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What are the drivers in the value of a balanced scorecard initiative? Is it worth the effort for a small business?

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Sam Wholley
Title: Consultant
Company: Frank, Rimerman + Co. LLP
(Consultant, Frank, Rimerman + Co. LLP) |

Anonymous,

The Balanced Scorecard can be as 'skinny' or 'fat' as you want it to be, if you understand the intent of the framework. Essentially, if you set company goals, align each business unit's (or department's) goals with the company's goals, align each individual's goals with those of their respective department, and have valid metrics whose results are visible to everyone in the organization, you will accomplish the same thing as implementing a full-scale scorecard with all of the bells and whistles.

Adherence to the framework becomes important as the company scales, though, which is why some smaller companies implement it from the beginning. They avoid making repeated changes as the company evolves.

I am assuming you have reviewed the four perspectives of the Balanced Scorecard framweork and the associated guidance for setting up metrics. If not, a good site to start reviewing these is at http://www.balancedscorecard.org. If you would like to discuss these further, I am happy to have a conversation with you about how this framework might be implemented in a smaller organization with a view to the future. Best of luck in your implementation.

Regards

Sam

scott graves
Title: CFO
Company: Armstrong Teasdale LLC
(CFO, Armstrong Teasdale LLC) |

Sam is correct in that the company's goals need to be aligned up-and-down the organization to truly be effective and powerful (and too often, they are not). With respect to the Balance Scorecard approach, it's the right thing to do to evaluate the company's strengths and weaknesses in terms of the four perspectives and then develop the company's goals and objectives in addressing the most important ones for the business' needs. Too often, companies think that they need to have their goals "balanced" among the four perspectives and that doesn't have to be the case. In doing that, less important goals could be prioritized in front of more important goals solely for the sake of "balancing" the scorecard.

So is the Balanced Scorecard worth the effort for a small business? Yes, it's a good tool for any organization, large or small, to use in establishing goals...and all organizations should establish goals no matter what their size. But it's only a tool, not an absolute.

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