...A critical analysis of Balanced Scorecard as a performance measurement tool: an overview of its usage and sustainability A iti al a alysis of Bala ed “ o e a d as a pe fo TABLE OF CONTENTS a e easu e e t tool: a o e ie of its usage a d sustai a ility TOPICS PAGE i ii iii iv-v LETTER OF TRANSMITTAL DECLARATOIN ACKNOWLEDGEMENT ABSTRACT CHAPTER ONE INTRODUCTION 1.1 Background of the study 1.2 Objective of the study 1.3 Scope of the study 1.4 Methodology 1.5 Limitations of the study BALANCED SCORECARD 2.1 Overview of the Balanced Scorecard (BSC) 2.2 Objective 2.3 Design 2.4 Original design method 2.5 Improved design method 2.6 Popularity 2.7 Variants and alternatives CRITICAL ANALYSIS ON THE CONCEPT & USING OF BALANCED SCORECARD WHETHER IT IS THE UNIVERSAL SOLUTION FOR THE BUSINESS MANAGEMENT? 3.1 Crucial investigation of the concept and using of Balanced Scorecard 3.2 A comprehensive new approach for the measurement and management 3.3 Is the Balanced Scorecard a universal key to the business management? 3.4 Balanced Scorecard: a question of conjecture and application CHAPTER FOUR: THE SUSTAINABILITY OF THE BALANCED SCORECARD 4.1 The Balanced Scorecard: an instrument for sustainability management 4.2 Different possible approaches of integrating environmental and social aspects 4.3 The process of formulating a sustainability Balances Scorecard 4-7 5 5 5 6 7 8-15 9-11 12 12-13 13 14 14 14-15 16-25 CHAPTER TWO CHAPTER THREE 17-21 21-22 22-23 23-25...
Words: 10563 - Pages: 43
...The Balanced Scorecard (BSC) Framework, Implementation Methodology and Recommended Application - Executive Brief (April 2012) - Introduction Balanced Scorecard is an integrated, organization-wide management system that drives, in an aligned manner, the transformation, improvement and modernization efforts of all hierarchical levels towards the accomplishment of organization’s Strategy. For this reason, Balanced Scorecard is also known as a Strategy Execution system. More precisely, Balanced Scorecard represents a framework for aligned Strategic Planning and for the consistent management of the organizational and individual performance in the execution of the Strategic Plan. Furthermore, Balanced Scorecard is a communication tool that helps each employee better understand where the Strategy drives the organization, what the plan is for reaching that destination and what their departmental and individual measured contribution is to that convergent effort. With such understanding, the employees – whether directly involved in the planned Strategy Execution, or not – can also change and improve the way they perform their daily jobs through micro-decisions that are both convergent and complementary to the execution of organization’s Strategic Plan. BSC History Balanced Scorecard has been launched twenty years ago as a first set of principles for balanced strategic Objectives and Measures/KPIs setting and measurement. The “parents” of Balanced Scorecard are Dr. Robert S. Kaplan...
Words: 2511 - Pages: 11
...“Critically evaluate the use of the Balanced Scorecard as a performance measurement system within organisations”. The Balanced Scorecard is a “strategic planning and management system” that is used at length by all kinds of organisations, stretching from private and public firms, governmental organisations along with non-profit organisations and many others. Traditionally Management Accounting was mainly focused on financial performance measures such as profit and loss figures and balance sheet figures. Now though, more emphasis is been given to the use of non-financial measures and incorporating these into the formal reporting systems used by organisations. The BSC allows the overall mission, policies and strategy of the organisation to be translated into an ample set of performance measurements. The BSC does not only focus on achieving financial objectives but instead allows a firm to pay attention to other non-financial goals that it must accomplish in order to meet its original, financial targets. The use of the BSC can be seen as a way of monitoring and improving both operational and financial performance of an organisation while a t the same time being used as a tool in order to aid the formulation and implementation of the organisation’s strategy. The idea of the Balanced Scorecard was first introduced by Kaplan and Norton in the 1992 Harvard Business Review article entitled “The Balanced Scorecard: Measures that Drive Performance”, which was based on a “multi-company...
Words: 2254 - Pages: 10
...Guidelines in corporate management The Balanced Scorecard – Translating Strategy into Action Introduction Public transport organizations face many barriers when trying to execute the strategy formed by their corporate managements. Some of these common barriers include: • The vision barrier, which arises when most managers and employees do not really understand the organization’s strategy. The people barrier, which arises when only a small portion of managers have some incentives regarding strategy and performance. The management barrier, which arises when most management teams spend only a small amount of time discussing strategy. The resource barrier, which arises when most of the business units fail to link their daily work and therefore their budgets to the overall strategy. • • • Balanced Scorecard was developed by Robert Kaplan, a professor at Harvard University and David Norton, a consultant from Boston. They began developing the approach after leading a research study of a dozen companies exploring new methods of performance measure. Kaplan and Norton put together a system that was able to measure a variety of activities throughout the organization: customer issues, internal business processes, employee activities and the concerns of shareholders. Under the Balanced Scorecard system, a company’s financial results are “balanced” and interlinked with all of these perspectives. This scorecard was successfully adopted by a number of organizations and the results...
Words: 2242 - Pages: 9
...Week One – Case Study One “Success and Challenges of Balanced Scorecard at Philips” Name: Priyanka Gandhi Institution: Fitchburg State University Course: Select Topics in Advance Managerial Accounting – MGMT 9034 Professor: Dr. Beverley Hollingsworth Date: January 25, 2015 Introduction Philips is a Netherlands based technology company headquartered in Amsterdam with three main divisions namely, Philips Consumer Lifestyle, Philips Healthcare and Philips Lighting. It is the largest manufacturer of lighting in the world. After a dismal performance during the 1990s, Philips decided to restructure the company. High manufacturing costs, growing competition etc made Philips realize the need to transform. It then came up with Business Excellence through Speed and Teamwork (BEST) program aimed at excellence in every aspect of business. Balance Scorecard was one of the tools selected under BEST. The Balanced Scorecard is an organizational performance measurement tool. This system helps in the measurement of both financial and non-financial factors that contribute towards organization’s future growth and profitability. Based on the organization’s vision, mission and strategy it views the organization in four different perspectives namely, 1) Financial Perspective 2) Customer perspective 3) Process perspective 4) Learning and growth perspective In terms of the above perspectives, the various subsidiaries of Philips will group their strategies, set targets and...
Words: 1760 - Pages: 8
...EDUTL 5901 | Balanced Scorecard: an Empirical Study of Small and Medium Size Enterprises | Data Analysis | Guangting Zheng Guangting Zheng Introduction This study analyzes Balanced Scorecard (BSC) knowledge among small and medium enterprises (SMEs) in Portuguese industry. It basically resolves three problems: Do Portuguese industrial SMEs use the BSC? Are those in charge of management accounting aware of the Balanced Scorecard? Is there any relation between spreading knowledge about the Balanced Scorecard and specific contingency variables? Traditionally managers evaluate performance with exclusively financial measures. The first performance evaluation models were based solely on financial measures (BANKER; MASHRUWALA, 2007; CORONA, 2009; LUFT, 2009; MARTIN; PETTY, 2000). However, over-emphasis on this assessment method may drive managers to try to maximize short-term financial results, thus harming the sustainable development of the company. According to Dearman and Shields (2001), even when using other methods theoretically considered as inadequate, correct management decisions can be made as long as managers are aware of the more adequate methods. Then in 1990, a new model called Balanced Scorecard was proposed. Balanced scorecard (BSC) is a strategy performance management tool, which can be used by managers to keep track of the execution of activities in the company. Now BSC is used not only as performance evaluation, but also as a strategic management system...
Words: 943 - Pages: 4
...JURNAL MANAJEMEN DAN AKUNTANSI BALANCED SCORECARD DAN MANAJEMEN STRATEGIK Umi Pratiwi Fakultas Ekonomi Universitas Soedirman Jalan HR. Bunyamin Grendeng Purwokerto Jawa Tengah Abstract: This article is about the application of the balanced scorecard in strategic management, from strategy formulation, planning, implementation, to performance evaluation. The application is useful in translating corporation strategy into operational activities which are absolutely needed in obtaining both short and long term objectives efficiently. In the absence of the translation, limited resources would likely be thoughtlessly. The scorecard, thus, serves as a controlling means for the corporation to utilize its resources in a sensible way. Kata kunci: balance scorecard, strategik manajemen PENDAHULUAN Tujuan perusahaan adalah mencari keuntungan atau laba yang tinggi, akan tetapi bukan itu tujuan utama satu-satunya. Ada yang lebih penting lagi yaitu kelangsungan hidup dari perusahaan tersebut. Jika perusahaan tidak dapat berkembang secara berkelanjutan, maka perusahaan tersebut akan kalah dalam persaingan. Untuk efisien dan efektifnya suatu perusahaan, sangat diperlukan adanya suatu struktur sistem pengendalian manajemen. Dalam pembangunan struktur sistem pengendalian manajemen tersebut, terdapat tiga komponen yang perlu didesain yaitu: (1) Struktur organisasi, yang dibangun sesuai dengan karakteristik lingkungan bisnis yang akan dimasuki oleh perusahaan; (2) Jejaring...
Words: 3469 - Pages: 14
...A Balanced Scorecard for Small Business C. W. Von Bergen Southeastern Oklahoma State University Management and Marketing Department Durant, OK 74701-0609 Phone: 580-745-2430; Fax: 580-745-7485; e-mail: cvonbergen@sosu.edu Daniel C. Benco Southeastern Oklahoma State University Department of Accounting and Finance Durant, OK 74701-0609 Phone: 580-745-2498; Fax: 580-745-7485; e-mail: dbenco@sosu.edu Abstract The balanced scorecard is a performance management system that enables businesses to drive strategies based on measurement and follow-up. Since the early 1990s the balanced scorecard has been applied in numerous large organizations resulting in many positive results that have been chronicled in the management literature. However, there are few studies addressing the use of a balanced scorecard within small companies. Hence, this paper presents a discussion of the key elements of the balanced scorecard and its applicability to small business. Executive Summary The balanced scorecard (BSC) approach helps organizations manage the implementation of their strategies. The BSC measures an organization’s performance from four key perspectives: financial, customer, internal business processes, and learning and growth. The BSC approach logically links these four perspectives. Improvements in employee learning and growth result in improved internal business processes, which create better products and services and, therefore, higher customer satisfaction and higher market...
Words: 4975 - Pages: 20
...January 2005 Re-examining the cause-and-effect principle of the Balanced Scorecard* Per Nikolaj Bukh, pnb@pnbukh.com, Aarhus School of Business Teemu Malmi, teemu.malmi@uts.edu.au, University of Technology, Sydney & Helsinki School of Economics Abstract There seems to be a wide variety of methods in how organizations apply the Balanced Scorecard (BSC) concept in practice and how it is interpreted in the literature. Consequently, it is not quite clear what the core features of BSC, or its variants, are and if all its variants are equally effective in producing expected outcomes. Moreover, the usefulness of BSC as a practical theory has been questioned by referring to some of its assumptions, especially the cause-and-effect relationship (Norreklit, 2000, 2003). In this paper we re-examine the cause-and-effect principle, which can be seen as one of the corner-stones of the BSC. Further, we outline alternative ways to apply cause-and-effect in practice, both analytically and organizationally. To facilitate research on BSC, we discuss some of the contingencies that may limit or support the usefulness of the causeand-effect concept. These include strategy, organization, environment and communication related issues. Key Words: Balanced scorecard, cause-and-effect, non-financial measurement, performance management, strategy, strategy map. * We wish to thank the editors, Sten Jönsson and Jan Mouritsen, for their guidance in the process of writing the paper. Further, we thank...
Words: 12575 - Pages: 51
...Table of Contents Introduction 3 Background 2 BSC Advantages 4 BSC Disadvantages 5 Review 4 Methodology 6 Pre-study essentials 5 How to Implement a Balanced Scorecard 7 Discussions and Results 9 Conclusion: 13 Recommendations: 13 References 14 Introduction Any business organization’s goal is to improve its operational performance. Through the employment of various types of performance measures, firms can assess the efficiency and effectiveness of their business process objectives. Furthermore, performance measurement tools can help businesses in evaluating their resource allocation processes in order to determine how resources can be better managed and distributed to the appropriate channels, Kaplan and Norton (1996) introduced the concept of a “Balanced scorecard (BSC)” as a basis for a strategic management system. This approach not only included financial and non-financial aspects but also blended business strategies into management systems. Background What is balanced scorecard? The BSC developed by Robert Kaplan and David Norton, and has been adopted by a wide range of leading edge organizations, both public and private. The BSC is a conceptual framework for translating an organization’s vision into a set of performance indicators distributed among four perspectives: Financial, Customer, Internal Business Processes, and Learning and Growth. BSC perspectives: 1. Financial perspective The importance...
Words: 2804 - Pages: 12
...Daryush Farid, Mehran Nejati, Heydar Mirfakhredini, Balanced scorecard application in universities and higher education institutes: Implementation guide in an iranian context / Annals of University of Bucharest, Economic and Administrative Series, Nr. 2 (2008) 31-45 BALANCED SCORECARD APPLICATION IN UNIVERSITIES AND HIGHER EDUCATION INSTITUTES: IMPLEMENTATION GUIDE IN AN IRANIAN CONTEXT DARYUSH FARID, َ EHRAN NEJATI, HEYDAR MIRFAKHREDINI∗ M Close compete of universities and higher education institutes in recent year in order to offer high quality services and achieve higher national and International rank, has led to an increase in their demand for a customized approach for assessing and improving their performance. This paper studies the application of Balanced Scorecard (BSC), as a powerful measurement and assessment system, in universities and higher education institutes. Reviewing the existing literature, the paper also provides an implementation guide for BSC in an Iranian perspective. Eventually, the performance indicators for measurement purposes of the introduced case study are proposed. Keywords: Balanced Scorecard, BSC, Performance Assessment, Higher Education, Universities, Iran. Introduction In today’s world of global competition, providing quality service is a key for success, and many experts concur that the most powerful competitive trend currently shaping marketing and business strategy is service quality (Abdullah, 2006, p. 31). Institutes of higher...
Words: 4899 - Pages: 20
...he balanced scorecard is a strategic performance measurement system developed by Robert S. Kaplan and David P. Norton to help organizations achieve breakthrough results by embedding strategy at the heart of the organization. Developed 12 years ago, the concept was significantly different from any existing performance measurement system and generated considerable excitement. A variety of applications and variations of the balanced scorecard have emerged since its inception. It was received and used so enthusiastically and effectively that the Harvard Business Review labeled it in 1997 as one of the 75 most influential ideas of the 20th Century. 1 Early on, a navigation metaphor was used to illustrate the need for additional performance measures. Over time, the navigation metaphor expanded to include the process of strategic mapping and decisions about where to lead your company. This article outlines the evolution of the balanced scorecard. BALANCEDSCORECARD: THEINCEPTION In 1990, the Nolan Norton Institute, the research arm of KPMG, sponsored a one-year, multi-company study on the future of performance measurement. David Norton, CEO of Nolan Norton, was the study leader, and Robert Kaplan served as an academic consultant. The 12 companies that formed the original study group believed that the exclusive reliance on financial performance metrics alone was causing their companies to do the wrong things. Many of the activities that create organizational value...
Words: 1680 - Pages: 7
...Today many hospitals are forming integrated health systems that consist of a main hospital, outpatient services, and nursing homes. This causes challenges for hospital executives to align the organizational strategies and main principles with performance measurement and management indicators within all areas of service. The balanced scorecard (BSC) is an option for hospitals to measure not only a company’s financial performance but how the company is satisfying its customers and employees. The BSC is designed to manage strategy not tactics (Kocakulah 2007). As of the year 2000, only about 70 of the country’s 6,000 hospitals were using the BSC method. Part of the reason for lag in adoption is hospitals have always used nonfinancial statistics and believed that they were using measures similar to a BSC already. Unfortunately, this is not the case in terms of effectiveness ( ). How to implement an effective BSC is the most important question. The single most critical condition in implementing a BSC is the involvement and ownership of the executive team. The approach is usually top-down. A top level BSC is created for the board of trustees, and then is cascaded down the organization to the department level. This is done with a team-based collaborative approach that consists of an “organizational change expert” as the leader (Kacakulah 2007). This “organizational change expert” should be the head of human resources. A HR manager is best suited for this role in many ways...
Words: 1200 - Pages: 5
...Executive Seminars Executive Action Learning Seminars CEO Club Executive Courses International Institute of Management Executive Education Courses Harvard Balanced Scorecard Review Med Jones International Institute of Management iim-edu.org International Institute of Management (IIM) iim-edu.org IIM Open Courseware (OCW) Copyright International Institute of Management (www.iim-edu.org) This work is the intellectual property of the authors. Permission is granted for this material to be shared for personal and educational purposes. IIM also grants the rights to disseminate otherwise or to republish in full or in part, provided that a statement of the source referencing the author(s) and “International Institute of Management” appears on the reproduced materials. As courtesy, please provide us with a notice of use by contacting us at: IIM Open Courseware (OCW) International Institute of Management 10161 Park Run Dr. #100 Las Vegas, NV 89145 USA Email: contact_us(at)iim-edu.org International Institute of Management (IIM) iim-edu.org Strategy International Institute of Management iim-edu.org Harvard Balanced Scorecard (BSC) Strategy Alignment & Performance Measurement Tool International Institute of Management iim-edu.org Executive Challenge Business Strategy Alignment & Performance Control International Institute of Management iim-edu.org Strategy Execution • In the 1980s, less than 10% of the strategies were successfully...
Words: 1104 - Pages: 5
...The Balanced Scorecard: Judgmental Effects of Common and Unique Performance Measures Author(s): Marlys Gascho Lipe and Steven E. Salterio Source: The Accounting Review, Vol. 75, No. 3 (Jul., 2000), pp. 283-298 Published by: American Accounting Association Stable URL: http://www.jstor.org/stable/248614 . Accessed: 11/03/2014 05:15 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. . American Accounting Association is collaborating with JSTOR to digitize, preserve and extend access to The Accounting Review. http://www.jstor.org This content downloaded from 131.181.108.165 on Tue, 11 Mar 2014 05:15:52 AM All use subject to JSTOR Terms and Conditions THE ACCOUNTING REVIEW Vol. 75, No. 3 July 2000 pp. 283-298 The Balanced Effects Scorecard: of Common Judgmental and Unique Performance Measures Marlys Gascho Lipe University of Oklahoma Steven E. Salterio University of Waterloo ABSTRACT: The balanced scorecard is a new tool that complements traditional measures of business unit performance. The scorecard...
Words: 8613 - Pages: 35
