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Wednesday, March 19, 2008

The Impact of Balanced Scorecards

The balanced scorecard, which is used extensively in business and industry, government, and nonprofit organizations worldwide, was originated by Harvard professors Dr. Robert Kaplan and Dr. David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give executives a more ‘balanced’ view of organizational performance.

According to recent survey of more than 1,000 organizations:

  • 80 percent of the organizations that regularly use the balanced scorecard (BSC) reported improvements in operating performance.
  • 66 percent of them also reported an increase in profits.
  • 61 percent, a significant majority, reported improvements in bottom-line financial results.

“Employing the balanced scorecard leads to new business processes that can be used to link long-term strategies to short-term decisions,” concluded Dr. David Norton, the founder and president of Renaissance Solutions, a global consulting organization. “But in order to implement the balanced scorecard successfully, a business unit must effectively communicate the organization’s strategies for increasing shareholder value to all employees. That helps to get everyone behind the overall strategy.”

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