Role Of a Balanced Scorecard In Performance Management

The balanced scorecard is very important and one of the prime tools used to measure performance. A balanced scorecard helps to deal with strategic planning and performance management. A balanced scorecard is a great boon in the Human Resource industry given by Kaplan and Norton. This helps the managers and employer to decide the performance appraisal for each employee as per their productivity and ability. A balanced scorecard helps to drive out financial and non-financial outcomes which overall indicates the performance and strategic output.

Balance scorecard not only helps to do performance management but also helps to evaluate the strategic planning, how it was executed and what are the loopholes. Balance Scorecard is now widely accepted and regularly used in various parts of the world. One recent global study has declared that balanced scorecard is one of the top ten management tools used to measure performance management worldwide in various companies.

Benefits of using a Balance scorecard as a management tool:

  • It is used to track and record the data.
  • It helps to measure the financial and nonfinancial outputs and inputs.
  • It helps to find out the loopholes of strategic plan followed out with proper results
  • It is very effective in measuring performance.

Balance scorecard helps to develop the strategic planning and reporting methodology of the organization in four different parts:

  • Financial
  • Operational
  • People
  • Customer

From these perspectives, the company can get a picture of what to implement, where to implement, and how to implement it.


The vision and strategy must be on the grounds of:

  • Financial
  • Customer
  • Growth and Learning
  • Internal Business process

For each ground, the organization must concentrate on:

  • Objective
  • Measure
  • Target
  • Initiative

How Balance Scorecard helps in achieving the goals of Performance Management?

Balance scorecard helps to evaluate the performance of the employees in the following ways:

  • What is the strategic plan?
  • How they are implementing it and in what respect?
  • What is the financial investment and return ratio?
  • What is the time invested?
  • What is the new product developed?
  • What is the feedback from customers?

Not only for the company, but the “balanced scorecard” has also helped to evaluate the internal business process via operational process, innovation, customer relationship, and various regulatory processes.

The strategic evaluation which is done through a balance scorecard is:

  • What is the outcome or result of strategic implementation?
  • What is the feedback from customers?
  • How we can do it in a much better way?
  • How we can develop the new products?
  • What are the improvements and changes required?
  • How to balance the stakeholders and financial output?
  • How we can develop the learning process in a much better way?

Balance scorecard also helps in the overall development of employees- their capability, managerial skills, leadership, skills, and competencies.

A balanced scorecard helps to find out the leadership quality among the employees, their capability, their outcome, and their development which helps employers or senior management to decide to do their performance appraisal. A balanced scorecard helps to move out of traditional barriers and reach new heights of success as this process helps in continuous development.

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