Strategic management is a necessary part of any organization’s success, but adding the balanced scorecard can allow businesses to see exactly where they are going, and what needs to be changed to meet their long-term goals.
What is the Balanced Scorecard?
The balanced scorecard (BSC) is a tool that allows managers to better follow and understand not only how their staff is performing, but also how that performance relates to the overall growth of the organization. The information gained from balanced scorecard provides deeper insight into how the current actions within the company affect the long term goals of strategic management, allowing managers to make the changes needed to ensure that the organization’s goals are met.
Four Processes of Balanced Scorecard
The balanced scorecard includes four processes that integrate the goals of strategic management with the actions of the employees, rather than strictly focusing on financial measures to gauge performance.
- Translating the Vision
- Communication and Linking
- Learning and Feedback
These processes, when incorporated with current strategic management practices, allow managers to provide the guidance and information needed by their employees to better meet long-term goals.
Translating the Vision
Translating the vision brings the goals and strategies of the organization to the employees in a manner that helps them better understand how their actions affect the overall success of the company. This is done by formulating objectives at the employee level that will help them understand what is needed for long-term success.
Communication and Linking
Strategic planning requires communication, and this balanced scorecard process helps managers tie their strategic goals in with individual and departmental objectives. This integration ensures that all employees within an organization have a better understanding of strategic goals, and how their abilities to meet the objectives line up with them.
Business planning allows managers to align the financial initiatives of the company with employee level goals. The balanced scorecard goals help managers make better allocation and prioritizing decisions, enabling them to see exactly which initiatives are necessary for meeting organizational goals.
Learning and Feedback
The fourth aspect of balanced scorecard incorporates reviews and feedback from customers, internal processes, and growth. These perspectives assist managers in the performance evaluation of current strategies, helping them understand which objectives require modification.
These balanced scorecard processes promote better results from the strategic management goals, driving the success of the organization.