Effectiveness Of Balanced Scorecard

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This report outlines the way the balanced scorecard is used as a tool used in the business industry. It outlines its historical development and analyses its usefulness.

The Balanced Scorecard
The balanced scorecard is a performance management tool that assists in the management of an organisation’s business strategy (Candle 2008). Kaplan and Norton (1992), the creators of the concept, introduce the business scorecard as 4 main perspectives, customer, learning and growth, financial and internal business process. They breakdown the meaning behind each perspective as follows: The customer leg measures the customer satisfaction for an organisation. It allows an organisation to determine how customers view their business and if customers
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It has been widely used There is a lot of evidence from companies employing the balanced scorecard that it is an effective tool using financial and non-financial measurement methods. (Bain, http://www.bain.com/Images/BAIN_BRIEF_Management_Tools_2015.pdf) states in their 2015 report that 38% of global companies use the balanced scorecard as their management tool. The satisfaction of the tool is also determined as a 3.90/5, above the global average of 3.84. However, satisfaction rating increases dramatically when given a major effort, receiving a score of 4.19, ranking it as the third best management tool. However, it was given a low score of 3.53, tied seventeenth, when limited effort was used in implementing the balanced scorecard. This suggests that unless a serious attempt is applied to using the balanced scorecard, it is not going to be effective for a company. Nevertheless, the usefulness of the balanced scorecard for global companies cannot be denied as it has a very favourable satisfaction rating, especially when used as a major element in their management …show more content…
It was found in the two year study that the branches that utilised the balanced scorecard performed better than the opposing branches. Studies like these however could be a result of the Hawthorne Effect whereby a subject aware of itself being in a study, improves their performance, leading to a less natural result. Despite this, it can be seen from many other studies such as

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