How does a balanced scorecard function in organizational management?

A balanced scorecard functions as a strategic planning and management tool that translates the organization's mission and vision into a comprehensive framework for performance measurement. It integrates both financial and non-financial metrics to provide a more holistic view of organizational performance.

The purpose of the balanced scorecard is to enable organizations to measure their operational efficiency, customer satisfaction, and internal processes alongside financial results. By translating the organization's mission into specific performance measures across various perspectives—such as financial, customer, internal business processes, and learning and growth—it helps ensure that all aspects of the organization align with its overall strategic objectives.

This approach allows organizations to track their success not only through historical performance but also through their ability to improve future performance by addressing the underlying factors that drive success. Thus, it fosters a more balanced and comprehensive management system, encouraging a long-term perspective rather than merely focusing on short-term financial outcomes.