Balanced Scorecard And The Small Business
2 July 2021
More and more big companies are turning to the balanced scorecard as a management tool – but how can small businesses benefit from the balanced scorecard revolution?
Businesses of all sizes have benefited from the management tools and concepts that come with the balanced scorecard – a mechanism for managers to identify, communicate and monitor the progress of their business strategies.
But for many small- and medium-sized enterprises the concepts of the balanced scorecard get placed on a utopian wishlist because they assume its design and implementation need the budget and manpower of a large organisation to be successful.
But while it is true that the small business should think about the balanced scorecard in a different way to the multinational, there is undoubtedly a place for the balanced scorecard in the SME’s business strategy – and the possibility that the balanced scorecard might be even more influential for the SME than it is for the big corporation.
Different needs for balanced scorecards
In a large organisation, much of the impetus behind the balanced scorecard’s design will be driven by a desire to get a clear picture of the business. As organisations grow and become more complex, senior managers can lose track of their business’s culture and lose control of its performance as a result – something a balanced scorecard can fix.
Managers in an SME don’t have this problem, and can focus instead on creating a strategic vision and set of objectives for the business – which they can then easily and clearly share with the rest of the organisation.
Small is beautiful for implementing balanced scorecards
Once the balanced scorecard has been designed, much evidence shows that large organisations fail to carry through the adjustments needed to make it a success. A commitment is required throughout a management chain that can run to ten or fifteen levels; a level of management unwieldyness that is blissfully absent in the SME.
Small organisations will find a well-designed, well-implemented balanced scorecard presents a powerful snapshot of their organisation and its goals to outside sources – potential investors, banks, and so on. Where the large organisation can point to huge turnovers, glib shareholder presentations and powerful brand valuations, the SME can compensate with a plan shared by management, employees and external stakeholders to drive success.
Balanced scorecards at the Advanced Performance Institute
The Advanced Performance Institute is a world-leading independent research and advisory organisation specialising in organisational performance. The institute provides expert knowledge, research, consulting and training on concepts like balanced scorecards, performance measurement and corporate performance management.
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