The balanced scorecard: origins, framework, and strategic performance measurement

MR Balanced Scorecard

The balanced scorecard is a unique managerial technique that promotes scoring metrics that analyze the important factors of any business. This technique enables organizations to develop and track key business strategies and goals. There are four branches of this approach including the customer leg, financial leg, internal business leg and education leg. M&R followed this breakdown and created scorecards for sections under these four legs in order to implement change and create a new profit making strategy.

M&R's balanced scorecard approach demonstrated many strengths and can be useful for gaining competitive advantage within the oil industry. One strength of this approach was that the managers of each gas station was given the opportunity to adjust at a local level to customer needs and demands. This training allowed a decentralized approach that can be more flexibly applied throughout the nation.

Another strength of M&R's balanced scorecard approach was that it created a new corporate strategy that can be viewed and understood by all members of the organization. This focusing effort gets everyone on board to a corporate vision that can be understood and eventually implemented by everyone at every level. This inside out approach focused on the fundamental business ideals that help create and maintain profitability and quality products and provide a solid organization for employees to work.

The balanced scorecard approach also demonstrated some significant weaknesses. The most obvious weakness is a lack of control by the centralized power structure that runs this organization. It may become more difficult to communicate and make additional changes to the organization as a whole due to the piecemeal approach taken on by the individual managers of each local gas station.

M&R has also severely complicated their corporate structure by adding in many complicated metrics that most likely fail to transcend geographic markets. Language and communication varies greatly from one region to the next and most likely uniformity is impossible to achieve in understanding each scorecard objectively. The metrics themselves need to be fully vetted in order for them to have an significant value to the organization and positively affect profits.

The bonus structure that M&R implemented as part of the balanced scorecard approach seems to be too beneficial for the managers and employees of this firm. This may cause some managers to adjust their own scoring system and fraudulently represent their success in order to receive a larger bonus.