A Procedure to Estimate Relations in a Balanced Scorecard

A Balanced Scorecard is more than a business model because it moves performance measurement to performance management. It consists of performance indicators which are inter-related. Some relations are hard to find, like soft skills. We propose a procedure to fully specify these relations. Three types of relationships are considered. For the function types inverse functions exist. Each equation can be solved uniquely for variables at the right hand side. By generating noisy data in a Monte Carlo simulation, we can specify function type and estimate the related parameters. An example illustrates our procedure and the corresponding results.