Balanced Score Card

Balanced Scorecard literature

Another concept that started with a narrower focus and has grown is the Balanced Scorecard approach, as described in Kaplan and Norton (1996). Originally a tool for linking balanced performance measures in an organization to its strategy, especially for private sector companies, it has been expanded to other types of organizations, including the public sector. It has also taken on board other aspects, e.g.:

• an alternative approach to strategic planning and alignment of an organization;

• new ways of appraising a company's assets;

• linking performance measures to reward systems;

• focusing stronger on human capital and development of this asset; and

• strong customer satisfaction focus.

Still, perhaps the strongest trait of Balanced Scorecard is its intrinsic simplicity, making it easy to grasp and fairly easy to implement in an organization. We could also mention Mintzberg and an approach to holistic performance management based on organizational theory. In the book Structure in Fives: Designing Effective Organizations , Mintzberg (1983) outlines three basic coordination mechanisms that can be viewed as structural elements that form the glue of the organization (see Figure 2):

1. Mutual adjustment: coordination is achieved through two-way communication, discussion, and clarification among the actors.

2. Direct Supervision: one person takes charge of coordination tasks by telling others what to do and keeping track of their performance.

3. Standardization of:

o Employee skills: allowing the organization to develop competencies and skills in certain directions.

o Work processes: coordination through pre-defined tasks that require little communication