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Benefits of using a Balanced Scorecard approach

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Benefits of using a Balanced Scorecard  

David Norton and Robert Kaplan introduced the Balanced Scorecard in 1992 to the private sector, as a methodology of measuring a company’s performance beyond its financial outcomes, like profit margins.

Nowadays, the Balanced Scorecard (BSC), which comprises the main four dimensions of an organization – Financial, Customer, Internal processes, Learning, and growth – is widely used by many companies activating in a wide range of industries: manufacturing, transportation, utilities, retail, hospitality and so forth.

In time, the benefits of the Balanced Scorecard have been identified by many organizations which have successfully implemented this tool.

Some of the most significant benefits that part of the companies who have successfully implemented the BSC methodology agreed upon are listed as follows:

  • Ensures an integrated strategic planning;
  • Transforms strategy into action and desired behavior;
  • Aligns Key Performance Indicators (KPIs) with strategy at all levels of an organization, not just strategic, but also at the operational and individual level;
  • Improves processes;
  • Provides management with a comprehensive picture of business performance;
  • Facilitates communication and understanding of the strategic goals at all levels of the company;
  • If applied at all levels (not only organizational and operational but also individual), it ensures an effective way of getting a complete understanding of an employee’s work performance;
  • By using balanced measures at the organizational level, and by efficiently sharing the results with superiors and employees, managers can provide the information needed to align employee performance plans with organizational goals;
  • Makes service delivery as efficient and effective as possible, by providing a real call for action;
  • Helps companies to focus on accomplishing their most important strategic objectives and priorities. For instance, with so many competing demands coming from citizens and community groups, local governments might inadvertently redirect attention from top priorities;
  • Helps managers in identifying areas that need improvement and allocating resources properly.

The list does not stop here, as each company, depending on the industry it activates in, can identify many other specific benefits of implementing a Balanced Scorecard methodology.

However, in order to arrive at the benefits of a Balanced Scorecard approach, companies need to understand how to efficiently implement and use the tool (studying best practices, but also keeping in mind that they have to focus on what matters most for them), and to ensure that all employees have a clear picture of the whole performance system.

Another important aspect is to be aware that it is an ongoing process that needs analysis, initiative identification, and successful implementation to keep the business competitive.

How Apple uses the Balanced Scorecard
NAM&R – A Best Practice Example of the BSC in Action

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Comments (12)

  • Dr. Houda Hedi Baccouche

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    The BSC focus on the main 4 dimensions of any organization: Financial, Customer, Internal processes, Learning and growth. If we have successfully implemented a BSC methodology, we can get many benefits such as: ensure an integrated strategic planning, transform objectives into action, align KPI’s with strategic objectives, improve process, clarify the strategic whole picture, facilitate communication and well understanding of strategic goals, efficiently sharing the results and identifying areas that need improvement and allocating resources properly.

    Reply

  • Salah Edien Suleiman Ahmed

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    The balanced scorecard consists of four basic perspectives that contribute to creating a balance in the performance of the organization, which are financial, customers, internal process, learning and growth. In order to maximize the gains from adopting and implementing the balanced scorecard, it is necessary to consolidate and strengthen the leadership’s commitment to it as a planning tool so that it becomes their day to day work, Aligning KPIs with strategy at all levels of the organization, not only the strategy, but also the operational and individual level. Communicate strategic destination to all staff at all levels.

    Reply

  • KAIS LASSOUED

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    It is interesting to point out that BSC aligns Key Performance Indicators (KPIs) with strategy at all levels of an organization, not just strategic, but also at operational and individual level.

    Reply

  • Reem Alqnayah

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    The balanced scorecard consists of four basic perspectives that contribute to creating a balance in the performance of the organization, which are financial, customers, internal process, learning and growth. In order to maximize the gains from adopting and implementing the balanced scorecard, it is necessary to consolidate and strengthen the leadership’s commitment to it as a planning tool so that it becomes their day to day work, Aligning KPIs with strategy at all levels of the organization, not only the strategy, but also the operational and individual level.

    Reply

  • Emad A Al Ghamdi

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    BSC is a great concept to apply
    It presents multiple views and sides to focus on strategy implementation that concentrate different kind of resources; it creates a common understanding and clarity for all concerns parties.
    Moreover, BSC is not allowing us to be unbalanced while integration or slip with one priority over other priorities and aspects.
    Alignment is one of main benefits of using BSC; it is elaborating during progress and a lot of unknown or unfigured gaps become more obvious and easy to bridge
    Emad

    Reply

  • Faisal Aldhafeeri

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    The BSC consists of 4 domains that can benefit the organization to ensure integrated strategic planning, transform objectives into action, align KPI’s with all levels of the organization, improve process, clarify the strategic whole picture, communicate strategic destination to all employees, identify the gaps in any area that need improvement and provide an action plan. BSC is a great concept to apply in our organization and it can bridge the gaps we have.

    Reply

  • Falah Mrgi Alshammari

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    This article explains the benefits of a carefully balanced performance card from all the perspectives on which the balanced performance methodology depends, namely financial, customers, processes, development and growth, and I agree that it is a methodology that requires the cancellation of the balanced performance card at all levels of the organization, especially individuals and the imbalance that affects the effectiveness of the balanced performance card .
    thanks for great article .

    Reply

  • Yahya Ebrahim

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    The BSC covers four main aspects for the organization: financial, customers, internal process, learning and growth. Using the tools of BSC will assist the organization to benefit & get stronger in many areas such as: ensuring an integrated strategic planning, reflecting the strategies on the action and operational level, ensures all different levels of managements are aligned with strategy, facilitates understanding of the set goals, provides a clear idea about the employees performance and helps the management to decide the areas of weaknesses in order to work on them for improvement.

    Reply

  • SALEM harbi

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    BSC is the best module than take you step by step to develop and execute strategy, however it is advance module it requires prior experiance to learn and implement.

    Reply

  • David

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    I totally agree with you.

    Reply

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