In the current time of globalization and digital era, each and every type of organizations are facing a lot of business issues due to tight competition in the market, changes in the technology and globalization. These factors are forcing the business firms to adopt new methods, tools and technology in order to conduct the business functions successfully, gain competitive advantages and reduce costs. For example, Balanced score card is one of the most common and useful approach this is used by a company in order to improve business performance, reduce cost and compete in the market. This method improves all the business areas of a company and brings innovation and development within the current business process and systems (Blokdijk, 2008). Basically, this research would discuss the concepts, roles and significance of a balance score card approach in enhancing the overall performance of a company. Moreover, it would also discuss the key advantages and disadvantages of implementing a BSC approach at the workplace. Additionally, the implementation issues as well as implementation process of BSC would be discussed in order to fulfill the objectives of the paper. Finally, this research study recommends some strategies to overcome the challenges associated with the implementation of BSC.
Basically, a BSC can be defined as innovative and strategic management system/tools that help the business firms in attaining their core and strategic objectives effectively. In addition to this, BSC is also play a lot of significant role in the overall success and growth of a company. For example, this BSC is allows a company to analyze their internal and external business environment and identify negative factors those are affecting the total success of the company. Moreover, a BSC is also guides the business firms that they should understand their business operations, functions and success from the four major perspectives such as: Financial, Customer/Stakeholder, Internal Process and Organizational Capacity (Smith, 2010).
Along with this, it should also be noted down that, this management tool is provides strategic direction to a company in order to improve the current and future business performance. For example, it provides opportunities to the companies to reduce intangible uncertainties. Moreover, it is also analyzed that, BSC is important for each and every types of business firms in order to attain competitive scope. For case, BSC can be used as a business framework by a company or its management not only to improve organizational performance but also track and manage different business and operational policies, strategies and method. Along with this, it is also important to know that, with the effective use of BSC, a company could be able to analyze and access various internal functions in an innovative manner that is important to improve organizational performance (Burney and Paul, 2008).
Effectiveness of Balance Score Card
It is true that, a balance score card is more effective, valuable and significant tool for the business firms that bring innovation within the internal environment of a company. In addition to this, with the help of BSC, a company can not only attain competitive advantages but also introduce various business strategies, methods and innovative operating process. This tool is also allows the companies to monitor organizational performance through the different views and introduce new objectives by monitoring existing. For example, all these measures provide a fast and comprehensive view to the top management of the company about the organization’s current performance (Wisner, 2011). It also includes both results and process. Additionally, BSC assists the companies to focus on the strategic agenda and bring innovation within the current business process, strategies and operations. On the other hand, it is also important to know that, a BSC is also more effective tool because it indicates overall performance of each and every business unit and department separately and successfully. By collecting this information, the management of the company could develop balance among the long and short term actions and objectives. At the same time, a balance score card is also bring innovation, accountability, creditability, flexibility within the business process and operational methods. Hence, it can be said that, a BSC is more important, effective and significant to attain the strategic vision, mission and objectives of a company (Withee, 2010).
In the current time, a balance score card approach is used as a management accounting technique by the business firms in order to conduct and perform the functions related the management accounting. For example, business firms are using this as a management accounting method in order to support different management functions such as: Translating the Vision, Business Planning, Communicating & Linking and Feedback and Learning. For example, with the help of BSC, a company can create and develop accounting strategies and method that could be used to bring innovation and improvements in the management accounting transactions (Rampersad, 2006). Moreover, a company could make long and short term plan by considering and using the applications of BSC. For example, it allows the accountants to make different types of budget for the total success. In addition to this, business firms can make plans for the future by accessing the different areas of business. Along with this, it is also provide different significant opportunities to the firms to utilize capital resources effectively and properly (Chai, 2009).
Implementation and other Issues of Balance Score Card
It is analyzed that, when a company execute and implement a balance score card approach within the organization, several types of implementation and other issues are faced that negatively affect the success of the company in the current and future. For example, taking decision regarding the use of BSC is challenging and complicated decision because it may affect the employees and company’s performance directly or indirectly. In addition to this, implementation of a BSC is also require great efforts, more time and high cost that negatively influence the profitability and market share of the company. For example, if a company has decided to implement BSC at the workplace, it has to invest billions of dollars in the expectation and implementation of BSC. So, it would be more costly and time consuming decision (Demirkan, Spohrer and Krishna, 2011).
At the same time, a company may also face the issues related to lack of Efficient Data Collection & Reporting, security, cyber crime and others. Additionally, employee Resistance and Incomplete Information related issues could be faced by the company. For example, the new system would bring a direct change not only in the business process and strategies but also change in the attitude and behavior of employees. This may create confusion, miscommunication and de-motivation among the different level of managers or employees. Moreover, the implementation process would also require financial support from the company, management support for the decision, and too much internet focus. Additionally, the company would also have to hire specific people with specific knowledge to understand the balance score card within the company and this would directly increase the costs for the company. At the same time, several issues may also be encountered by the company due to the implementation of BSC such as: lack of communication, planning, coordination, proper support, lack of IT team, lack of knowledge etc (Friedrichs, 2011).
Implementing balance Score Card & Appropriate Timeline Required
The implementation process is more challenging task for the companies because they have to consider several factors before the execution in the company. Moreover, several techniques, methods and ways are also used to develop and implement a balance score card. The following are the key and major steps that should be followed in order to effectively and successfully implement the balance scorecard (Niven, 2011).
Assessing the mission, vision, objectives and goal of the organization: As per this step, first the organizational vision, mission, goals, objectives should be defined and explained effectively. This would help the company in creating a picture of the future that company wants to create (Mather, 2005).
Defining the Business Strategy: In the next step, a company would needs to create a business strategy for the BSC. This strategy would allow the company to address the major challenges associate with the BSC and provide possible methods to address such issues more effectively. For example, the company would also need to address the current issues that have impact on the success of the company. Moreover, the management would have to identify the major causes behind the business challenges and have to adopt methods to deal with these. This step would also required to use various methods and techniques such as: SWOT, gap analysis, risk assessment, etc (Grembergen, 2004).
Concentrate on Client Necessity: According to this step, the management of the company should use a specific strategy in order to analyze the issues as per the needs of customers. It would help the company in creating the value, costs, and quality of the items.
Focusing on Internal business process: In this step, a company should effectively focus on internal business and adjust the goals/objectives and tasks with the strategic plan of the company. In the same way, a company should adopt specific practices, activities and exercises.
Strategy Map: In this stage, the top management of the company would use strategic mapping in order to evaluate that how the strategic plan would help the company in attaining organizational objectives. Additionally, the management would also create strategy, makes plan and develop specific strategy to attain the organizational objectives (Khosrowpour, 2006).
Assigning initiatives and implementing process: In this step of BSC, the company and its top management should provide strategic guidelines to their organizational people or employees about their tasks, functions, roles and responsibilities. It means the management would have to develop a clear understanding about the roles, significance and importance of BSC. This would help the company to make the process more effective and successful (Wrembel and Koncilia, 2007).
Cascade the scorecard: It is the step by which the company would require to adopt and use different strategies, tools and procedures towards the organizational objectives. Moreover, both internal and external environment would be access to attain the key objectives.
Evaluate the scorecard and the process: In this step the company would adopt all the four key areas to measure and tract the performance of the organizations. This step would also allows the company to identify the major factors that were affecting the success of the company in the market (Murby, and Gould, 2005).
On the basis of above discussion, it can be concluded and recommended that, it is important and essential for the management of company to create and develop specific methods in order to effectively and successfully execute the Balance score card within the company. Moreover, it is also important to link BSC with the organizational business operations and functions. On the other hand, the management or company should also arrange the training and development programs so that the employees could be able to understand the advantages of BSC. At the same time, the management should also try to develop relationships, and trust with their employees in order to avoid future challenges (Kanji, 2012).
Moreover, the company should also consider and involve their employees and staff in the decision making process in order to improve understanding about the new system within the company. Along with this, a company as well as its management must also consider all the factors related to BSC before implementing the new system. For example, the company should consider the cost, time and impact of BSC. It means they should take ideas about the implementation cost of BSC. Hence, all these strategies should be used in order to avoid the implementation issues effectively (Mather, 2005).
Blokdijk, G. (2008). Balanced Scorecard 100 Success Secrets, 100 Most Asked Questions on Approach, Development, Management, Measures, Performance and Strategy. USA: Lulu.com.
Burney, L. and Paul, A. (2008). Financial Services Corporation: Implementing an HR balanced scorecard. IMA Educational Case Journal, 1(2), pp.1-10.
Chai, N. (2009). Sustainability Performance Evaluation System in Government: A Balanced Scorecard Approach Towards Sustainable Development. USA: Springer.
Demirkan, H., Spohrer, J.C. and Krishna, V. (2011). Service Systems Implementation. USA: Springer.
Friedrichs, C. (2011). An analysis how the Balanced Score Card approach could enhance the personal contentedness considering the change in the society from a Work/Life balance to a multi-duty-life of individuals in consulting companies in Germany. USA: Diplomarbeiten Agentur.
Grembergen, W.V. (2004). Strategies for Information Technology Governance. UK: Idea Group Inc (IGI).
Kanji, G.K. (2012). Measuring Business Excellence. UK: Routledge.
Khosrowpour, M. (2006). Emerging Trends and Challenges in Information Technology Management: 2006 Information Resources Management Association International Conference, Washington, DC, USA, May 21-24, 2006. UK: Idea Group Inc (IGI).
Mather, D. (2005). The Maintenance Scorecard: Creating Strategic Advantage. USA: Industrial Press Inc.
Murby, L. and Gould, S. (2005). Effective Performance Management with the Balanced Scorecard: Technical Report. Chartered Institute of Management Accountants. Retrieved from: gt_with_Balanced_Scd_July_2005.pdf
Niven, P.R. (2011). Balanced Scorecard: Step-by-Step for Government and Nonprofit Agencies (2nd ed.). Canada: John Wiley & Sons.
Rampersad, H.K. (2006). Personal Balanced Scorecard: The Way to Individual Happiness, Personal Integrity, and Organizational Effectiveness. USA: IAP.
Smith, R.F. (2010). Business Process Management and the Balanced Scorecard: Using Processes as Strategic Drivers. Canada: John Wiley & Sons.
Wisner, J.D. (2011). Principles of Supply Chain Management: A Balanced Approach. USA: Cengage Learning.
Withee, K. (2010). Microsoft Business Intelligence For Dummies. USA: John Wiley & Sons.
Wrembel, R. and Koncilia, C. (2007). Data Warehouses And OLAP: Concepts, ArchitecturesAnd Solutions. UK: Idea Group Inc (IGI).