The balanced scorecard (Kaplan and Norton, 1992) measures performance from four perspectives: financial, customer, internal business process, and learning and growth. It turns strategy into measures and targets. The Baldrige Excellence Framework is broader, assessing seven categories from leadership to results.
Example scorecard
For a heritage charity like Historic Places (March 2025 pre-seen):
| Perspective | Objective | Measure | Target |
|---|---|---|---|
| Financial | Grow unrestricted income | Commercial income growth | +8% a year |
| Customer | Delight visitors | Visitor satisfaction score | 90%+ |
| Internal process | Easy booking | Share of tickets booked online | 70% |
| Learning and growth | Skilled, engaged volunteers | Volunteer retention | 85% |
The perspectives link: skilled volunteers (learning) improve visits (process), which raise satisfaction (customer), which grows income (financial). Kaplan and Norton call this a strategy map.
The Baldrige Excellence Framework
Chapter 3 of the book covers Baldrige. Its seven categories (current names; the book uses some earlier ones):
| Category | Question |
|---|---|
| Leadership | How do leaders guide and sustain the organisation? |
| Strategy | How are strategic objectives set and put into action? |
| Customers | How do we listen to and engage customers? |
| Measurement, analysis and knowledge management | How do we use data and knowledge to improve? |
| Workforce | How do we build an effective, engaged workforce? |
| Operations | How do we design and improve work processes? |
| Results | How well are we performing in all these areas? |
Source: NIST Baldrige Performance Excellence Program.
Balanced scorecard vs Baldrige
| Balanced scorecard | Baldrige | |
|---|---|---|
| Purpose | Turn strategy into measures and targets | Assess and improve the whole management system |
| Structure | 4 perspectives | 7 categories |
| Output | A set of KPIs | Strengths and areas to improve |
| Best for | Tracking strategy | Organisation-wide improvement |
In ACCA SBL
Performance measurement sits in syllabus areas C and H. A typical task: an organisation that measures only profit. Recommend measures in each perspective tied to its strategy and case facts, with targets, and explain how they link. Add benchmarking to set realistic targets.
Advantages
- Balances financial and non-financial measures
- Links measures to strategy
- Shows cause and effect
Limitations
- Too many measures can confuse
- Measures can conflict
- Ignores some stakeholders, such as suppliers and the community
- Can encourage gaming of targets
FAQs
What are the four perspectives of the balanced scorecard?
Financial (how do we look to shareholders?), customer (how do customers see us?), internal business process (what must we excel at?) and learning and growth (how can we keep improving?).
Who created the balanced scorecard?
Robert Kaplan and David Norton, in a 1992 Harvard Business Review article. They later added strategy maps to show cause-and-effect links between the perspectives.
What is the Baldrige framework?
The Baldrige Excellence Framework, from the US Baldrige Performance Excellence Program, assesses an organisation across seven categories: leadership; strategy; customers; measurement, analysis and knowledge management; workforce; operations; and results.
What is the difference between the balanced scorecard and Baldrige?
The balanced scorecard is a measurement tool that turns strategy into targets in four perspectives. Baldrige is a broader self-assessment of how well the whole organisation is managed, with results as one of seven categories.
Is the balanced scorecard still relevant?
Yes. Many organisations, including public bodies and charities, use it or a variant, though often with fewer, sharper measures than early versions.