Balanced Scorecard (BSC) is a set of corporate appraisal that provides a set of information to management to help strategic policy formation and achieve financial goals at every level in the organization. R.S.Kaplan and D.P.Norton introduced this idea in the early 1990s.
In order to embark on the BSC path an organization, the management needs to understand the company’s mission statement and vision. Then proceed to the four generic perspectives that cover the financial status of the organization, internal business processes, the level of expertise of their employees and customer satisfaction level. These main strategic focus areas are need to be balanced between short-term and long-term goals, required inputs and outputs, internal and external performance factors, financial and non-financial indicator.
The strengths are by looking at four main areas will give a big picture; it helps the organisation to focus on strategic development to meets its objectives especially when having critical environment (competition) and it matches with the desired results by understanding and responding to customer requirements. For instance, is the customer happy with the product? BSC gives a clear vision, a coss-disciplinary and hierarchy navigating in communication process, integrating the operational objectives for performance measurement at an
appropriate level – for instance, customer complaints can be confronted before they lead to a reduced customer retention. Besides, top managers who intergrate a BSC can gain understandings into their worker experiences that will lead to employee satisfaction and thus business productivity and profitability.
In contrast, it is takes time to plan out and producing a report that includes the four perspectives with clear objectives and goals until its maturity. These can demotivate employees as well as increase training expenses where the management has difficulty to understand the new system that could lead the loss of interests to...