factors through the number of client complaints, referrals, and contacts per period. 
• Internal Business Processes: Most of your accounting firm’s internal processes are administrative. These may include metrics on the number of profitable projects, the new software you’ve implemented, the bidding estimates you’ve accepted, and utilization rates. 
• Learning and Growth: In accounting firms, your HR department is your biggest asset in developing your workforce. It can help you develop workforce plans to keep your staff up to date and competitive.

Who Develops and Uses a Balanced Scorecard?

Nonprofit and government industries were not able to use the early iterations of the BSC because those early versions were specific to customer-oriented industries. Now, any industry of any size can and should use the BSC. Even technology giant Apple, Inc. and the U.S. Government Office of Personnel Management (OPM) use the balanced scorecard approach. According to the Harvard Business Review , Apple’s five performance indicators are as follows:

• Customer satisfaction
• Core competencies
• Employee commitment and alignment
• Market share
• Shareholder value

High-level executive or division leadership teams should drive scorecard development. Without leadership buy-in, balanced scorecards will fail. Leaders should integrate strategic management approaches into their scorecards. Experts recommend a three-team approach for developing BSCs enterprise-wide. Each team should have specific experiences and competencies, and include people from the following groups:

• Upper-Level Management: Managers on this team should be strategic thinkers and have an overall understanding of the business. They should also be excellent communicators and able to make strategic business decisions. This is your general leadership team, sometimes known as executive sponsors .
• Mid-Level Management: Managers on this team should also be good communicators and well educated in the business. Additionally, it’s vital that employees respect these mid-level managers, as they will be the ones championing the BSC throughout the company. Lastly, they should be detail-oriented yet able to see the big picture. This team is your core team .
• Lower-Level Personnel: This team is capable of linking the material from the two other teams to their specific job functions. They should have a highly detailed understanding of these jobs and be able to come up with detailed metrics. This team is the measurement team .

The Balanced Scorecard Automation and Performance Analysis

Once you fill in your scorecard, there are many options for tracking including pen and paper, BSC-specific software, and generalized tools. The BSC was developed to be a performance management system. Many experts recommend that once you build your scorecard, you should automate it. This means finding performance management software that’s right for your company, or making use of software that you already have. The software takes your innovative BSC ideas and implements them evenly throughout your company. Many software packages can handle not only the BSC, but the strategic mapping as well. In bigger enterprises with multiple BSCs — one for the overall strategy and one for each division — software is a good way to keep them organized. Moreover, the software can help you coordinate the development, production, and distribution components across the entire company.

There are some benefits to automating your BSC with Microsoft Office products, such as Excel or PowerPoint. Most of your professional staff will already be comfortable working with these programs, so they can easily customize the software to the company’s needs. However, managing multiple documents from one reporting period to another may take some creativity, as that particular feature is not inherent in these programs. Furthermore, Microsoft products do not address the issue of version control, so you may have multiple iterations of your scorecards floating around between all of your users. 

There are applications that cater specifically to the BSC, so you don’t need to customize or program them. These apps can also manage multiple users, providing version control and tracking updates. And, they can generate the BSC-related reports and analytics that you need. Nevertheless, sometimes they are too specific and cannot be linked with your other business applications. Also, not all of these programs are intuitive, which can lead to the added expense of staff training. This is, of course, in addition to the cost of the software.  

Another option is a Business Intelligence (BI) solution. BI solutions are categories of software designed to analyze business data, not just collect it. This software captures your automated processes, and can generate real-time analytics. The upside of this type of software is that your data warehouse of analytics systems is probably already working with a BI solution. Therefore, you can store all of your data in one location. The downside of a BI platform is that your average user is not familiar with it (which again leads to the additional expense of outside experts). What’s more, BI reports for high-level staff are not easy to generate and typically do not include anecdotal or qualitative information. 

The Balanced Scorecard Benefits and Strategy

The biggest benefit of the BSC is that it brings together all of the disparate elements of your company tactics into one report. Since all the operational metrics are in one place, your executive management can see the sacrifices linked to each improvement. Other benefits include:

• Taking a vision and making it a reality
• Improving transparency within the company
• Ensuring your company has strategic priorities
• Making decisions using real-time data
• Managing the environment more effectively

You should build your BSCs in a cascading manner. This means that you are translating your overall corporate scorecard down the line to lower levels. This results in a clear strategy from top to bottom. As you descend the levels of your organization, your BSCs will reflect more operational and tactical, and less strategic, measures.

Building a BSC can be a challenging but worthwhile venture. You will start by prepping all of your materials, including your current strategic plans, financial plans, marketing plans, operating plans, annual reports, quality improvement programs, and customer analyses. You should also interview your executive management team repeatedly for their ideas (do this before you develop your BSC and as you get closer to completing it). Other sources of information should come from your industry’s competitive analyses, trend analyses, technology trend analyses, and marketing trend analyses. Once your team has gathered all the necessary information, they can follow the steps to design your BSC. We’ve already covered most of the steps, but their sequence is outlined below:

• Identify your company’s vision and mission.
• Develop a strategy with a customer-first lens.
• Develop objectives that expand on your mission statement.
• Perform your strategic mapping.
• Develop your performance measures.
• Develop projects that initiate performance accountability.
• Come up with a system to track your objectives and initiatives and report on them.
• Ensure your BSC’s cascade.
• Perform an after-action review of your process.
• Adjust your BSC regularly, based on your closed-loop feedback.

The following are our expert’s tips for managers new to developing BSCs.

Robert Key, Senior Project Manager and Agile Coach,  AMN Healthcare

Here’s what Key had to say about developing BSCs:

“My experience with the balanced scorecard comes from working as a project manager and Agile coach and teaching at the University of Phoenix and the University of San Diego. I have helped put together balanced scorecards for many different teams and taught strategic management courses. The main industries that I have focused on are education and healthcare recruiting.

“I often talk about a cartoon that I once saw. It was a CFO talking with a CEO. The CEO asks, ‘But what happens if we train them and they leave?’ when discussing their workforce. The sage CFO replies, ‘What happens if we don’t and they stay?’ To me this illustrates perfectly the importance of not ignoring the training and education piece of the scorecard (the learning and growth perspective). Many in management are fixated on the other quadrants, but managers, especially new managers, need to learn the value of training and educating their people. This is a cost center, but what happens when you remove training is that the morale crumbles. In lean financial times, this is usually the first thing cut. However, this defeats the purpose and does not save any money. This is the equivalent of stabbing yourself in the foot. In particular, new personnel who come in do so at a disadvantage, putting your whole organization at a disadvantage.

“If I had to advise managers new to the balanced scorecard, I would tell them to use Six Sigma techniques during design as needed, especially when developing the internal business process and customer sections. If you do the other three right, the finance part should follow easily. Choose executives carefully: your CFO and VP of Human Resources for your education section, your sales leaders and high-level reps for your business processes, and even IT for the customer section. Speak with anyone who faces and interacts with your customers, looking to get different scenarios and input on how we can work better. Consider performing surveys. Regarding the finance piece of the equation, if you do everything else right, finance should follow.

“I have really worked, even volunteered on my own time, to ensure that our workforce learns what they need to in order to be successful. I love to teach, and this comes out in all of the places that I work. It is because I have been so fortunate: I had amazing teachers who taught me the value of giving back. I have even hosted ‘lunch and learn’ sessions.   “Finally, you should not avoid any of the quadrants. You may not know the answers, but, if that is the case, you should seek input from other departments or resources. Don’t make it up on your own unless you know what you are doing and avoid external consultants. Internal consultants, if available, are your best bet because they know your business. If you must use an external consultant, use them for benchmarking after your analysis is completed.” 

Learn More About the Balanced Scorecard

The BSC was developed in the early 1990s. Since then, a multitude of resources has become available to show you how to develop your own BSC and put it to work for your company. However, the best resources are still the books by the original authors of the BSC. By reading and referencing these books, you can truly understand the design process as it was meant to be and achieve the best results for your company. These books include:

The Balanced Scorecard: Translating Strategy into Action , Kaplan and Norton, 1996. The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment , Kaplan and Norton, 2000. The Execution Premium: Linking Strategy to Operations for Competitive Advantage , Kaplan and Norton, 2008. Strategy Maps: Converting Intangible Assets into Tangible Outcomes , Kaplan and Norton, 2003.  For nonprofits and government agencies, check out the following book on the BSC: Balanced Scorecard: Step-by-Step for Government and Nonprofit Agencies , Niven, 2003. 

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Balanced scorecard

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Using the Balanced Scorecard as a Strategic Management System

• Robert S. Kaplan
• David P. Norton
• From the July–August 2007 Issue

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• What Is a Balanced Scorecard?
• Understanding BSCs
• Characteristics of the BSC Model
• Benefits of a BSC
• Examples of a BSC

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What Is a Balanced Scorecard (BSC), How Is It Used in Business?

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What Is a Balanced Scorecard (BSC)?

The term balanced scorecard (BSC) refers to a strategic management performance metric used to identify and improve various internal business functions and their resulting external outcomes. Used to measure and provide feedback to organizations, balanced scorecards are common among companies in the United States, the United Kingdom, Japan, and Europe. Data collection is crucial to providing quantitative results as managers and executives gather and interpret the information. Company personnel can use this information to make better decisions for the future of their organizations.

Key Takeaways

• A balanced scorecard is a performance metric used to identify, improve, and control a business's various functions and resulting outcomes.
• The concept of BSCs was first introduced in 1992 by David Norton and Robert Kaplan, who took previous metric performance measures and adapted them to include nonfinancial information.
• BSCs were originally developed for for-profit companies but were later adapted for use by nonprofits and government agencies.
• The balanced scorecard involves measuring four main aspects of a business: Learning and growth, business processes, customers, and finance.
• BSCs allow companies to pool information in a single report, to provide information on service and quality in addition to financial performance, and to help improve efficiencies.

Investopedia / Michela Buttignol

Understanding Balanced Scorecards (BSCs)

Accounting academic Dr. Robert Kaplan and business executive and theorist Dr. David Norton first introduced the balanced scorecard. The Harvard Business Review first published it in the 1992 article "The Balanced Scorecard—Measures That Drive Performance." Both Kaplan and Norton worked on a year-long project involving 12 top-performing companies. Their study took previous performance measures and adapted them to include nonfinancial information.

Companies can easily identify factors hindering business performance and outline strategic changes tracked by future scorecards.

BSCs were originally meant for for-profit companies but were later adapted for nonprofit organizations and government agencies. The performance metric is meant to measure the intellectual capital of a company, such as training, skills, knowledge, and any other proprietary information that gives it a competitive advantage in the market . The balanced scorecard model reinforces good behavior in an organization by isolating four separate areas that need to be analyzed. These four areas, also called legs, involve:

• Learning and growth
• Business processes

The BSC is used to gather important information, such as objectives, measurements, initiatives, and goals, that result from these four primary functions of a business. Companies can easily identify factors that hinder business performance and outline strategic changes tracked by future scorecards.

The scorecard can provide information about the firm as a whole when viewing company objectives. An organization may use the balanced scorecard model to implement strategy mapping to see where value is added within an organization. A company may also use a BSC to develop strategic initiatives and strategic objectives. This can be done by assigning tasks and projects to different areas of the company in order to boost financial and operational efficiencies, thus improving the company's bottom line .

Characteristics of the Balanced Scorecard Model (BSC)

In a balanced scorecard model, information is collected from four aspects of a business and analyzed:

• Learning and growth are analyzed through the investigation of training and knowledge resources. This first leg handles how well information is captured and how effectively employees use that information to convert it to a competitive advantage within the industry.
• Business processes are evaluated by investigating how well products are manufactured. Operational management is analyzed to track any gaps, delays, bottlenecks, shortages, or waste.
• Customer perspectives are collected to gauge customer satisfaction with the quality, price, and availability of products or services. Customers provide feedback about their satisfaction with current products.
• Financial data , such as sales, expenditures, and income, are used to understand financial performance. These financial metrics may include dollar amounts, financial ratios, budget variances, or income targets.

These four legs encompass the vision and strategy of an organization and require active management to analyze the data collected.

The balanced scorecard is often referred to as a management tool rather than a measurement tool because of its application by a company's key personnel.

Benefits of a Balanced Scorecard (BSC)

There are many benefits to using a balanced scorecard. For instance, the BSC allows businesses to pool information and data into a single report rather than having to deal with multiple tools. This allows management to save time, money, and resources when they need to execute reviews to improve procedures and operations.

Scorecards provide management with valuable insight into their firm's service and quality in addition to its financial track record. By measuring all of these metrics, executives are able to train employees and other stakeholders and provide them with guidance and support. This allows them to communicate their goals and priorities in order to meet their future goals.

Another key benefit of BSCs is the help it provides companies to reduce their reliance on inefficiencies in their processes. This is referred to as suboptimization. This often results in reduced productivity or output, which can lead to higher costs, lower revenue , and a breakdown in company brand names and their reputations.

Examples of a Balanced Scorecard (BSC)

Corporations can use their own, internal versions of BSCs. For example, banks often contact customers and conduct surveys to gauge how well they do in their customer service . These surveys include rating recent banking visits with questions about wait times, interactions with bank staff, and overall satisfaction. They may also ask customers to make suggestions for improvement. Bank managers can use this information to help retrain staff if there are problems with service or to identify any issues customers have with products, procedures, and services.

In other cases, companies may use external firms to develop reports for them. For instance, the J.D. Power survey is one of the most common examples of a balanced scorecard. This firm provides data, insights, and advisory services to help companies identify problems in their operations and make improvements for the future. J.D. Power does this through surveys in various industries , including the financial services and automotive industries. Results are compiled and reported back to the hiring firm.

What Is a Balanced Scorecard and How Does It Work?

A balanced scorecard is a strategic management performance metric that helps companies identify and improve their internal operations to help their external outcomes. It measures past performance data and provides organizations with feedback on how to make better decisions in the future.

What Are the Four Perspectives of the Balanced Scorecard?

The four perspectives of a balanced scorecard are learning and growth, business processes, customer perspectives, and financial data. These four areas, which are also called legs, make up a company's vision and strategy. As such, they require a firm's key personnel, whether that's the executive and/or its management team(s), to analyze the data collected in the scorecard.

How Do You Use a Balanced Scorecard?

Balanced scorecards allow companies to measure their intellectual capital along with their financial data to break down successes and failures in their internal processes. By compiling data from past performance in a single report, management can identify inefficiencies, devise plans for improvement, and communicate goals and priorities to their employees and other stakeholders.

What Are the Balanced Scorecard Benefits?

There are many benefits to using a scorecard. The most important advantages include the ability to bring information into a single report, which can save time, money, and resources. It also allows companies to track their performance in service and quality in addition to tracking their financial data. Scorecards also allow companies to recognize and reduce inefficiencies.

What Is a Balanced Scorecard Example?

Corporations may use internal methods to develop scorecards. For instance, they may conduct customer service surveys to identify the successes and failures of their products and services or they may hire external firms to do the work for them. J.D. Power is an example of one such firm that is hired by companies to conduct research on their behalf.

Companies have a number of options available to help identify and resolve issues with their internal processes so they can improve their financial success. Balanced scorecards allow companies to collect and study data from four key areas, including learning and growth, business processes, customers, and finance. By pooling information in just one report, companies can save time, money, and resources to better train staff, communicate with stakeholders, and improve their financial position in the market.

Harvard Business School. " Business Insights: What Is a Balanced Scorecard? "

Harvard Business Review. " The Balanced Scorecard—Measures That Drive Performance ."

J.D. Power. " The Key Indicators and Drivers of Performance ."

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Please note you do not have access to teaching notes, the balanced scorecard: a new challenge.

Journal of Management Development

ISSN : 0262-1711

Article publication date: 22 May 2009

The purpose of this paper is to focus on one strategy known as “The Balanced Scorecard”, discussing the growing importance of balanced scorecard performance systems, exploring issues that organizations face in building and implementing scorecard systems, and sharing lessons learned from Australian organizations that have taken the balanced scorecard journey.

Design/methodology/approach

The approach taken is the case study methodology to depict the real world examples of organisations that have confidence in the “Balanced scorecard performance system“ so that other organisations can follow suit.

The paper concludes that the balanced scorecard approach may require some substantial changes in culture within the organization.. The balanced scorecard requires understanding, commitment and support from the very top of the business down. The balanced scorecard will evolve. As culture changes and develops to accept the new approach and members of the organisation mature within the new culture, the organisation will find new things to measure, new goals in different areas, to make the balanced scorecard even more balanced and effective in supporting a living, growing, viable organisation. Different organisations have quite different needs, market areas, people, products and services, and will end up with significantly different balanced scorecards.

Research limitations/implications

The outcomes were based on two multinational corporations and may differ with small and medium enterprises.

Practical implications

The balanced scorecard is balanced in another dimension – not just a balance of measures of essential areas of the business, but also a balance of goals versus accountability. If people do not accept accountability for achievement of the balanced measures and goals of the balanced scorecard, there is no balanced scorecard. The people of the organisation are the key to the success of the balanced scorecard system.

Originality/value

The paper specifically looks at the implementation of the “Balanced Score Card Performance Management System” in Australian corporations.

• Balanced scorecard
• Performance management systems
• Human capital
• Organizational culture

Chavan, M. (2009), "The balanced scorecard: a new challenge", Journal of Management Development , Vol. 28 No. 5, pp. 393-406. https://doi.org/10.1108/02621710910955930

Emerald Group Publishing Limited

Copyright © 2009, Emerald Group Publishing Limited

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