Advantages of Balanced Scorecard – Balanced Scorecard Pros and Cons
Have you ever thought whether not your business can do more and earn more money for you? Well, maybe you can, but in order to learn that you have to evaluate current performance of your company. There are many performance evaluation tools used in modern business, but perhaps balanced scorecard is one of the most popular ones. Balanced scorecard does not only evaluate company performance but also communicates linear and operational management. Every successful company has certain business goals. And every company does something to achieve them. With the help of balanced scorecard it will be possible to see “cause and effect” ties between what is done to reach goals and strategic goals themselves. In other words, balanced scorecard puts strategy into action, as well as measures business.
The process fo BSC implementation
What are advantages of balanced scorecard? They go as follows:
- Balanced scorecard communicates operational and strategic management. It often happens that company’s decisions, actions and measures have nothing to do with the strategy. Company management thinks that they are approaching strategic goals, but in fact the company is sinking. Balanced scorecard provides a clear strategic map with clear cause and effect ties and relations between goals and measures. Such strategic maps are understood even for ordinary employees with little experience in strategic planning.
- With the help of balanced scorecard it is possible to educate personnel. Statistics show that more than 80% of managers do not participate in strategic planning or have wrong concepts and interpretations of company strategy, say apart of ordinary employees. With the help of strategic maps company strategy will be understood at all company levels. If every employee in the company understands his own contribution to implementation of strategic goals the company has all chances to succeed.
- Balanced scorecard makes it possible to introduce amendments in changes to measures and goals which makes this system rather flexible and mobile. As markets are very changeable these days, external changes should lead to changes inside the company. Having balanced scorecard implemented in the company, it is possible to correct measures and objectives in order to implement strategic goals.
Advantages of BSC
At the same time, balanced scorecard has certain requirements and rules which need to be observed. Various mistakes made by top managers lead to failure to successfully implement balanced scorecard. This explains huge portion of criticism in regard to balanced scorecard. Remember, that balanced scorecard it just a tool in hands of top managers and business owners.
