What is a Balanced Scorecard (BSC)? In fact, BSC is a strategic planning and management system that is utilized by the organization in order to communicate goals, align daily duties, prioritize projects, products and services, and measure and monitor progress towards targets. Generally, BSC is used in business and industry, government, as well as non-profit organizations worldwide. The BSC will provide information about companies when viewing their objectives. Hence, the organizations will use the balanced scorecard to develop strategic objectives.
By utilizing BSC in the right way, managers can monitor employee performance and develop an action plan when the organization able to track the success of the organization in terms of finances. For instance, BSC can show the number of clients that are lost by the company, so management can easily monitor the performance of the sales team. The management will also know the results are positive or even negative. Thus, BSC provides a powerful framework for planning and implementing goals.
Moreover, BSC will improve strategy communication by having a one-page picture of strategy which enables the organizations to communicate the strategy internally and externally. This can facilitate the understanding of strategy and engage staff and external stakeholders in delivering and reviewing the strategy. While there is good communication, the companies can solve some issues on important aspects such as customer satisfaction, employee skills, and internal business process.
Furthermore, BSC will help the companies to design performance indicators for their strategic objectives. Thus, the companies can measure the employee performance accurately. Based on some researches, organizations that are applying the BSC approach will report higher quality management information and better decision-making.
Lastly, BSC can also be utilized to guide the design of performance reports and dashboards. This will help the organizations to ensure that management reporting will focus on vital strategic issues and help the organizations to monitor the execution of the plan.