Why is the balanced scorecard approach important? The short answer is because it is absolutely vital to the success of any business.
Balanced Scorecard in Internal analysis
Having a balanced scorecard is very important for a business to measure their success and to improve upon their failures. If a business wants to find ways they can succeed, they can look at their scorecards. They will tell a business where they need to improve. This way the business can implement training strategies to help both employees and management staff improve. The scorecards will show where the improvements need to be made and it will also show the successes of the business. Scorecards can be kept on each employee and then their performance can be measured against others. This will show the employee the areas that they have made improvement on and the areas that they still need to improve on.
Balanced Scorecard in Financial analysis
On the financial perspective, the balanced scorecard makes the company conscious of their financial status. The scorecard, again through the four categories, will measure the financial capabilities of the company. Their capabilities to spend, to gain money, and to sustain their business with their existing funds make this perspective important. It is very important for a company to keep track of their financial data, and at the same time, create new ways to earn profit. Since the balanced scorecard concerns strategy, the financial perspective lets the company see if the budget they have at hand will allow them to execute a certain strategy.
Balanced Scorecard in Customer analysis
Why balanced scorecard is so important to a business is because the scorecard will highlight the weaknesses within the business and all businesses need to find ways that they can improve in their relations with customers. Customers are vital to a business as they are basically the businesses bread and butter. Without customers, a business is going to fail. Businesses need to spend a lot of time on improving customer service because this has been a sore point for a lot of businesses to date.
Balanced Scorecard in Learning and growth analysis
Why balanced scorecard is so important to a business is because it shows that everyone in the business is committed to succeeding. A business is only as good as its managers and employees. Managers need to be able to help an employee understand where they need to improve and they need to be able to provide further training to an employee that needs it. There will be some employees that will excel over others. Perhaps pairing up these employees with employees that need a little extra help would be a good idea. It is up to the manager to provide solutions for how to improve the performance of the employees.
It is important because it measures that success and failures of the employees of the business and it allows for the business to provide further training to employees who need it. It is important for a business to measure who is performing well and where improvements can be made. It is always vital to a business to improve where they can, especially if they want to succeed in the fast-paced internet world of today.
Benefits of the balanced scorecard approach
- Provides a comprehensive view of the whole organization
- It drives changes in organizational behavior/ performance
- It gets everyone focused and aligned to the organization’s strategy
- People will use it & support it because people support what they help build
- It allows effective communication of strategy throughout the organization
- It captures the value of business both tangible & intangible
- It adds discipline and structure to the day-to-day organiza- tional operations
- It is very ﬂexible and adaptable