A proposed framework for integrating the balanced scorecard into the strategic management process

Abstract

The Balanced Scorecard (BSC) proposed by Kaplan and Norton has been accepted by the business world, worldwide, as a very promising tool for the performance measurement of an organization at the firm level. Later on, its founders described the way of using their model as an integrated system of the whole strategic planning process. However, what it still remains vaguely explained is the operational (practical) connection of the BSC model to the strategic planning and performance measurement process. The ambition of the present paper is to demonstrate a method that could easily connect directly the various performance measures (criteria) of a BSC with the stated goals and objectives of any firm. Specifically, it explains in great detail how the multicriteria method of Analytical Hierarchy Process (AHP) could practically facilitate this connection. It analyses how a firm could arrange the various performance criteria in such a way that could be capable of controlling its stated goals and objectives through the implementation of its strategy. This paper starts with a literature review concerning the two methods, BSC and AHP, and then proceeds to the formation of the proposed framework, which actually facilitates the formal and quantitative links between the firm’s stated performance criteria and its overall strategic planning and performance measurement process.