WHEN DOES USING A

BALANCED
SCORECARD
BECOME INEFFECTIVE?

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 MEANING

Balanced Scorecard is a
management system that enables
an organization to set, track and
achieve its key business
strategies and objectives.

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Once the business strategies are
developed, they are tracked
through relevant metrics in the
four legs of a balanced scorecard
- Customer, Financial, Internal
Business Process, Learning and
Growth.

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Kaplan and Norton’s Balanced
Scorecard helped in measuring
the business's performance in
terms of financial and Non-
Financial metrics. It is a powerful
tool, and the Objective of the
Balanced Scorecard is to create
Cause and Effect logic for the
Organizations strategy goal.

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Principles to remember when
mapping goals into perspectives:
• Follow Cause and Effect Logic
Between perspectives
• Mapping business goals
• Align KPIs with Goals

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Some of the Advantages of a
Balanced Scorecard include the
following:
• This tool helps an organization to
create breakthrough performance.
• It helps in making strategy
operational.
• It acts as a vital component in
device integration.
• It drills down organization-level
measures to functional measures.

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Balanced Scorecard becomes
ineffective under these
scenarios:
• When there are too many
performance Indicators.
• When everyone in the
organization is not involved.
• When the metrics are poorly
defined.
•When KPI’s are insufficient
• Lack of Planning

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• Lack of Communication
• When there is no balance
between the four perspectives.
• When Leadership is just focusing
on Financial metrics /
Performance.
•When a Balanced scorecard is
not updated in regular frequency
(Sustainability would be an issue)
• When using the tool for Strategy
Formulation (It is a tool for
strategy implementation)

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