What the Balanced Scorecard DOES Address and What NOT

Balanced Scorecard
Knowledge Center

 

Next Topic

Balanced Scorecard > Best Practices > What the Balanced Scorecard DOES Address and What NOT

What the Balanced Scorecard DOES Address and What NOT
musazili, Teacher, Kenya, Member
According to my experience, the balanced scorecard effectively deals with the 'hard side' of the organization, for example the financial performance (such as the turn over), the level of training, the quality and quantity of products.
However if fails to address the 'soft side' of an organization, such as causes of under performance, motivation of employees and organization indigenous factors e.g. internal politics.
 

 
Extra Perspectives Can be Added
Samuel A Villegas Arvelo, Management Consultant, Venezuela, Member
In my experience using the BSC during the last 5 years, it is a very effective tool to measure, report and "align" business perspectives and improvement initiatives. Extra perspectives (for example the soft sides of organizations) can be easily added to the traditional ones and you can also include the soft side of business in any kind of Strategy Map.
 

 
BSC and Soft Aspects
Antonio Velasquez J., Management Consultant, Peru, Member
That's right. However if you put "figures" to the "soft side" of the BSC, it will be better.
 

 
Satisfaction Surveys Round Out the Numbers
McDavitt, ICT Consultant, New Zealand, Member
'Soft side' measures can be collected using staff / customer satisfaction surveys. These surveys (repeated annually) give an indictor of staff satisfaction / engagement, customer perceptions etc.
 

 
BSC is a Speedometer
Shad Raza, Manager, India, Member
As we all know the BSC is a speedometer of business which doesn't speak about the reason for low fuel in the vehicle or why we are running at low/high speed.
However, it will indicate you the low or high fuel level which helps in making us proactive in replenish the fuel level so that we shouldn't stuck up...
For knowing the "softer areas" you might refer to Root Cause Analysis.
 

 
What the BSC Measures and what it Does Not
Bukekile Mashoko, Analyst, South Africa, Member
I have little experience with using the BSC as a strategic approach and performance measurement methodology. However, it appears from experiences around this approach that the soft side can be captured in the learning and growth perspective - provided strategy formulation itself is sensitive to the need to give practical effect to the organisational, sub-cultures and social environment cultural influences as well as the whole arena of employee / management motivators & reward systems.
The reason organisations tend to be 'stuck' with the 'hard' metrics is most likely due to leaders' beliefs that the soft side has limited bearing on overall outcomes -or failure to invest in practical / acceptable metrics to track the learning and growth dimension. It seems adaptation within the core perspectives rather than adding extra perspectives may keep the methodology simple enough to lead and to communicate.
 

 
BSC Does Not Deal with Soft Aspects
Peter Herbert
All in all, we must conclude that Musazili is right. The BSC in its standard form is not dealing directly with the 'soft side' of the organization.
This is not a problem nor a weakness, but just a fact we need to consider about its application area. As any other management method or concept, the BSC has limits.
It's important we understand in what situation we should and shouldn't consider applying it.
 

 
The BSC Does Deal with Soft Aspects
Paul Maguire, Business Consultant, United States, Member
I agree that the 'soft side' is often the most challenging aspect of strategy implementation. As Bukekile Mashoko points out, the learning and growth perspective can include objectives centering on culture and leadership.
Indeed, strong efforts on these objectives are often the key to the delivery of 'hard side'. If leadership is tenaciously focused on managing what matters; supporting value derived from greater collaboration, developing and reinforcing contributive leader behaviors and visibly rejecting non-useful behaviors the 'soft side' will be transformed.
In the end, the BSC is just another tool. "Artisan" leaders learn how to wield it well.
 

 
Use 7S to Deal with Soft aspects in BSC
Johnny Michael Tan, Management Consultant, Malaysia, Member
I agree soft aspects can be captured under learning and growth perspectives.
Using McKinsey 7S:
- 'Staff' indicator can be from 'turnover' rate of critical positions e.g. technical and/or engineering.
- 'Skills' can be viewed from HR development matrices.
- 'Style' could be based on key programs e.g. suggestion scheme (inputs, implemented) or by management by walking around by top management / leadership at the shop floor when they are visiting ops work teams.
 

 
It Depends on How it is Deployed
Tayo Aduloju, CEO, Nigeria, Member
In a decade of application of the BSC, I have found that how it is deployed determines its capacity to deal with hard and soft issues of an organization.
If the BSC is deployed with the principles of strategy-focused organizations (which are all soft issues); if the process of scorecard development includes the discipline of alignment (which links corporate performance and motivation to personal imperatives); if the discipline of execution which translates scorecards into tools for coaching, training, mentoring and leadership development is in place; if the BSC becomes more than a performance appraisal tool - it has the potential to shape culture, making strategy everybody's job and eliminating the bottlenecks to non-performance through the active review of strategy maps (which effectively implemented creates a cause-effect logic between tangibles assets (soft) and tangible assets (hard).
That is why its called balanced. It balances tangible and intangible; financial and non-financial; hard and soft.
 

 
BSC Addresses Both the 'hard' and 'soft' Sides of an Organization
Nelson Waweru, Manager, Kenya, Member
@Shad Raza: I agree it all boils down to how the tool is interpreted. This is because as with any other tool, BSC will give you the data but you ought to go an extra mile and ask WHY the results are the way they are. I believe there is no tool that can tell what interventions you need to take in the course of implementation of your strategy, rather it will give you the red flag, i.e. at what point in time that you need to put interventions or mitigations if things are not happening as planned.
 

 
Balanced Scorecard - Effectiveness in Addressing Soft Side
Yesheen Vibhakar, Strategy Consultant, India, Member
The word 'Balanced' in the BSC is the balance between the qualitative (intangible - soft) and the quantitative (tangible - hard), the Strategic and the Operational, the long term and short term and the financial and the non financial.
Also, the steps needed to construct the Scorecard, which include Situation Analysis, Transformation Themes and Strategy Maps do surface all the causes as well tie them with the likely effects.
So the possibility of the Scorecard addressing both hard and soft are both there.
I agree with @Tayo Aduloju that how it is constructed and deployed will determine how well it addresses the whole. In my experience, having feedback and counselling sessions and interventions of coaching and mentoring integrated with the scorecard deployment exercise can help tremendously in resolving the very problem Musazili has stated.
 

     
Special Interest Group Leader

Interested? Sign up for free.


Balanced Scorecard
Summary
Forum
Best Practices


Balanced Scorecard
Knowledge Center

 

Next Topic



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2019 12manage - The Executive Fast Track. V15.1 - Last updated: 24-8-2019. All names of their owners.