Crucial Role of a Balanced Scorecard - Research Paper Example

A balanced scorecard is the face value of an organization that connects strategic objectives. According to the balanced scorecard institute website, “A balanced scorecard identifies the connection between creative capacity, efficient product development processes, improved customer and stakeholder value, and financial outcomes” (“Balanced scorecard institute”, 2000). The above scorecard incorporates the mission and vision statements of a company, which form part of the strategic objectives. A vision statement of a company explains the reason for being. It inspires people to achieve more than they thought possible, allows the stretching of resources to increase profitability, and unites employees towards a common goal. A vision statement forms the foundation of an organization's values and influences its strengths and weaknesses. On the other hand, a mission statement describes why the organization exist, what it intends to achieve, and the purpose and identity of the organization.

The above-balanced scorecard incorporates organizational values, purpose, and identity. For instance, to remain at a competitive advantage, the company has to employ a mechanism of establishing new products through innovation. Similarly, a company whose mission is to offer the best services to its customers to retain them does this by offering quality services to them just like it is dictated in the scorecard. Additionally, vision and mission statements dictate the values that an organization stands for. This important aspect portrays the company’s image and helps employees to identify with it. A good public image goes a long way in helping a company increase its market share in the community over a period. In addition, a company's culture and values form a basis for employee motivation because they feel part of the organisation.

The above-balanced scorecard incorporated strengths, weaknesses, opportunities, and threats of an organization. A strategic objective that gears towards measuring processes in the company such as an operation process helps establish the existing strengths and weaknesses. For instance, measuring the level of employee turnover will help establish if the organization has a weakness or strength in its productive employees. Additionally, setting measurable objectives calls for the use of opportunities available in the market to counteract the threats. For instance, before deciding to increase the market share of a company’s products, one must first establish the existing opportunities. In conclusion, balanced scorecards borrow ideas from vision, mission, and SWOT analysis to enable the company to grow in line with its objectives.