What Does “Balanced” Mean?

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We discussed the process of designing the Balanced Scorecard in the eTraining, “How to Build the Balanced Scorecard”.

In this bonus mini-lesson, we will consider the idea of “balance” in the Balanced Scorecard.  What does it mean?  Why is it important to have a balanced view of your company or project?

What Does “Balanced” Mean?

Each indicator or category on a Balanced Scorecard has its own weight—that is, a number which shows its relative importance.  These weights tell you which goals, indicators, and tasks are most important or most valuable to the company.  You will also take these weights into account when you calculate the total performance of your Balanced Scorecard.  Our BSC Designer software, available at www.BSCdesigner.com, performs these calculations automatically.

But “Balanced” is not only about the weights of your indicators.  It is also important to have a balanced view of your company, business unit, or project.

  • You need to balance your Financial and Non-Financial Indicators.  The Balanced Scorecard should provide a balanced view of your whole company, including internal Business Processes, Customer Relationship, and Education and Growth, as well as Finance.
  • You need to balance your long-term and short-term goals.  We discuss this process in our eTraining, “Strategy Maps and the Balanced Scorecard,” available at www.ScoreCardTrainings.com.
  • You need to balance completeness and independence when you design your indicators.  Taken all together, your indicators should describe 90% of your business, but they should not repeat each other.
  • And you need to balance the performance of your indicators, as well.  After a month or two, if some indicators have changed their values dramatically and others have not changed their values at all, these indicators are not really balanced.
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Balanced Scorecard Examples

Balanced Scorecard Software - BSC Designer