BUSINESS

Balanced Scorecard

Balanced Scorecard

Introduction

Balanced Scorecard and Vertical alignment chart are the tools used by the HR to fit into organizational strategies. Both the approaches are useful to investigate the factors including the internal and to some extent external forces, influencing the organizations. The systems are implemented to account all the inefficiencies and take remedial steps to overcome the issues (Budde, 2007).

While balanced scorecards have been widely appreciated for the comprehensive performance measure standards that they provides, they have also been criticized for their practicality and applicability in various natures of organizations. Arguments against balanced scorecards range from their application limited ho monetary and quantifiable key performance indicators to their obsolescence in organizations that either have qualitative performance indicators or are driven by mission and values rather than monetary growth.

Balanced Scorecard

In the past, performance of organization used to get measured against short-term financial goals. Due to increased business operations such systems could not serve the purpose of companies. The companies' increased business units resulted in doubling the responsibility of organizations mangers toward its stakeholders. To align with the goal of stakeholders, companies ensure to create strategy that must be translated in to desirable actions (Chen, & Jones, 2009).

Kaplan and Norton have introduced the idea of Balanced Scorecard concept and methodology, which gained worldwide popularity among scientist and managers. The Balanced Scorecard is a tool to bridge the gap between developing of strategy and its implementation by creating a linkage between four management processes (Ahn, pp. 441-461).

Balanced Scorecard is useful to:

explain and interpret vision and strategy;

Communicate and link strategic objectives and measures;

Plan, set targets, and align strategic initiatives.

Strengths and Weaknesses of Balanced Scorecard

Balanced Scorecard is a useful way to identify internal and external inefficiencies creating hindrances in company processes. It not only helps in identifying the specific areas where disturbance occur but it also identifies the linkage between various business aspects. At individual level it helps individual employees to realize company goals and be able to overcome the shortcomings in achieving those goals. It helps employees to understand the importance of their job and the impact of their contribution.

The weakness of Balanced Scorecard is that it takes lot of time and effort to identify the key aspects of business units. Not only identifying, but it takes time and accuracy to create a linkage between all the business units. The tool lacks assessment of suppliers' influences on various businesses. Secondly it lacks the as the impact of supplier activities and environmental activities affecting various aspects of business units (Ahn, pp. 441-461).

Another major weakness of the Balanced Scorecard, which also remains a major purpose of this paper, is the range of its applicability in different forms of organization. The system given by Kaplan and Norton had received criticism for not being universally applicable and is only effective in organizations with a particular nature and set of mission, goals and strategies. This particular problem will be discussed in detail later in the ...