The Balance Scorecard, By Robert S. Kaplan And David P. Norton

2325 Words10 Pages
As suggested by the biggest proponents of the Balance Scorecard, Robert S. Kaplan and David P. Norton, “What you measure is what you get. Senior executives understand that their organization’s measurement system strongly affects the behavior of managers and employees.” Hence, after a year-long research with many companies, they devised the Balance Scorecard (BSC) measure which revolutionized the traditional thinking about performance measures. By looking beyond the traditional financial performance measures, the managers were able to better understand the strategy, positioning and performance of their company. The underlying reason behind getting this comprehensive view of the business was BSC approach focused on predicting future…show more content…
After analyzing and learning more about the BSC approach, the proponents of this concept, have laid out the following key benefits of adopting and implementing BSC within a firm. • Obtain balanced view of firm’s performance • Overcoming challenges • Link short-term actions to long-term objectives • Acts as the personal scorecard • Helps ensure right measures are tracked • Points out missing links • Helps communicate the strategy • Promotes forward-looking organization On the flip side, the critics of the BSC approach have listed the following limitations which the managers need to be aware of when making the decision to implement BSC within their organization. • Lack of validation • Lack of effective data collection • Lack of process improvement methods • Lack of formal evaluation structure • High emphasis on internal focus • Makes organizations less dynamic • Time consuming • Lack of integration between the top-levels and operational measures In the remainder of the paper, we dig further into each of the pros and cons listed above that have been retrieved by the proponents and critics of the BSC approach. Pros of the Balance Scorecard Approach Obtain balanced view of company’s performance The balanced scorecard supplements the traditional financial perspective with performance measurement criteria from three other perspectives- customer, internal business processes and learning and growth. Looking at each of the four aspects of the
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