WHat is balanced scorecard?

Balanced scorecard is defined as a strategic management systems used by organisations to communicate their goals, prioritise and measure progress. Essentially, BSC is a tool that supports the implementation of a long-term, effective strategy. This system enables orientation on the most important aspects of the enterprise and is based on monitoring and control activities, which ensure the effectiveness of long-term activities. BSC targets control activities that allow faster verification of errors and more efficient corrective actions.
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The Balanced Scorecard is very effective in project portfolio management, since it enables coherence between the set of strategic objectives and the projects implemented by the company. It is also often used by managers as it gives the opportunity to present strategies using measurable and realistic goals, consistent with both the mission and the vision of the organization.
There is a correlation between success from the determined strategy and appropriate assignation of tasks. The Balanced Scorecard consists of four perspectives oriented to financial and non-financial elements, enabling precisely the definition of appropriate goals:

• Financial
• Clients
• Internal processes
• Growth and learning (innovation).

The financial perspective allows to set strategic financial goals that ensure adequate long-term economic effects. It is measured by increment in sales value, increase in market share, etc. An important aspect of the financial perspective is its integral role in relation to the goals set in other parts of the Balanced Scorecard, since indicators of internal processes, growth and learning as well as clients should be adequate to financial indicators.
When setting financial goals, you should also pay attention to the phase of the organization's life cycle. Types of economic effects are different for different phases of the life cycle. For example, for a new start-up business an important aspect is to stay on the market and increase participation in the sector. In developed companies, the economic profit or the rate of return on the investment is of greater importance. For mature organizations, however, the financial goal may be to maximize the cash flows.
Determining the indicators in the customer perspective is associated primarily with the verification of customer groups of market segments on which the company operates. The clients' perspective is based on measures determining the company's market share, customer service and retention, customer satisfaction level, etc.
The perspective of internal processes is an element combining the two above aspects. Indicators of this perspective focus on processes that are the most important for the company, and therefore are based both on creating added value for customers and on undertaking investment activities in new solutions. Examples of such measures are, for example, the level of production quality, the number of new products, etc.


The prospect of growth and learning require careful and accurate determination of indicators. In this area, special attention is paid to the qualifications and skills of the company's employees. The development of the enterprise depends on their competence and knowledge. A well-functioning information system in the organization also allows the company to develop, thanks to fast access to information. The growth perspective measures include, for example, human resources potential, level of motivation, decentralization, and the possibilities of information systems.
Sources:
https://www.balancedscorecard.org/Links to an external site. Balanced Scorecard.
https://www.pmi.org/learning/library/project-portfolio-management-strategic-objectives-6196Links to an external site. From the balanced scorecard to the project portfolio