While looking for efficient strategic management frameworks, many leading companies opt for Balanced Scorecard. This system is proven to be very effective and is suitable for implementing in various industries. In other words, Balanced Scorecard (BSC) is a powerful business management tool which helps monitor employee performance, manage strategic initiatives and create strategy maps. Though this system is used worldwide, not all managers understand the reasons of its popularity. Balanced Scorecard system offers unique features and at the same time is very easy to use. These are probably the main reasons of its popularity.
The BSC was created by Norton and Kaplan, who were the first to suggest using nonfinancial indicators for business performance evaluation. Previously, performance of a company was assessed only by financial measures. Later it was proven that financial performance depends on various non financial factors. Thus, Norton and Kaplan created a unique management framework that combines both financial and nonfinancial indicators.
This performance evaluation system includes four main categories: internal business process, financial, customer, learning and growth. Managers responsible for implementing the system should carefully select key performance indicators (KPIs) which help assess each category. The whole process is quite simple: KPIs are measured and analyzed by managers in charge. The received information is then used for strategic planning and making business related decisions.
Key performance indicators help evaluate current business performance. If the performance does not reach the targeted goals a manager or company owner should look for ways on how to solve this problem. Business management framework gives different opportunities for gathering information necessary for proper business management.
Among the main benefits of using BSC are:
Superior control over enterprise performance at all targeted areas. This means, a company's performance is controlled at all levels. The gathered information allows managers to make adequate business-related decisions.
Implementation of automation tools. The process of gathering and analyzing information is completely automated. Thus, all measurements are always accurate. However, to avail all advantages of using this system it is crucial to have an experienced person who will be responsible for the projects. To achieve better results managers at charge should undergo special trainings that will give a better understanding of this strategic management framework.
Possibility to discover deviations at early stages. The system detects all deviations on the company strategy and consequently helps avoid financial losses. Besides, most indicators help detect problems before they occur. This means, this management framework helps avoid numerous problems and huge financial losses.
It is not a secret that many notable companies have multiplied their revenue due to the implementation of Balanced Scorecard system. Once this framework becomes an integral element of your company's daily routine, you will discover unique methods for the development of your enterprise.
Getting a decent education on scorecard is not difficult. The Internet is crammed with online courses, templates and case studies that will help you get the most of this strategic management framework. Balanced Scorecard will help achieve your goals only if you understand the basics of its implementation.
