Balanced Scorecard Approach vs. Traditional Performance Measurement

When making major changes in an organization there is need for the employees to be part of the process. This means that the management has to take the responsibility of educating the employees on the need and importance of the changes to be made. In order to use a balanced scorecard approach to measure the progress of the organization, the management has to take the responsibility of ensuring all the employees are aware of what they need to do. It is also important that when using the balanced scorecard approach, the employees understand that the effect is seen after sometime. The effects are not immediate and the changes start bearing fruit gradually not all at once. It also important for the management to be careful about how many change strategies they implement. This is because, once the changes of one project start showing, they may be convinced that more changes are necessary which could easily make it difficult for the employees to keep up with. At the end of the day, the company could change so much that its foundation is invisible. BAE was successful in implementing changes using the balanced scorecard approach. This is due to the flexibility of the approach and its wholesome focus on the need for change in all the departments of the company. 

BAE’s decision to the use and implementation of the balanced scorecard approach was based on the fact that it had a focus of tackling three major areas and their subsections. These were; plans for customer support, commercial aircraft and the defense systems (Murby & Gould, 2005). All these were issues that the company was concerned about changing to improve effectiveness. Customer support in any business is important. This would mean that the balanced scorecard approach would entail the company management training the employees to better handle the customers. The balanced scorecard approach was used because of the magnitude of the company. It is appropriate for big changes in companies. The nature of change that BAE was concerned about could not be achieved by the traditional approach. This is due to the rigid nature of the traditional performance measurement approach while the company had many changes to make concurrently. It is important that when taking into consideration the flexibility of a project, one is in a position to create a new strategy mid project in case there are drastic changes in the industry, a provision that lacks in the traditional performance measurement approach. The balanced scorecard approach becomes a better option for an organization in today’s corporate space. 

The nature of the company cannot give the traditional performance measurement approach the responsibility to carry out change strategies and be successful. This is because, with the traditional performance measurement approach, there is no direct involvement of the change managers and the actual changes on the ground. This makes it difficult for the management to create change strategies without being unfair to the employees, misappropriating funds and even failing to meet the desires of the clients (MacKay, 2004). The traditional performance measurement is more focused on raising profits in a company rather than improving the company as a whole in terms of efficiency of employees, customer satisfaction and even efficiency in the utilization of funds. With the balanced scorecard, the company can easily take care of the employees, account for the resources and ultimately satisfy the needs of the clients. BAE being a security company needed to use the balanced scorecard approach to ensure the technology being used is top notch and if possible more sophisticated than what the terrorists and other malicious parties would have on the British citizens who have trusted BA with their security (Niven). The balanced scorecard approach was most suitable for ensuring that the organization was effecting the changes fairly. 

The balanced scorecard approach is the best approach for companies in industries that face changes every other day. This makes it suitable for BAE because security changes are always occurring. This means that that the company is at liberty to introduce new security features as the need arises. The traditional performance measurement approach would not be effective in this case because it is only focused on the finances (Balanced Scorecard institute, 2018). When dealing with security, finances are a major part but cannot function independently. This would explain the reason why BAE was quick to implement those strategic changes using the balanced scorecard approach. The balanced scorecard was effective because it shifted focus from being purely financial to include the other supporting factors. Looking at the balanced scorecard being used by BAE today, it is clear that the strategy was a success due to the fact that most of the aspects of the company can now be measured. This makes the approach a good choice in addition to its flexibility in terms of being easily modified to suit the needs of the company. The flexibility can easily be seen in the fact that the initial balanced scorecard to be used by the company had only eight key areas of focus but now the number has risen to seventy and more will be identified as time goes by. Over the years, the balanced scorecard has been easy for the organization managers and the employees to implement due to better understanding and constant reminders on the implementation strategies.

References

Balanced Scorecard institute. (2018, May 5). Balanced Scorecard Basics. Retrieved from Balanced Scorecard institute: www.balancedscorecard.org/BSC-Basics/About-the-Balanced-Scorecard

MacKay, A. (2004). A practitioner’s guide to the balanced scorecard: A practitioners’ report based on: ‘Shareholder and stakeholder approaches to strategic performance measurement using the balanced scorecard. Retrieved from Chartered Institute of Managemnt Accountants: http://www.cimaglobal.com/Documents/Thought_leadership_docs/tech_resrep_a_practitioners_guide_to_the_balanced_scorecard_2005.pdf

Murby, L., & Gould, S. (2005). Effective Performance managemnt with balanced scorecard:Technical report. Retrieved from Chartered Institute of Management Accountants: http://www.cimaglobal.com/Documents/ImportedDocuments/Tech_rept_Effective_Performance_Mgt_with_Balanced_Scd_July_2005.pdf

Niven, P. (n.d.). Financial Perspective. Retrieved from EPM Review: http://www.epmreview.com/rescources/articles/item/85-customer-perspective.html