Balanced Scorecard Implementation Pitfalls to Avoid (part 2)
There are many Balanced Scorecard implementations where companies don’t seem to get all the benefits described above. Research and experience have identified various traps and pitfalls main ones to avoid are listed below.
- Seeking Perfection in a Balanced Scorecard.
There are some companies that spend forever trying to create a perfect Balanced Scorecard and therefore never actually start using it. It is important to realise that there will never be a perfect Balanced Scorecard. The world around you changes constantly and therefore the Balanced Scorecard needs to change too. However, in order to be practical it is important to agree on one Balanced Scorecard and run with it for a while instead of waiting forever to create something perfect.
- Lack of Senior Management Support for the Balanced Scorecard.
Not having the buy-in and support of key manager and executives can jeopardise the success of any Balanced Scorecard implementation. It is important that key individuals in an organisation are committed to the strategic objectives and performance indicators identified in the Balanced Scorecard. The best way to achieve this is to closely engage them in the process of designing the Balanced Scorecard.
- Not Involving Staff and External Stakeholders in the Balanced Scorecard design.
The Balanced Scorecard is often seen as a top management initiative in which they define what needs to be done and what needs to be measured. However, creating a Balanced Scorecard is a fantastic opportunity to engage with a wider group of internal staff and key external stakeholders. Involving them will yield a better Balanced Scorecard and most importantly help to create buy-in and support.
- Lack of Balanced Scorecard Understanding.
Many organisations assume that once senior management have agreed on their Balanced Scorecard, strategic map and their indicators everyone will happily implement it and collect and report the data. Don’t underestimate the need for training and communication about the Balanced Scorecard initiative and its aims and objectives. Again, this is especially important since there are so many different interpretations of what a Balanced Scorecard is and what it is for. Experience has shown that the support of lower and middle tier managers is essential for the success.
- Using the Balanced Scorecard for Additional Top Down Control.
As I have outlined in my book “Strategic Performance Management”, one of the main problems with Balanced Scorecards arises when senior managers use the performance indicators identified to apply a command-and-control approach in which they use the indicators to punish or reward people. This creates fear, resistance and cheating. Instead, managers should use their Balanced Scorecards to foster a learning culture where everybody is encouraged to collect performance information to improve future performance.