A balanced scorecard is a vital strategic management tool that can be used in
the organizational context for the purpose of identifying and strengthening the
internal operations and performance. It is regarded to be a vital tool which can
help leaders and managers within an organization to develop key performance
indicators (KPIs) relating to diverse strategic objectives. Purba has identified a
balanced scorecard as a formal management technique that can help in the
development, implementation as well as management of business strategies.
The tool is of high strategic importance since it helps organizations to focus on
improving organizational performance, making better and more informed
decisions and evaluating production processes (Taufik et al., 2021).
A manager can use the balanced scorecard tool for the purpose of making well-
informed decisions in the business context. The scorecard fundamentally
sheds light on four varying perspectives, including the financial perspective,
customer perspective, internal business process perspective and learning and
growth (organizational capacity) perspective. A manager can assess past
performance and identify areas where improvements can be introduced to
achieve the business goals and objectives at an optimal level. According to
Viviana, the use of a balanced scorecard can simplify and streamline the
decision-making process for business owner ad managers (Zambrano et al.,
2021). The management tool can be structured to share valuable knowledge
and thus facilitate the use of available information that can help to make
sustainable and effective decisions (Zambrano et al., 2021,p. 10). For
example, in-depth insight into the learning and growth perspective can help
managers to make vital decisions relating to the training and development
aspects of the staff members within the organization. Similarly, detailed
insight into the internal processes relating to quality control aspects can create
an opportunity for the managers to strengthen the existing controls so that the
quality of the offerings can be improved. The use of the tool can significantly
contribute to the decision-making process by identifying the areas that need to
be strengthened within the organization.
Although the balanced scorecard tool came into existence decades ago, it is
still used as an effective strategic tool that aids in the decision-making process.
For example, the balanced scorecard tool helps small firms to support the
computation and calculation of the incentives that need to be paid to the staff
member during their appraisal (Sharma & Sharma, 2020,p .4). Similarly, it
helps managers to make vital decisions about increasing the effectiveness of
the existing processes and practices relating to budgeting, planning and risk
management (Sharma & Sharma, 2020, p . 8).
References
Sharma, D., & Sharma, U. (2020). Analysis of balanced scorecard usage by
private companies. Pacific Accounting Review.
Taufik, D. A., Purba, H. H., & Hasbullah, H. (2021). Balanced Scorecard:
Literature Review and Implementation in Organization. Jurnal Operations
Excellence: Journal of Applied Industrial Engineering, 13(1), 111-123.
Zambrano, G. V. C., López, A. C. C., Rivera, D. N., & Vera, M. L. V. (2021).
Balanced Scorecard for decision making and development of sustainability
strategies for a tourism destination. Journal of business and entrepreneurial
studies, 5(3).
