A look at some of the benefits of using balanced scorecard methodology.
Why are thousands of businesses and other organisations all around the world using a balanced scorecard methodology?
What are the advantages of having a wider range of performance measures than before, as the balanced scorecard demands?
Balanced scorecards get you where you want to go
The answer to both these lies in Kaplan and Norton’s earliest work on the balanced scorecard. They showed how an aircraft pilot used lots of different instruments on his dashboard, each measuring a different thing, to get his plane to where he wanted to go.
Similarly, businesses can use a balanced scorecard – measuring the organisational equivalent of their engine temperature, wind speed and altitude – to get where they want to go and meet or exceed their overall organisational goals.
Benefits of the balanced scorecard
Kaplan and Norton described the benefits of using the balanced scorecard to be:
Focusing the whole organisation on the few key things needed to create breakthrough performance
A balanced scorecard might show that an organisation is only weak in a couple of areas – but that these areas are impeding its overall success. By focusing everyone in the organisation on improving those areas, overall performance gets better.
Helping to integrate various corporate programmes (like quality and customer service)
Looking at different organisational programmes or units from different perspectives can be a way of getting everyone singing from the same songsheet. If the balanced scorecard shows customer service to be weak, focusing on everybody’s customer service performance behaviours will lead to small improvements in each department or unit; the overall effect will be a bigger improvement in the organisation’s customer service performance across the board.
Breaking down strategic measures to lower levels of the organisation, so managers and employees both know what is required to achieve excellent overall performance
An organisation might have overall goals – to increase productivity by 5 per cent, for example. By breaking down its productivity measures to granular levels of the organisation as part of a balanced scorecard, every member of the organisation will have clear targets that support the overall goals.
Using management techniques based on the balanced scorecard techniques can also have a positive impact on an organisation’s people, as it will recognise strengths and weaknesses of different people in different areas. People can feel valued in ways not recognised by traditional measurement approaches. At the same time, an organisation can use its people’s strengths to their greatest effect while working to improve their areas of weakness.
Balanced scorecard: part of a wider strategy
Simply having a balanced scorecard will not, on its own, deliver improvements, however, and most organisations employ it as part of a wider performance improvement strategy.
The Advanced Performance Institute is a world-leading independent research and advisory organisation specialising in organisational performance. The institute provides expert knowledge, research, consulting and training on concepts like balanced scorecards, performance measurement and corporate performance management.
The aim of the API is to provide today’s performance-focused companies, governments and not-for-profit organisations with insight, advice and services that help them deliver lasting change and superior performance.
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