New Balanced Scorecard

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Is it difficult to create a new Balanced Scorecard? What are the most important implementation steps? How to avoid most common pitfalls when introducing BSC to the company? Find answers to these questions in this article. Check additional information about new balanced scorecard.

Many companies are very light minded towards introduction of Balanced Scorecard. Top managers view Balanced Scorecard just as another management system. This is not so. BSC differs from similar performance evaluation and strategic management tools. If other control and management systems can function without participation of the majority of employees, Balanced Scorecard requires focus of the entire personnel. The company should learn to live with Balanced Scorecard rather than use it. Balanced Scorecard will function successfully only in case it becomes an inseparable part of everyday routine for most employees. BSC is philosophy. Thus, implementation process takes quite a long time. In this article we'll talk about how to create a new balance scorecard, most typical mistakes and pitfalls to avoid.

The initial step of implementing Balanced Scorecard is development of a comprehensive, ambitious but realistic strategy. Without having clear strategic goals there is no point in use of Balanced Scorecard. Sure, BSC can be used only for performance evaluation purposes. However, this is not what Balanced Scorecard has been designed for. Strategic goals should cover global plans, future prospects, mission and values of the company. Strategy is not about making quick money. Strategy is the protection against future problems which must be solved even before they evolve into disasters.

Once strategy is developed, it is high time to start building Balanced Scorecard. Where to start? One should remember that BSC consists of four categories: financial, customer, internal business processes, learning and growth. These four categories cover critical success factors for a business. Of course they differ from business to business, and that is why it is important to find the right key performance indicators within the four categories. Key performance indicators are measures that indicate progress or regress of the company on the way to implement the previously adopted strategic goals.

You can find various sets of key performance indicators for almost every business and industry. Keep in mind that there are no universal sets that will suit needs of every individual business. Each key performance indicator needs to be individually picked out and tested. Focus on most important key performance indicators is essential. For example, hiring cost per employee is more important than average daylight per square meter in office. Sure, every key performance indicator is important in its own way, however on least some of them really indicate progress in strategic goals implementation.

Having finished the process of selecting key performance indicators, top managers and those responsible for Balanced Scorecard implementation should proceed to testing of the system and collecting information. The company should have an effective and reliable system to collect information and analyze data. If BSC receives late information or distorted data it will not help top managers implement strategy. Even if the right indicators a chosen, they require the right values. Top management should decide on who and when will up-date indicators and collect information otherwise Balanced Scorecard will become as said waste of time. Besides, it is necessary to conduct trainings and introduction sessions for the majority of the personnel. People need to understand why the use Balanced Scorecard and what benefits they will get personally.

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Balanced Scorecard Toolkit includes step-by-step manuals, documents, presentations, check lists designed to help business professionals with successful development and implementation of Balanced Scorecard. Learn more about BSC Toolkit.