What is the function of a balanced scorecard (BSC) in performance management?

The function of a balanced scorecard (BSC) in performance management is primarily to align measurement with strategic goals. The BSC is a strategic planning and management system that organizations use to integrate business activities with the vision and strategy of the organization, improve internal and external communications, and monitor organizational performance against strategic goals.

By focusing on various perspectives—financial, customer, internal business processes, and learning and growth—the BSC helps ensure that all aspects of performance are considered and interconnected with the overall strategy. This alignment serves to guide resources, direct actions, and establish priorities that support the organization's overall objectives.

The balanced scorecard provides a framework for assessing whether the organization is moving in the right direction with regard to its strategic goals and objectives, making it a vital tool in performance management. This structured approach enables management to set measurable goals and assess their achievement in the context of the organization’s strategic vision.