Question

What is the purpose of the Balanced Score Card (BSC)? When does a leader know when to utilize a BSC?

Answer 1

A balanced scorecard is a tool used by organizations to gauge the performance of the organization in four key areas - learning and growth, business processes, customers, and finance. It is used for strategic management that provides feedback to identify key areas that need improvement to improve the good outcomes for the organizations. Using BSC companies can identify obstacles/ roadblocks that are affecting the organization performance and suggest changes that can be tracked by future BSC scorecards.

A leader needs to utilized Balanced scorecard when the performance of the organization is not up to the mark and the attributes for poor performance is not clearly identified. Using BSC leaders can identify the improvement areas and outline improvement areas to put the organization back on track. The examples of a few issues that can be identified by BSC are:

• Learning and Development - Indicators of poor performance maybe - Lack of innovation, No new competitive advantage being developed etc.
• Business process - Indicators of poor performance maybe - Low capacity utilization, Bottlenecks in the process, Quality issues, Poor inventory management etc.
• Customer perspective - Indicators of poor performance maybe - Low CSAT scores, Increased customer complaints etc.
• Financial Data - Indicators of poor performance maybe - Low sales value, Low profitability, Decrease in revenue etc.