The balanced scorecard is a set of integrated operating and financial performance measures which communicate and highlight the strategic goals and priorities of an organization. The concept has encourages the use of a few major financial as well as non-financial performance measures ( Marshall, McManus & Viele, 2014). The NMDP Balanced Scorecard development process has various strengths and weaknesses.
Strengths
It promotes creation of strategic goals and offers the capacity to concentrate on areas which need long-term continuous improvement.
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It allows for the documentation of cause-and-effect relations between strategic goals within every goal of the organization.
It enables communication of strategic goals which may be demonstrated on a strategy map which is easily comprehended by every stakeholder and employee and demonstrates how the viewpoints work together to attain the goal.
It guarantees the organization concentrates on strategic measures and objectives from a stakeholder or customer angle and knowledge, people and technology viewpoint.
Allows the organization’s management to monitor strategic goal performance in the long-term instead of monitoring the supporting initiatives and projects’ status.
It builds a framework for prioritizing initiatives, projects and financing opportunities on the basis of contributing to and supporting the strategic goals.
It enables organizational strategic goals to be split into departmental goals, thus offering all employees a more precise comprehension of how their work affects and adds to the strategic goals.
It encourages long-term, constant improvement since strategic processes progress over time.
It creates a learning organization in which corrective measures are applied in situations where department or strategic objective measures are unachieved.
Weaknesses
The major drawback of the NMDP Balanced Scorecard development process is that often, the process focuses so much on performance analysis, which as well focuses intensely on financial measures like return on investment, and operating managers ( Marshall, McManus & Viele, 2014) . This makes managers lose sight of other major indicators which may offer additional insight to understanding performance.
It requires strong leadership support to be successful.
It is an overwhelming framework.
It does not focus on external factors and competition.
Reference
Marshall, D., McManus, W., & Viele, D. (2014). Accounting: What the Numbers Mean (10th Ed.). New York: McGraw-Hill Irwin. ISBN: 007802529-7
