The Balanced Scorecard (BSC) is a strategic management framework that provides a comprehensive view of an organisation's performance by considering multiple perspectives. These perspectives, also known as the four traditional BSC perspectives, encompass different aspects of organisational success and guide the selection of key performance indicators (KPIs) to measure progress. The four perspectives are:
Financial Perspective: The financial perspective focuses on financial outcomes and measures the organisation's financial performance. It includes metrics such as revenue growth, profitability, return on investment (ROI), and cash flow. These indicators provide insights into the organisation's financial health and its ability to generate sustainable profits.
Customer Perspective: The customer perspective examines how the organisation meets customer needs and expectations. It includes measures of customer satisfaction, customer loyalty, market share, and customer retention. These metrics help assess the organisation's competitive position and ability to deliver customer value.
Internal Processes Perspective: The internal processes perspective examines the efficiency and effectiveness of internal operations and processes. It includes process cycle time, quality, productivity, and innovation measures. By monitoring these indicators, organisations can identify areas for improvement in their core business processes.
Learning and Growth Perspective: The learning and growth perspective focuses on the organisation's ability to adapt, innovate, and develop its people and infrastructure. It includes employee satisfaction, training and development measures, knowledge management, and technology infrastructure. These metrics help assess the organisation's capacity to improve and drive innovation continuously.
Each perspective in the Balanced Scorecard framework is interconnected, and improvements in one area can positively impact other perspectives.