Applying a Balance Scorecard
APPLYING A BALANCE SCORECARD
Balance Scorecard can be identify has a general idea that measures an organisation activities in terms of its vision and strategies to provide insight and give managers a comprehensive approach between its strategic values divers and the strategic outcome, which allows executives managers to view the performance of the organisation. Strategic management approach was developed, in early 1990s by Dr. Robert Kaplan and Dr. David Norton, the scorecard was evolved to allows business clarify its vision in other to implement them into action.
However, there have been number of reasons why this has not been a full success story, this is because many organisations face a dilemma on how to implement and convey this into a finished product of reality to end users. This therefore has given poor result to the execution of strategic management with compounding fact that organisation found it difficult to implement.
According to the case study source by: understanding performance, financial times 06/10/2004 there are various reasons why company have found it difficult to implement the scorecard, the last research done by Hackett Group showed that 82 per cent of their 2700 strong database of companies claim to use scorecards and only 27 per cent are mature, which concludes that most companies are having significant difficulty taking balance scorecard from the concept to reality.
This also explains that most companies objectives are not linked to their strategy, this however will be difficult for organisation to use the scorecard, also financial executive look on the concept as an expensive and useless substitute for traditional paper reports. Importantly most companies get very little value out of the scorecard because they havent followed the basic rules that make them effective; reason for this difficulty is the number of measures normally included in the scorecard.
Based on a US report the average use of the scorecard is 132 per month of these 80 per cent are internal, historical financial and operating data which shows that management will be restricted focus on 20 per cent. Therefore less time is sent on the managing strategy and more time spent on tactical decision.
While using the scorecard organisation found out that resource such as time, energy and money are often times not allocated to things that are critical to the organisation