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Corporates are not taking balance scorecards from concept to reality

As many as 70% of all companies that implement balanced scorecards fail to generate real business value through their use, according to research from The Hackett Group, a business advisory firm.

 

While balanced scorecards are a potentially powerful forecasting and management tool, most companies fail by focusing on far too many metrics (on average, nine times too many). Companies also overweight scorecards with historical financial information rather than providing true balance by more heavily integrating forward-looking measures.

 

At their most effective, balanced scorecards can be powerful tools, providing concise, predictive, and actionable information about how a company is performing and may perform in the future, and world-class companies are 2.3 times more likely than typical companies to have mature balanced scorecards in place, according to Hackett's 2004 Finance Book of Numbers research. But the benefits of effective balanced scorecards are not being realized for a number of reasons but primarily because they include too many metrics and overweight the scorecards with historical financial information.

 

According to Hackett, companies report an average of 132 measures to senior management each month ? nearly nine times the number of measures in most effective balanced scorecards.

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