Cataloging Information
Decisionmaking & Sensemaking
Leadership
This article introduces the reader to Kaplan and Norton’s “balanced scorecard” system, a set of measures designed to give a manager an overview of business performance. The scorecard includes four measures. The first measure is financial, the traditional measure of performance. The other three measures include customer satisfaction, internal processes, and innovation and improvement activities. The balanced scorecard prevents information overload and forces the manager to focus only on these four critical indicators of performance. Kaplan and Norton give an overview of each measure and illustrate each one with anecdotes from their research. They argue that performance measures have historically had a “control bias,” and that implementing the balanced scorecard system challenges this bias by making vision and strategy central to good performance. Through the use of four measures, the balanced scorecard helps managers better understand internal relationships, which can help improve decision making and problem solving.
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