A balanced scorecard is a performance metric that is used an organization to improve its strategic management. It helps to identify, improve, and enhance the internal functions and the resulted outcomes of the organization. It also helps an organization to measure and provide feedback, so that a company remains align with its objectives and strategies.
Steps to linking Balanced Score cards to budget
The first step in linking balance scorecard to the budget is to gather the background material and distribute it among the balance scorecard team. The balanced scorecard is a tool which is used to develop a management plan; therefore it is necessary that the team leading the balanced scorecard strategy should have an adequate amount of data on organization's strategy, mission, vision, competitive position, and employee core competencies. The data about the company can be extracted using both internal and external resources. Internally data can be collected through strategy and market resources. Data mining can also be done using external resources such as press releases, analyst reports.
In the second step, comprehensive training sessions are given to the team. In these training session, the team is briefed what balanced scorecards is all about. The participants then develop the fundamentals of organization's strategy which comprises of strategic outcome, theme and aspects. This is done to focus the attention of participants towards organization's value proposition and customer needs.
The information that is gathered in step 1 and step 2 is now used for formulating strategic objectives, which defines the organization's tactical intent. Objectives when initiated are categorized on the strategic premise level by perspectives, connected in strategy maps (cause effect linkages) for each strategic theme, and then finally amalgamated to construct strategic objectives for the organization.