Q. Limitations of using balanced scorecard?
- Historical performance analysis is no guide to the future.
- Manipulation or 'massaging' of performance measures by management, in particular when measures are tied to bonuses.
- BSC measures may need to evolve and change quickly to reflect changes in the environment, there could be a delay in implementing changes quickly enough and the trend analysis may become distorted when new measures are introduced.
- Costly 'bespoke' information systems to collect, gather, summarise and present multiple performance measures. Expense, Management time and opportunity cost of maintaining and developing a BSC system.
- Conflict between BSC perspectives e.g. trade-off between cost of innovating and satisfying customers and loss of shareholder wealth which could create in the short-term under financial perspective.
- Too many performance measures often distort the benefits e.g. information overload. Management may pursue BSC objectives to the detriment of everything else e.g. ignorance of other dimensions like staff and the ecological environment.