Balanced Scorecard Measurements

Written by Serena Berger
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In trying to implement a balanced scorecard system, you will have to come up with a list of metrics that can be used to gauge how will your company is meeting specific goals. The development of this list can be one of the most difficult parts of the process for many companies because it requires an examination of the company's mission, practices, and relationship with its customers. Your senior management team will be crucial in providing direction by indicating what information would be helpful in making future strategic decisions.

One criticism that is often levied against financial measures is that they only look at the past. Ideally, you would prefer to develop measurements that are leading indicators--these can indicate future trends both inside and outside of the company. The performance measures that you indicate should also be quantifiable so they can be easily collected and analyzed.

When picking measurements to use for your balanced scorecard, you will want to identify metrics that are both efficient and discriminating. Efficient measures allow you to draw several conclusions based on a few measures. It can become extremely costly to collect a separate measurement for each initiative. Discriminating measurements are those whose differences are meaningful--obviously this is a necessary aspect of metrics because that is the only way you can look at differences and make useful decisions based on them.

Balanced Scorecard Measurements from Different Perspectives

In deciding what measures to use in your balanced scorecard, you should look at your company from several perspectives. It is important to look at financial measures as well as measures related to your customer base and business processes. Based on these perspectives, you should identify metrics that will allow you to assess the overall performance of your company and make changes where necessary.


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