Proceedings of the 3rd European Conference on Intellectual Capital

2. Balanced scorecard framework
Angelos Vouldis and Angelica Kokkinaki
A method widely utilised in various organisational settings is <strong>the</strong> Balanced Scorecard (BSC) approach
(Kaplan & Norton, 1992). Introduced by Robert S. Kaplan and David P. Norton in 1992, balanced
scorecards have found widespread adoption in Fortune 1000 companies. Rohm & Halbach (2005)
state that ‘building and implementing a scorecard system is more about changing hearts and minds
and sustaining new directions, than it is about selecting performance measures and buying Balanced
Scorecard s<strong>of</strong>tware.’
The Balanced Scorecard is a holistic model that can be used at various levels across <strong>the</strong>
organisation, service, team or group. It aims to enable organisations to manage strategy by linking
corporate objectives, initiatives, measures and targets at all levels in <strong>the</strong> organisation. It is <strong>of</strong>ten
viewed as an attempt to translate strategy in to action and it proposes measuring enterprise
performance under four different perspectives, as shown in Figure 1.
Figure 1: Balanced scorecard perspectives (from Kaplan & Norton, 1992)
The Financial Perspective links <strong>the</strong> financial objectives to <strong>the</strong> corporate strategy <strong>of</strong> an organisation.
The Customer Perspective examines aspects related to customers’ perceptions.The Innovation and
Learning Perspective on <strong>the</strong> Balanced Scorecard expands objectives and measures related to
organisational learning and growth with respect to employees, systems and organisational alignment.
The Internal Business Perspective focuses on all actions and key processes necessary for delivering
<strong>the</strong> value expected by <strong>the</strong> customers in a productive and efficient way and in doing so to prioritize
research, design and development processes and examine important operations process measures
as cost, quality, time, and performance characteristics.
Originally <strong>the</strong> Balanced Scorecard prompted users to identify an equal number <strong>of</strong> measures in each <strong>of</strong>
four perspectives. This demonstrated <strong>the</strong> need to balance financial and non-financial measures;
internal and external measures; leading and lagging measures; and short and long-term measures.
Researchers realised that having balance in <strong>the</strong> number <strong>of</strong> measures is no longer considered strictly
necessary after different implementations and researches development. Schneiderman (2006) argues
that balance is actually harmful and that ‘good scorecards will be unbalanced’.
Rohm & Halbach (2005) suggest a ‘Nine Steps To Success balanced scorecard’ 'framework as
shown in Figure 2 for building and implementing a Balanced Scorecard approach.
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