“Balanced scorecard” right way in strategic planning

Evaluation of the performance of an organization is essential for its sustainable development. Various measures have been evolved over a period of time for the purpose. However, most of these measures concentrate on only one of the facets of the organization. It is recognized that while an organization might be performing well in one area, it might be ill-performing in some other area. Consequently, balanced sustainable development of the organization becomes a difficult objective. The concept of Balanced Scorecard, developed by Robert Kaplan and David Norton in 1992, tries to overcome this limitation of the traditional techniques of performance evaluation. A Balanced Scorecard brings together, in a single management report, many of the seemingly disparate elements of a company's competitive agenda. It provides an organization the necessary tools for performance measurement and monitoring, directly addressing multiple aspects that support the overall vision and strategy by developing indicators for different factors. Once the use of the Balanced Scorecard filters down in the organization, the lower level employees are able to see the link between what they do and its impact on the company's bottom line goals (e.g., results benchmarks like profit). And the scorecard becomes a management tool where employees receive feedback that is timely enough to impact current or future performance. Unfortunately, the logic lying behind the scorecard approach to performance measurement can go away when measures are put to use in the face of practical contingencies affecting an organization. While there are good reasons to measure multiple dimensions of performance, there are also strong pressures to appraise performance along one dimension: better or worse. The Balanced Scorecard concept has intrinsic executive appeal, though for success the Balanced Scorecard must be viewed as the tip of the improvement iceberg. Processes within the organization are less visible, but equally essential to assure that the scorecard contained the right components and support systems. Adding simply more non-financial measures can result in a loss of organizational focus and a dilution of effort. This paper critically evaluates the concept of Balanced Scorecard as a tool for performance measurement of an organization. Apart from the need for such a technique, the shortcomings are also discussed to understand why adoption of Balanced Scorecard technique is difficult in practice.