During the implementation of the BSC has become a broad management system. Many see in it the framework structure of the entire management process. It is especially convenient to use the BSC as a tool for strategic communication and specialization in cases where the strategy is vague and politically motivated. Especially often this happens in public administration and non-profit organizations.
In addition, the use of BSC can serve as a motivational stimulus. When the company does not provide incentives for achieving intermediate goals, an assessment of the results achieved using BSC will force people to pay attention to their achievement.
In relation to systems traditionally recommended for company management, BSC has the following advantages:
orientation not only to the past, but also to the future;
possibility of accounting for high-quality information;
strategic orientation as starting points;
focusing on control of bottlenecks, rather than on available information;
acceleration of necessary changes.
In general, the advantages of the Balanced Scorecard system, from the point of view of practice, are quite significant, among them:
linking operational and strategic management loops through a multidimensional and practical approach;
an all-encompassing system for carrying out a company’s top-down strategy across all hierarchical levels through four main aspects (consumer, business, innovation and financial);
the need to define units of measurement and the availability of a strategic map make the discussions on the implementation of the strategy more objective and constructive;
The BSC enables broad, training-oriented communications across all levels of the enterprise;
The new concept is well aligned with the controlling system and management methods aimed at increasing the value of the enterprise.
In fairness it should be noted that the BSC, like other management concepts, has both advantages and weak points. Some practice managers refer to BSC as a much more complex system than it seems at first glance, and highlight such problems:
attention focuses excessively on indicator-based management, “soft” factors are ignored;
it is difficult to ensure the uniqueness of some of the purpose-to-do bundles and the strategic map;
some measurement problems are not always solved;
The concept does not provide for conflict resolution mechanisms.
Nevertheless, the system has proven its effectiveness in managing the processes of increasing the value of an enterprise. Highly aggregated indicators that are commonly used to assess the results of operations are difficult to understand at the operational level and cannot be used in specific activities. BSC allows to transmit these indicators to lower levels in the form of understandable terms and specific tasks.
The system is also used to inform external consumers. Companies are beginning to make non-monetary indicators in statements intended for shareholders and potential investors as indicators of their financial capabilities. For example, Deutsche Bank includes BSC figures in reports since 1998.
Also, the system’s invaluable contribution to “increasing relevance”, that is, ensuring proper attention to priority areas, using appropriate incentives and methodology. For example, the implementation of the motto “Customer in the center of attention” using the BSC really provides a significant increase in the quality of customer service.
Using the system allows you to reduce the time usually spent on the development of budgets, and reallocate this time to perform other tasks. And although, as noted, BSC was developed as a methodology for implementing a ready-made strategy, practice shows that about half of the companies use the system also to revise the existing strategy.
According to a study by the Institute of Management Accounts, in organizations using BSC, management assesses the effectiveness of the management system of their company almost a point higher on a five-point scale than the leaders of other organizations.
Summing up, it should be emphasized that the Balanced Scorecard creates a long-term balance in the company. This is a balance between short and long-term goals, that is, between what is important for the organization today and what is necessary to achieve tomorrow. The system also creates a balance between the internal and external environment, a balance between the interests of employees and shareholders. There is a balance between financial and non-financial indicators, as well as between different levels of the organization, that is, a balance between the interests of management and all employees.
Balanced Scorecard allows organizations to reach their full potential. Outstanding results when using the system were achieved not as a result of the use of new strategies by new people based on new processes, but due to the fact that the whole organization was focused onimplementation of the strategy. However, it is necessary to understand that BSC does not replace a good formalized strategy, therefore, when developing a BSC for your company, invite a specialist in strategy development to the team. The problem of high-quality implementation of the strategy today is more relevant than ever before. Organizations are facing uncertainty in stock markets, an increasing pace of change and expectations. For many companies, such changes threaten an increase in chaos, so it is very important to be among those who can focus on key factors and implement their strategy, which means to achieve success.