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Reporting, use & meta-evaluationStrategic managementKPIOrganizational managementStrategy mapNonprofit and public sectors

Balanced Scorecard

Balanced Scorecard
Also known as: BSC、Balanced scorecard approach

Organizes strategic objectives through perspectives such as finance, users, internal processes, and learning and growth, linking indicators and actions. Nonprofit organizations adapt perspectives and relationships to their mission. [1]

Balanced scorecard design worksheet — openReferences and checked sections
Difficulty
Intermediate
Cost
Medium
Duration
Illustrative estimate (adjust for scale and team): design: 2–4 weeks / embedding operations: 6 months–1 year
Content updated: 2026-10-07Source checked: 2026-09-13 (includes AI cross-checking)No documented human reviewIncludes fictional examples

How it works at a glance

The balanced scorecard supports strategy implementation by measuring not only financial results but also user relationships, internal working processes, and individual and organizational learning. It links objectives, indicators, target values and specific initiatives. [1]

Nonprofit and public organizations can center the structure on social mission and benefits for participants rather than placing financial results at the top. Arrows in a strategy map represent assumed relationships; creating the diagram alone does not demonstrate causality. [1]

  1. Clarify strategy
  2. Set objectives across four perspectives
  3. Develop a strategy map
  4. Set indicators, targets and actions
  5. Prepare the scorecard and begin implementation
  6. Cascade objectives and embed the approach
Sequence of implementation steps. See “Implementation steps” for details of each stage.

When to use it and when it is unsuitable

When to use it

  • When linking medium- and long-term organizational strategy to daily operations through indicators
  • When managing customer satisfaction, organizational capabilities and other factors that financial indicators alone cannot capture
  • When visualizing multiple dimensions of progress toward a nonprofit or public organization's mission
  • When establishing strategic meetings where all departments discuss strategy using a shared language

When it is unsuitable

  • When the main purpose is short-term operational improvement. BSC is a strategic tool and may be excessive for simple KPI management.
  • When organizational strategy and mission are not yet clear. A strategy map cannot be drawn without a strategy.

Participants, roles, and deliverables

Participants and roles

Executives and strategy departments (design), and all managers (cascading). External BSC consultants are often engaged during design.

Main deliverables

  • Strategy map
  • Balanced scorecard (indicators, targets and initiatives across four perspectives)
  • Periodic scorecard report

Implementation steps

  1. Clarify strategy
    Review and organize the mission, vision and medium- to long-term goals with stakeholders. BSC quality directly depends on strategic clarity, making investment here most important.
  2. Set objectives across four perspectives
    Organize objectives needed to implement strategy from multiple perspectives. In nonprofit and public sectors, adapt the structure around mission and benefits while also considering financial sustainability. Do not fix the number of objectives per perspective.
  3. Develop a strategy map
    Arrange strategic objectives vertically across four perspectives and show the causal chain “learning and growth → internal processes → customers → finance/mission” with arrows. Check the logic that improving A achieves B, which leads to C.
  4. Set indicators, targets and actions
    Define leading and lagging indicators for each strategic objective, with targets and deadlines. Link specific strategic initiatives or action plans to target achievement.
  5. Prepare the scorecard and begin implementation
    Compile objectives, indicators, targets and initiatives for all perspectives in a scorecard and establish collection and reporting arrangements. Discuss progress at quarterly reviews.
  6. Cascade objectives and embed the approach
    Link strategic objectives to operational responsibilities and actions. Check whether departmental roles and indicators align with overall goals, and schedule implementation reviews to suit organizational arrangements. Do not impose uniform embedding periods or use in personnel appraisal.

Strengths and limitations

Strengths

  • Enables multidimensional assessment of organizational performance integrating financial and nonfinancial aspects
  • A strategy map shares the strategy's causal logic across the organization
  • Flexible enough for mission-centered application in nonprofit and public organizations
  • The discipline of narrowing indicators strengthens strategic focus

Limitations

  • Design and embedding require substantial time and effort; without strong organizational commitment, the system becomes a formality
  • Causal chains across the four perspectives remain hypotheses and do not guarantee actual causality
  • Has difficulty accommodating complex environmental changes and emergent strategy, requiring regular review of the strategy itself

Common pitfalls

  • Too many indicators obscure strategic priorities. Focus on important relationships and indicators used for decisions.
  • Used only by executives and not communicated to frontline staff. Without cascading, strategy remains detached from operations.
  • Never reviewing the initial design. Annual reviews of strategy and indicator validity are essential.

Conditions of use and evidence

  • Do not apply a corporate structure that places financial results at the top unchanged to nonprofit and public sectors. [1]
Fictional example; not actual results

Examine a library's support strategy from multiple perspectives

The following is a fictional example for illustration. A small library improves material provision for people who have difficulty visiting.

PerspectiveStrategic objectiveLeading indicatorLagging indicatorTarget and deadlineMain initiative
Service usersReceive needed materialsProportion of requests whose details were confirmedProportion of requested materials delivered on timeFirst comparison in March; agree targets after October measurementConfirm receipt conditions with user representatives
FinanceSecure funding to sustain deliveriesMonthly review of projected expensesDelivery costs / completed deliveriesAssess continuation within budget in MarchCompare delivery methods
Internal processesReduce delays between requests and dispatchReview unprocessed requestsDays from request to dispatchEstablish baseline in October and check changes in MarchSimplify handovers between staff
Learning and growthStaff can suggest alternative materialsNumber of case review sessionsAppropriate suggestions for simulated requestsAll staff complete exercises in DecemberCase training on users' circumstances

Common errors in judgment

Common mistake

Always place increased revenue at the top, even in nonprofits

How to revise

Adapt perspectives around mission and benefits for participants

ReasonFinancial health and organizational purpose are not the same.

Common mistake

Treat strategy as complete once indicators fill all four perspectives

How to revise

Show indicator relationships, actions and assumptions to test

ReasonA collection of unrelated numbers does not support decisions.

Organize your thinking by writing

Balanced scorecard design worksheet

A practical template is available to fill in and print on A4 paper.

Open worksheet

Related methods

Performance MeasurementLogic ModelResults-Based ManagementIndicator Design

References and checked sections

  1. Conceptual Foundations of the Balanced Scorecard, Working Paper 10-074
    Robert S. Kaplan / Harvard Business School · 2010
    Section consulted
    Balanced Scorecard for Performance Measurement, p. 4; Extending Balanced Scorecard to Non-Profit and Public Sector Enterprises, p. 23
    How it relates to the text
    Do not apply a corporate structure that places financial results at the top unchanged to nonprofit and public sectors.
    Source checked: (includes AI cross-checking)

Editorial and checking information

Content updated: Source checked: (includes AI cross-checking)No documented human reviewIncludes fictional examplesEditorial policy and scope of checkingCite this pageReport a correction

How to cite this page

EvalCompass Editorial Team. “Balanced Scorecard”. EvalCompass, updated 2026-10-07. https://evalcompass.jun-nakatani.com/en/methods/balanced-scorecard/
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Change history
  • — Corrected descriptions and procedures identified through content checks (U07). Preserved input field order, counts, labels and section structure.
  • — Updated explanations to correspond with sources, and added method-specific fictional worksheet examples, judgment examples and revision history.