Balanced Scorecard Strategy Map: Why Use This Framework

June 29, 2012 by  Filed under: Management 

Balanced Scorecard is known as the most popular and widely used strategic management framework in a variety of industries and companies, including market leaders and iconic business. So, BSC is the number one tool to be used to manage strategic initiatives, monitor company performance and create strategy maps. Lots of managers do not quite understand why BSC should be used in the first place. On the one hand, this framework seems pretty easy to use and it looks like a variety of other similar systems, such as Six Sigma. On the other hand, Balanced Scorecard is truly unique. Its founders, the great Norton and Kaplan were the first business experts who suggested using nonfinancial indicators in performance evaluation systems. Previously, only financial measures were used to assess performance of companies. However, nonfinancial factors greatly affect financial performance. Thus, BSC combinesfinancial and nonfinancial measures.

Traditionally, Balanced Scorecard consists of four categories: financial, customer, internal business processes, learning and growth. Each category has key performance indicators that should be carefully selected by managers in charge. The main principle of BSC is quite simple. Indicators are measured, managers analyze obtained information and use it in strategic planning and decision-making. For example, the company believes that 20 sales daily is a good result. If current performance is below the desired goal, something needs to be done to fix the problem. Balanced Scorecard offers vast opportunities to gather all important information relevant for strategic management at one place. Benefits of using BSC go as follows:

· Continuous control over company performance at all managerial levels. The beauty of Balanced Scorecard is that possible to create a cascading BSC. It means that company performance at all levels will be measured while top managers will have summarized information.

· Lots of automation tools and software available on the online market. It is possible to automate the process of gathering and analyzing information. Sure, it is important to have qualified personnel who will be in charge of the Balanced Scorecard projects. Generally, it is recommended to undergo trainings for a few managers in charge, while the majority of employees have to possess at least elementary knowledge of this strategic management framework.

· Possibility to constantly monitor deviations from a strategy. As salon as company performance goes down balancing scorecard will signal it. Moreover, some indicators can send alerts even before major problems occur. In other words, it is possible to solve problems using BSC, before those problems evolve into financial catastrophes.

· Normally, Balanced Scorecard becomes a part of company everyday routine, in the majority of cases — its philosophy. It’s not a secret that many successful companies that became icons in the business world flourished thanks to BSC.

· It is relatively easy to get a solid education on BSC, as there are lots of case studies, templates and online courses made available from respectable companies having a profound experience in implementation and maintenance of this system.

· BSC does help reach business goals, although it does not do it on autopilot.

Want to know how to create an effective balanced scorecard strategy map without paying huge money to consultants? We have the solutions you will like!

Article Source:
http://EzineArticles.com/?expert=Sam_Miller

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