Balanced Score Card
The balanced scorecard�s (BSC) four focus areas are financial, customer, process, and learning and
growth. The scorecard incorporates measures derived from an organisation�s strategy. Although
retaining financial measures of past performance, the balanced scorecard also introduces the drivers of
future financial performance.
Address the following issues/questions:
Critically evaluate the advantages of using the BSC approach to performance measurement and identify
critical areas in terms of implementation of the BSC. Should public sector or not-for-profit organisations
develop a BSC? Use examples to illustrate your points as well as suitable academic references.
And consider the following questions:
�What are the advantages of using the balanced scorecard?
�What are the critical areas that should be considered in its implementation?
�Should the balanced scorecard be used across different organisations?
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Balanced Score Card
Introduction
Balance scorecard approach is a strategic system of management and planning that is
widely used in the business environment with the sole aim being to have all the activities of an
organization well aligned with the vision of the organization. Further, this approach helps to
ensure that the communications of the organization both internal and external are improved. The
third and equally important goal of balanced score card is to help assess the performance of the
organization against the already laid don strategies and goals.
Advantages
The balanced score card has a couple of benefits to the business. As the name suggests, it
is a business strategy whose aim is to bring about balance within an organization. The traditional
strategies that have been in place have only concentrated on only certain aspects of an
organization (Niven 2010). This has often led to imbalance and the resulting effect is that it is not
possible to fully assess the performance of the organization. With the balanced score card, every
aspect of the organization is carefully considered and assessed. The balanced score card has four
main areas of focus. These are processes, customer, finances and growth. All these aspects
spread out to cover all other areas of an organization.
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Balanced Score Card
Due to the fact that each area is assessed separately, departments have to become creative
and generate new ideas that will ensure that they remain afloat. Unlike in the past where
departments in an organization depended on each other for performance, each department is now
assessed independently. This has encouraged need for every department to perform as expected.
Although there is separation of departments, there is a chain of activities that are
interconnected and run across departments. As such, instead of having unhealthy competition
among departments, teamwork is encouraged. The cyclic nature of interdependence in activities
means that each department must be supportive of each other (Gerard, 2012). This has been
identified as one of the strong pillars of the balanced score card approach.
With a balanced score card, it helps to give the management, at a glimpse, the nature of
operations of the organization (Kaplan & Norton 2013). The approach helps to summarize and
consolidate under a single platform of the activities and operations of an organization. As such,
monitoring becomes easier and does the assessment. This makes it easy to assess whether or not
the organization is meeting its goals as projected in the vision and the strategic plans of the
organization.
Implementation
In implementing the balanced sore, there are areas that must be carefully considered. The
first is the how well the strategy blends with the vision and mission of the company. Any
strategy that does not support the projected goals of the organization will not contribute to such
an achievement (Smith 2010). It is therefore crucial that care is taken to ensure that there is
proper alignment of the two.
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Balanced Score Card
Further, in the implementation of the same, it is important to consider the contributions
towards performance of the business (Niven 2010). The business core card that is set in place
must have its primary objective as boosting and improving performance of the organization. A
company’s performance determines its future. In performance, there are very many issues that
are considered including customer satisfaction. It is not just the profit margins that are
considered but also how well the customers of the business are served. Customers are the biggest
asset of any organization. Their satisfaction largely determines the performance of the
organization.
Use of Balanced Score Card
Although the balanced scorecard is often used in business organizations, it is often
applicable in nonprofit making organizations. The balanced score card’s aim is not just to ensure
that profit margins come up (Brown, 2007). Rather, the aim is to ensure that an organization can
match its performance to its goals, long term and short term and its vision. Further, it helps make
the management’s work easier by consolidating the activities of the organization. In so doing, the
performance of the company goes up.
Certainly, the balanced score card has been as being very effective in profit making
organizations. Every aspect of the business and especially the finances are out in check and this
helps to push the profit margins considerably.
Conclusion
In an era where organizations are seeking to improve performance management, business
scorecard is an idea that cannot go unnoticed. The pivotal role played by this strategy has helped
increase the ability of organizations reach their intended goals. It has been realized that proper
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implementation of the balanced score card helps improve customer satisfaction. The overall
value of services and products of the company also goes up. Besides bringing harmony in the
activities of an organization, it also helps to streamline the in-house activities of the organization.
Teamwork becomes more evident and this in turn boosts performance Channels of
communication are also opened up. This means even in organizations where there is structural
bureaucracy, those down in the ladder can still communicate to the top management. Balanced
score card is business idea that has been tried and tested and has proven practicable.
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References
Brown, M, 2007, Beyond the balanced score card: improving business intelligence with
analytics, New York, Analytics Press.
Gerard, B, 2012, Balanced scorecard 100 success secrets, New York, Prentice Hall
Kaplan, & Norton D, 2013, Alignment: using the balanced scorecard to create corporate
synergies, London, Sage.
Niven, R, 2010, Balanced score card: step by step, California, John Wiley and Sons
Smith, R, 2010, Business process management and the balanced score card, California, John
Wiley and Sons
