The Balanced Scorecard as a Strategic Management System

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  • 0:04 What Is Balanced Scorecard?
  • 1:22 Example of a Balanced…
  • 2:51 Lesson Summary
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Lesson Transcript
Instructor: Claude Bourbonniere

Claude has worked as a Company Manager for Cirque du Soleil for the past 20 years and completed an MBA in Global Management at the University of Phoenix in 2014

Executives of organizations need summary information to help them to make decisions. Learn about the balanced scorecard, which can be used as a strategic management system, and how it's used.

What Is Balanced Scorecard?

Mr. People is the CEO of a non-profit organization that provides meals to homeless students. He wants a tool to help him to monitor the performance of his organization, and to help him make the best strategic decisions. Mr. People looked at the business management literature and discovered the balanced scorecard, a tool used by corporations to help their executives to be informed about the status of their companies and to make decisions.

The balanced scorecard is a strategic planning and management system that provides summary details about key performances of an organization or company for its executives. The information reported in a balanced scorecard helps executives to know if their business activities are progressing in line with the vision and strategy of the organization.

It's a flexible tool and can be adapted to meet the needs of an organization. A balanced scorecard can measure various tangible and intangible factors, such as finances, productivity, and even employee satisfaction. Many balanced scoreboards also include target figures or goals. Reported figures are compared with estimates, typically in a table format over time. Decision-makers use the differences, if any, to make adjustments. Balanced scorecards are generally updated on a regular basis, at whatever time intervals are best for the organization, such as quarterly.

Example of a Balanced Scorecard

Mr. People's non-profit organization provides meals to homeless students. The strategic information that Mr. People has decided he needs is:

  • How many schools the non-profit organization supports
  • How many students use the services of the organization
  • The financial snapshot of the organization
  • The financial goals of the organization
  • How many workers and volunteers support the organization

The key indicators of program success can be measured over time. Presenting this information in a balanced scorecard format can make it easier to see which metrics meet target figures and see which metrics may need more attention.

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