Question

Topic: Decentralization and modern performance management systems in accounting

How does the usage of a balanced scorecard encourage managers to work harder?

Answer 1

Balanced scorecard (BSC) is a strategic management system that companies use to: Communicate what they want to achieve, align the day-to-day work that everyone is doing with strategy, prioritize projects, products, and services.  The usage of a balanced scorecard encourage managers to work harder because it has the following advantages:

• The Balanced Scorecard provides an overall framework for developing and communicating strategy. It implies that performance outcomes as well as key enablers or drivers of future performance are identified to make a complete strategy.
• The Balanced Scorecard help organizations map their projects and initiatives to the different strategic objectives, which ensures that the projects and initiatives are strictly focused on delivering the most strategic objectives.
• The Balanced Scorecard help organizations to design key performance indicators for their different strategic objectives.
• The Balanced Scorecard is also used to guide the design of performance reports. This ensures that the management reporting focuses on the important strategic issues and helps companies supervise the execution of their plan.

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