Most common BSC mistakes in evaluation of business efficiency
Balanced scorecard as a strategic managerial tool has received a large portion of criticism. In fact, that has nothing to do with the way this system works. Most critics of this system are top managers and business owners who had a negative experience of using balanced scorecard. Mistakes made during implementation stages of BSC are very common and typical.
4 BSC perspectives
Balanced scorecard doesn’t work as a magic solution for all problems inside and outside the company. Moreover, if not properly applied balanced scorecard can even harm the company and become a waste of time, effort and money. Critics of balanced scorecard may claim that the system becomes very expensive and complex. Also they say that the results were not achieved. Well, they have their own reasons to say so. But let’s analyze these mistakes and think whether or not they could have been avoided.
Most common BSC mistakes
Mistake number one. No comprehensive strategy. Balanced scorecard transfers strategy into action. So, if the company has no strategy or its strategy is vague and incomprehensive, then what should be transferred into action? Strategy development is the initial stage of BSC implementation. Moreover, it is important to differentiate strategic goals, tactical objectives and short-term tasks. Strategic goals and strategic problems are problems that have not occurred yet. Strategic vision is the vision of future.
Mistake number two. Lack of IT solutions to collect and analyze information. Distorted or incomplete information will make managers adopt wrong decisions. Untimely submission of information is also a common problem. Companies are to react to changes in the external environment with internal changes as soon as possible. If the information comes too late it will be too late to react.
Mistake number three. Lack of competent and educated staff to implement balanced scorecard. As a rule, 80% of managers do not the dissipating strategic planning or have no idea what the company strategy is, say apart of ordinary employees who have their own goals and tasks. That’s why, it is important to have people who will be responsible for collection and analysis of information as well as decision-making.
Mistake number four. Wrong choice of key performance indicators. Even in the company has strategy, well educated staff and necessary resources BSC may fail if the wrong indicators are chosen. Company management should focus on most important indicators to put strategy into action.
A mistake number five. Desire to achieve results as soon as possible. Balance scorecard works in the long-term. Please, remember that.
Tags: bsc errors, bsc implementation, bsc mistakes
