In order to identify objectives and measure these against key financial-, customer-, internal business process- and growth-metrics, companies will benefit greatly from applying a balanced scorecard to their activities. The balanced scorecard template provides a set of metrics that has been designed to help executives as well as management and finance professionals to measure company success. In other words, the balanced scorecard template is a model used to position the success of a company relative to its short- and long-term objectives.
Definition of the Balanced Scorecard Template
The balanced scorecard template - a popular measurement system used in consulting, is defined as follows:
“Balanced scorecard methodology is a management tool designed to translate an organization's mission statement and overall business strategy into specific, quantifiable goals and to monitor the organization's performance in terms of achieving these goals.”
The template of the balanced scorecard should contain a description of the objective type, guidance on how to measure the objectives, as well as definitions of the targets being pursued.
Development of the Balanced Scorecard Template
The theory of the balanced scorecard template was developed in the early 1990’s by Robert Kaplan and David Norton. The general way of approaching business during that time was to measure success exclusively based on financial measures. With the balanced scorecard template, Kaplan and David introduced a way to more comprehensively measure the success of a company - by a system providing managers with the information needed in order to preventively make better decisions, instead of just reporting financial activities of the past. A key aspect of the template is measurement, but the purpose of it is to enable the management to set, track and achieve strategic objectives for the organization. Therefore, the balanced scorecard template should be considered as a management system, instead of merely a measurement system.
The four Pillars of the Balanced Scorecard Template
As earlier established, the balanced scorecard template should be considered as a management system, with the purpose of providing information on how to set, track and achieve strategic objectives. After developing these strategies, the objectives of them should be tracked through the four pillars of the balanced scorecard, which are the perspectives of customers, finances, internal business processes, as well as knowledge, education and growth. In order for business executives and managers to plan, implement and achieve strategies and the objectives of those, the four pillars of the balanced scorecard template are necessary. The concept behind each pillar is described below.
The Customer Pillar
The customer pillar of the balanced scorecard template measures the satisfaction of a company’s customers, as well as their performance requirements. These elements are being measured with consideration to both the organization and the product or service being delivered.
The Financial Pillar
The function of the financial pillar within the balanced scorecard template is to track the financial requirements of an organization. Furthermore, this pillars also allows for an organization to track its financial performances.
The Internal Business Process Pillar
The internal business process pillar allows for a company to measure its critical-to-customer process requirements and measures, defining those elements that are of critical meaning to customers when choosing the outlet of their businesses.
The Knowledge, Education and Growth Pillar
Finally, the pillar of knowledge, education and growth within the balanced scorecard template focuses on ways for a company to obtain and capture knowledge as well as on ways to educate employees. This particular pillar is also concerned with strategies on how to maintain and grow a competitive edge within the markets of a certain company.
In order for a company to thrive, its four pillars the balanced scorecard have to be measured, analyzed and improved together continuously. To achieve the conceptual meaning of the balanced scorecard, strategies, objectives and tactics have to bet set for the four pillars. The strategies and tactics of a company should then be congruent and considered an essential thread, tying together the business philosophy. Furthermore, this thread should be followed when working towards the strategic objectives described in the balanced scorecard methodology