Balanced Scorecard - the Pros and the Cons of BSC

Updated on January 8, 2018
tamarawilhite profile image

Tamara Wilhite is a technical writer, industrial engineer, mother of 2, and a published sci-fi and horror author.

Introduction

Balanced Scorecard includes financial, customer, internal perspectives and "learn and innovate". Balanced Scorecard (BSC) offers a straightforward method of linking collected metrics to stated company goals. There are advantages and disadvantages of using the Balanced Scorecard to define business goals.

Balanced Scorecards look at far more than process efficiencies or product defect rates.
Balanced Scorecards look at far more than process efficiencies or product defect rates. | Source

Advantages of Balanced Scorecard

  • Balanced Scorecard presents organizational goals in a single page chart broken down into relatable areas.
  • Balanced Scorecard allows companies to bridge the gap between mission statement or over-arching goals and how day to day activities support the company's mission or objectives. A BSC goal of pleasing the customer can be tied to improving technical support performance according to the Service Level Agreement or exceeding the SLA.
  • BSC raises innovation and process improvement methods such as six sigma and lean manufacturing to a corporate goal. It also ensures that voice of the customer is equally important.
  • Balanced Scorecard does not exclude other methods of business reporting or process improvement. Six sigma projects naturally fall under the "learn and innovate" section. Financial standards like Sarbanes Oxley are simply used by the financial department when meeting financial scorecard goals or implemented by the financial department to meet a financial scorecard goal.
  • Balanced Scorecards can provide a visual means of demonstrating how different goals are related. Increased sales improve the profit or sales goals under the financial section. Improved customer service meets the “voice of the customer” goal.
  • Balanced Scorecards are straightforward enough to be used by many managers after gaining familiarity with the concept. Advanced training isn’t required to implement a simple version of BSC.

Disadvantages of Balanced Scorecard

  • Balanced Scorecard performance is subjective. Unlike quality levels, it cannot be quantified except by surveys or management opinion. Mandating a specific number of training hours per year to meet an “learn and innovate” doesn’t necessarily mean all employees take courses that help them in their jobs or that attending classes to fill in the quota is better than working on the assembly line. Demanding high employee morale can hurt managers, since morale is not always a manager’s purview. Setting a goal of high morale along with lay offs to save money is counter-productive.
  • Balanced Scorecard does not include direct financial analysis of economic value or risk management. Goal selection under Balanced Scorecard does not automatically include opportunity cost calculations.
  • Because Balanced Scorecard can add a new type of reporting without necessarily improving quality or financial numbers, it can seem to be an additional set of non-value-added reporting or, worse, a distraction from achieving actual goals.
  • Overly abstract Balanced Scorecard goals are easy to reach but hard to quantify.
  • When a company is failing to meet its Balanced Scorecard goals, the goals may be re-interpreted to the current state of affairs to meet success or avoid failure. Altering the acceptance criteria for a good balanced scorecard is easier than altering the acceptance criteria for mechanical parts and hence the reject rate.

Questions & Answers

  • Who will benefit most from the Balanced Scorecard?

    Any business trying to juggle multiple metrics.

Comments

Submit a Comment

  • tamarawilhite profile imageAUTHOR

    Tamara Wilhite 

    6 years ago from Fort Worth, Texas

    The irony of goal setting by managers is ensuring they meet the goals they have - regardless of financial impact, the drain on morale or simply adjusting goals to say they met the latest interpretation of the official mandated goals.

  • LeanMan profile image

    Tony 

    6 years ago from At the Gemba

    You should always make your objectives measurable, never accept a subjective measurement! Balance scorecards are fine if implemented correctly but too many managers see it as just another initiative and the disconnect still exists between what they do and the overall goals of the company.

working

This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, toughnickel.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://toughnickel.com/privacy-policy#gdpr

Show Details
Necessary
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
Features
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Marketing
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Statistics
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)