Two balanced scorecard mistakes and how to solve them

Simangele Mzizi, Fsp Business, 08 Jul. 2014

Tags: balanced scorecard, balanced scorecard mistakes, what’s a balanced scorecard

According to Investopedia, a balanced scorecard is a performance metric used in strategic management to identify and improve various internal functions and their resulting external outcomes.

In other words, a balanced scorecard aims to measure and provide feedback to businesses in order to assist in implementing strategies and objectives.

To get the most from a balanced scorecard approach, keep reading to discover the two mistakes most companies make when they implement a balanced scorecard and how to overcome them.

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Here’s how to solve these two common balanced scorecard mistakes

According to JET Richardson, a firm that helps companies implement business strategies, balanced scorecards fail in organisations for a number of reasons. And it’s mostly because companies make these two mistakes:

Mistake #1: Treating the balanced scorecard effort as a project and not assigning enough resources to its ongoing use

According to the firm, many companies treat the development of the balanced scorecard as a project. They assign a project leader to manage the process of balanced scorecard development and release the resources when the project “ends”.

What’s more… Once the development of the balanced scorecard is complete, they don’t formally assign resources to support the implementation and ongoing management of the balanced scorecard.

So what’s the solution?

Overcome this mistake by doing the following: To ensure the sustainability of the balanced scorecard in your company, resource it sufficiently from the start.

You must have a balanced scorecard manager and an administrator. And you must assign these roles earlier on in the development and the implementation phase.

There’s one more mistake you need to know about so you can avoid making it.

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One more mistake you need to avoid when it comes to a balanced scorecard

Mistake #2: Not clearly linking balanced scorecard indicators with strategic objectives

If your balanced scorecard isn’t grounded or clearly linked to your business strategy, it won’t be helpful.

Irrelevancy translates into balanced scorecard failure, warns the site.

Overcome this mistake by: Clearly linking balanced scorecard indicators with strategic objectives. This will help you maximise the value of the balanced scorecard as a strategy management tool.

There you have it: Make sure you avoid the mistakes we’ve outlined when it comes to your company’s balanced scorecard.

PS: If you need the seven key steps to follow when implementing a strategic balanced scorecard approach to your performance management system, check out the Practical Guide to Human Resources Management.

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