Sir Terry Leahy, CEO of Tesco, the company that now takes £1 of every £8 spent in British shops, has often cited the use of Balanced Scorecard as the key factor in the company’s ongoing success.

Balanced Scorecard is based on the premise that financial measures alone are not adequate for assessing the health and likely future success of a business.  Instead, a balanced scorecard focuses management of key objectives into four balanced categories:

1.       Finance
2.       Customer
3.       People
4.       Process

The theory behind the four quadrants is that better skilled and motivated people will deliver better service, which will bring more customers, who will spend more and come more often. They will also produce better operational standards, which will reinforce the customer’s positive impressions of the company. And better operational standards will drive down costs and allow the company to offer great value for money.

The scorecard is a highly visible but simple, easy to use tool. Performance is reviewed regularly in slick, efficient meetings. In organisations with effective scorecards, staff throughout the business are highly motivated and engaged in continuously improving their business performance.