Key Terms

Balanced Scorecard – A strategic performance management framework that uses four perspectives (Financial, Customer, Internal Business Process, Learning & Growth) to measure and manage organizational performance.

Strategy Map – A visual representation showing cause-and-effect relationships between objectives across the four Balanced Scorecard perspectives.

Financial Perspective – The Balanced Scorecard perspective that focuses on how shareholders view the company, measuring profitability, growth, and shareholder value.

Customer Perspective – The Balanced Scorecard perspective that focuses on how customers view the company, measuring customer satisfaction, retention, and market share.

Internal Business Process Perspective – The Balanced Scorecard perspective that focuses on internal operations and processes that create value for customers and shareholders.

Learning & Growth Perspective – The Balanced Scorecard perspective that focuses on the company's ability to innovate, improve, and develop capabilities.

Key Performance Indicator (KPI) – A measurable value that demonstrates how effectively a company is achieving key business objectives.

Non-Financial Measure – A performance measure that is not expressed in monetary terms, such as customer satisfaction, quality, or employee turnover.

Leading Indicator – A measure that predicts future performance (e.g., employee training hours leading to improved customer service).

Lagging Indicator – A measure that reflects past performance (e.g., profit margin reflecting past decisions).

Variance Analysis – The process of comparing actual performance to targets or budgets and analyzing the differences.

Performance Dashboard – A visual display of key performance indicators and metrics used to monitor organizational performance.

Strategic Theme – A major strategic focus area that guides the development of Balanced Scorecard objectives (e.g., customer intimacy, operational excellence).

Cause-and-Effect Relationship – The connection between objectives where achieving one objective (cause) leads to achieving another (effect).

Performance Measure – A metric used to track progress toward achieving an objective.

Target – The desired level of performance for a specific measure.

Benchmark – A standard or point of reference against which performance can be compared.

Balanced Approach – Considering multiple perspectives and measures rather than focusing on a single dimension of performance.

Stakeholder – Any individual or group that has an interest in or is affected by the organization's performance.