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TRU Balanced Scorecard Strategic Planning

Balanced Scorecard Approach to Strategic Planning *

Best applied in non-profit organizations, the balanced scorecard is a multifaceted evaluation tool that combines both financial and non-financial factors to measure company performance. Based on their experience, Robert Kaplan and David Norton developed the approach around their idea that impressive financial returns are only one of the important factors to consider when assessing the success of a business. A balanced scorecard evaluation should take into account a range of objectives in different categories, including both leading and lagging indicators.

According to advocates of this approach, a balanced set of criteria paint a more complete picture of a company's performance. Each of the metrics would include specific quantitative targets to help an organization measure its progress against established goals (e.g., increase new product revenue by 25%). Beyond strategic planning, another common application of the balanced scorecard approach today is in determining executive compensation. Companies are beginning to assess executives' performance by linking their compensation directly to stated strategic goals.

* Source: APQC. Strategic Planning: Final Report. Houston, TX: American Productivity & Quality Center :
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