Balanced Scorecard: Step-by-Step for Government and Nonprofit Agencies, 2nd Edition

1

Introduction to the Balanced Scorecard

Roadmap for Chapter 1 Before you can begin developing a Balanced Scorecard for your organization, we must ensure that you have a solid foundation of Scorecard knowledge and understanding from which to build. This chapter will provide that base.

We’ll begin by considering just why measurement is so important to the modern public and nonprofit organization. We’ll then look at three factors that have led to the rising prominence of the Balanced Scorecard since its inception over seventeen years ago. You’ll learn that our changing economy, which places a premium on intangible assets, demands more from our measurement systems. Financial measurements and their significant limitations will then be examined. The final factor escalating the growth of the Balanced Scorecard is the inability of most organizations to effectively execute their strategies. We’ll review a number of barriers to strategy implementation.

The Balanced Scorecard has emerged as a proven tool in meeting the many challenges faced by the modern organization. The remainder of the chapter introduces you to this dynamic tool. Specifically, we’ll examine the origins of the Scorecard, define it, and look at the system from three different points of view: as a communication tool, measurement system, and strategic management system.

WHY MEASUREMENT IS SO IMPORTANT

One of the themes of this book is that regardless of what sector your organization represents, there is a role for measurement ...