Balanced Scorecard, a viable option and a solid strategic layout help you to go above and beyond your limits. In 1990s Dr. Robert Kaplan and Dr. David Norton came up with the idea of this strategic planning and management system to help the business owners to capture a broad and balanced view of the company’s performance. It combines the strategy and management to give a comprehensive look of short as well as long-term objectives and tactics of your business. The balanced scorecard is dynamic and updated strategic management framework, providing executives and senior management a strategic and actionable outline of goals and strategies and helping them to increase and maintain performance.
It is nice to know the advantages of balanced scorecard as well as some important considerations if you want to implement this valuable tool for strategic thinking and to ensure consistency between your daily activities and vision of your company. Let’s figure out if it is the right route for your organization.
Balanced Scorecard Gives Structure to Your Strategy
Unlike HR and financial management, there are multiple approaches to strategic management and the balanced scorecard is strategic planning and management system that connects the dot between strategy elements (vision, mission, core values) and operational elements (performance measure and targets). It is considered to be a logical and structured way to help leaders of the organization to ensure that all areas of the management are covered in an easy to understand way. Balanced scorecard keeps your goals at center and track progress through the specific measure and helps management to monitor actions by following initiatives.
Advantages Of Balanced Scorecard
It Makes It Easy to Communicate
A well-formulated strategy with all its interrelated objectives mapped on a piece of paper allows the management to communicate smoothly and efficiently. A strategy map is a clean, visual and straightforward aid which aligns all the departments and division for the achievement of high-level business goals and objectives. Strategy map support the understanding of the strategy to help management to engage the staff as well as external stakeholders and strengthen the process of strategic communication. There are several advantages of balanced scorecard, if implemented correctly, can help you to reap the sheer number of benefits and advantages concerning the method of communication.
- It gives employees a set of goals and objectives of the organization to keep in mind while working.
- It helps employees to identify key goals.
- It fosters the better understanding of the strategic elements that need work.
- It enables employees to see overlapping influence of objectives.
It Aligns Your Departments and Divisions
Another compelling advantage of balance scorecard is facilitating the alignment of all division and department with a common strategy. Balanced scorecard structure allows you to create the link between your critical objectives and the objectives of your parent company. Additionally, it will enable you to witness how the measures of your department roll up with the enterprise level measures and how you can link your projects with enterprise level projects and much more. The balanced scorecard structure is efficient when large projects are shared across multiple divisions.
Create a Link Between Your Individual Goals and Organizational Strategy
Further advantages of balanced scorecard is a strategy focused organization framework allows individuals to align their goals with the goals of the organization. For example, an employee setting their regular performance goals for annual performance can link their goals with the overall and goals and objectives of the department. Thus, balanced scorecard allows employees to contribute to growth and development of the organization.
Keep Your Strategy at the Front and Center of the Reporting Process
Organizations build strategic plans, put them on the shelves to never see them again but balanced scorecard is a strategic plan which is predicted to review the strategy on a regular basis and it is only possible when the strategy is organized. Such periodic review of the policy is something which will help you to reference your plan on a regular basis and keep it at the center of the managerial reporting process. Periodic review will bring life to it and give you a direction to manage your organization. Moreover, it will tell you the exact location where you are and how you are going to achieve your goals which is another another one of the advantages of balanced scorecard.
Due to a large number of advantages of balanced scorecard, a large number of organizations are exclusively embracing it to achieve desired results. The balanced scorecard is considered to be the most influential business idea which has potential to reflect the true essence of value creation activities of your organization.