Definition of balanced scorecard

an approach to performance measurement that also focuses on what managers are doing today to create future shareholder value. A balanced scorecard is a set of performance measures constructed for four dimensions of performance. The dimensions are financial, customer, internal processes, and learning and growth. Having financial measures is critical even if they are backward looking. After all, they have a great effect on the evaluation of the company by shareholders and creditors. Customer measures examine the company's success in meeting customer expectations. Internal process measures examine the company's success in improving critical business processes. And learning and growth measures examine the company's success in improving its ability to adapt, innovate, and grow. The customer, internal processes, and learning and growth measures are generally thought to be predictive of futuresuccess (i.e., they are not backward looking). After reviewing these measures, note how "balance" is achieved: (1) performance is assessed across a balanced set of dimensions(financial, customer, internal processes, and innovation); (2) quantitativemeasures (e.g., number of defects) are balanced with qualitativemeasures (e.g., ratings of customer satisfaction); and (3) there is a balance of backward-lookingmeasures (e.g., financial measures like growth in sales) and forward-lookingmeasures (e.g., financial measures like growth in sales) and