How Was The Balanced Scorecard Rated in 2014? Here is an Analysis of The Survey Results

2GC Active Management has recently published their annual Balanced Scorecard Usage Survey[1] for 2014. On ten pages they share the results of the survey together with the key findings and analysis of the trends. Here are some that I find especially interesting for those who are planning to implement the Balanced Scorecard or feel that it’s time to upgrade their BSC project.

How was the Balanced Scorecard rated in 2014?

The use of BSC for the strategic management

  • 64% of participants (two times more than in 2013) responded that they use the Balanced Scorecard for their strategic management.
  • 58% of participants (almost a one-third increase compared to 2013) told in the survey that they use BSC for their operational management.
  • The number of those who use it for reporting only decreased slightly to 28%

Personally, I think that this reflects a positive shift in the understanding of the BSC’s role. Business professionals have started treating BSC not as a simple measurement tool, but as a management tool that helps them to understand the strategy better rather than just give out some numbers at the end of the reporting period.

  • 44% of the participants also responded that they report according to the BSC monthly. This fact also confirms the general trend towards making BSC a daily business tool.

Less rewards linked to the Balanced Scorecard

Before[2] we were discussing some best practices about aligning compensation plans to the Balanced Scorecard. The empirical results of the survey confirm that companies are now less enthusiastic about linking BSC to individual rewards; the respective percentage of the companies decreased almost double to 20%.

Companies still use 1st generation BSC model without automation software

According to the results of survey only 22% use automation software for the Balanced Scorecard. Most of the respondents (39%) still use their office software for this purpose. I believe this can be explained by the maturity level of the BSC projects. The survey refers to the BSC generation-based classification explained earlier[3]. Most companies still use 1st generation (30%) and 2nd generation (50%) BSC, only 20% use the 3rd generation BSC.

BSC is now more aligned with the rest of the company than in 2012

Finally, according to the results of the survey 44% (30% in 2012) of organizations reported that they have multiple Balanced Scorecards. I believe this is an indirect evidence for the better alignment of BSC across the companies. More companies understand that the top level BSC is good for the management, but not for the departments or line level employees.

How will the Balanced Scorecard look in 2015?

In general the survey confirms that there are many positive trends:

  • In 2015 we’ll see even more companies that move up from older BSC to the 3rd generation Balanced Scorecard;
  • More business scorecards will be translated to the lower levels and aligned with top level scorecard;
  • The need for the BSC automation software (like for example BSC Designer) will increase;
  • The role of the BSC will evolve even more from a simple reporting to strategic management;

I’m interested to learn your opinion about the results of the 2GC’s survey and your prognosis about the BSC trends.

References

  1. ^ http://2gc.eu/files/2014_Survey_Document_Final.pdf
  2. ^ Compensation and Reward KPI Best Practices, Aleksey Savkin, 2013, BSC Designer, http://www.bscdesigner.com/reward-kpi-best-practices.htm
  3. ^ Development of the 3rd Generation Balanced Scorecard, Gavin Lawrie, Ian Cobbold, 2002, http://2gc.eu/files/resources/2GC-WP-Dev3rdGenBSC-090311.pdf

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Strategy and KPIs Scorecard Expert | Speaker | CEO. Aleksey Savkin (LinkedIn, @bscdesigner) is helping companies to better formulate their strategies and make the process of strategy execution more tangible with KPIs. His areas of expertise are Balanced Scorecard, Key Performance Indicators, business performance management. Aleksey is a frequent speaker at conferences; the author of a number of articles and books on Balanced Scorecard. New book by Aleksey: 10 Step KPI System

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