Balanced scorecard
In one sentenceA tool for measuring a business's performance from four perspectives together, financial, customer, internal processes, and learning and growth, rather than from profit alone.
Simply put
Financial figures tell you what happened, but not what will happen. The scorecard adds indicators that come before profit: customer satisfaction, delivery speed and staff training.
Each perspective has a few clear objectives and indicators, all linked to the business's strategy.
Example
A chain of stores tracks four indicators monthly: gross profit margin (financial), the percentage of returning customers (customer), the percentage of orders ready on the same day (processes), and training hours per employee (learning and growth). A fall in returning customers alerts it before sales fall.
Don't confuse it with
Financial ratio analysisFinancial ratios are only one perspective of the scorecard.