Each business strategy has its own fair share of benefits and pitfalls. This usually depends on the process itself, the organization and its people. This is also true with the balanced scorecard strategy as it can either make or break your business.
Some of the benefits of the balanced scorecard system include the following: (a) Translate strategy into measurable parameters,Every now and then, company develops strategies and this depends on the present market and the environment among other factors. (b) Communicate strategy,It would be easier to make employees understand the concept of each strategy through the use of balanced scorecards. (c) Align individual goals with company ‘s strategic objectives After communicating the strategy, each employee should know how to adapt to certain changes and apply best practices on every instance. (d) Promote improvement,Feedback of implementation results to process improvement.
If not handled well, the balanced scorecard can also result to potential pitfalls due to: (a) Lack of well-defined objective and strategy,How can one measure success if strategic plans are not in place? Developing an established understanding of the linkages between metrics and objectives will most likely result to a more favorable outcome. (b) Poor leadership,Realizing the potential of balanced scorecard also means a more hands on approach in doing business. Every people within the organization, especially leaders, should have a standard and synchronized process in doing things. Employees look up to leaders for guidance, so what can one expect of incompetent and unproductive leaders? (c) Use of generic metrics,There should be variation on the metrics used by organizations as one ‘s objective and strategy may be different from the other. Being more specific and precise in identifying metrics is needed to develop more strategic plans and objectives.