S/F/56. The Balanced Scorecard Model

The paper thoroughly examines the balanced scorecard model developed by Kaplan and Norton in the early 1990s. The balanced scorecard has become hugely popular and has been adopted by thousands of commercial and non-profit organisations throughout the world. The scorecard introduces the idea of multi-dimensional performance measurement and management as opposed to purely financial measures. It thus introduces four categories along which a company should measure its progress: financial; customer; internal processes; and learning and growth. According to Kaplan and Norton, there is a strong cause-and-effect relationship between the perspectives, which ultimately leads to superior financial results. The paper looks in detail at the scorecard perspectives, their content and logic; the cause-and-effect rationale; as well as the whole process of the balanced scorecard development, alignment, and cascading. Where appropriate, critical remarks are made about the validity of certain assumptions behind the model.