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Balanced Scorecard : Drawbacks of Implementation

It is said that 50% of the Fortune 1000 companies have adopted the balance scorecard methodology into their system. The balance scorecard technique helps in identifying the areas and products that are financially viable and successful. This helps the management in deciding their long term strategy with the various customers.

Introducing the system without having any objective in mind is a major cause for the failure in reaping the advantages of this system. The objectives that are to be achieved must be well defined and communicated to all the parties involved in the attainment of the same. The attainment of the strategy is possible by having a well drafted strategy map which contains a set of objectives that must be arrived at to attain the overall objectives of the company. A badly designed strategy map results in a confusing scorecard.

As the business world is highly volatile the strategy must incorporate the changes in the fast moving world. The company must be capable of taking the advantage of the opportunities that open up before them. This calls for the changes in the existing system. The major step to welcome the change must be taken by the top management. The scorecard technique if is to be successful requires the full support and the commitment of all levels of the management hierarchy. But in most cases the top management delegates the task to other members leading to the failure in the implementation.

The cost and time taken for the deployment of the balanced scorecard is generally high. It is said that the total amount of time for the initialisation of the first step takes about two to three months and the complete deployment will take about 26 months to start functioning. As the employees have to be educated on the changes in the system and must be made efficient to meet the challenges. The system calls for continuous training which takes up a great deal of cost and money. The failure to have an on-going training facility to make the employees adept to exploit the opportunities as and when necessary makes it ineffective. However, if successfully implemented, the scorecard can create a higher return of income and a lower amount of waste.

The successful implementation of the scorecard depends on the knowledge of the employees about the advantages of having it installed. The implementation is possible only with the support for the system from all the employees involved in the actual functioning of the business.

To be useful the scorecard must incorporate all the strategies of all the divisions of the business and it must not be biased to any particular division. In most cases the involvement from all active divisions is absent, thereby making it ineffective.

The scorecard requires the company to incorporate all the changes in the outside world which have a direct impact on the company functions. This makes it difficult to conform to the existing planning and budgets allocated.

The implementation of the balanced scorecard is a challenging work for which the support of all the employees is vital to make it productive.

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Posted: 09/04/2011 09:12:33

Thanks for sharing the details

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