Advantages and benefits of the Balanced Scorecard
The advantage of the Balanced Scorecard method lies in its consistent, strategy-oriented corporate management, which includes the lowest levels of a company, where strategy-based operational initiatives are derived. All resources and all employees of a company are aligned with the corporate strategy. The strategy is consistently communicated and monitored through Balanced Scorecards.
The Balanced Scorecard method overcomes the disadvantages of traditional KPI systems in corporate management:
No limitation to financial KPIs
No pure focus on the past
Qualitative data also considered
Reduction of complexity, consensus building
Strategic objectives as the starting point of the Balanced Scorecard approach
Focus on management bottlenecks, not on existing data
Acceleration of required changes
The Balanced Scorecard method is ideal for strategy-oriented corporate management as it overcomes the following barriers:
Concretization barrier: In traditional management approaches, vision and strategy are theoretical formulations; the derivation of specific (operational) action plans is not consistently pursued.
Vision barrier: The strategy is often not understood by those employees who have to implement it.
Commitment barrier: Strategies are not associated with specific departmental or individual objectives.
Implementation barrier: Reporting is geared to operational-monetary objectives, rather than strategic objectives.
Operational barrier: The budgeting process is separated from the strategic planning process.