Purpose of in Balanced Scorecard In An organization
The assignment is literature review based only. No need for any field
or first order data collection. It consists of two parts (A and B) as
follows:
A) [A] Literature review [14 marks]: Select one of the following models
used in TQM implementation and write an essay (around 1500
words), from published literature and reliable resources, focusing on
the principles used, practical perspectives of the implementation
(including pros and cons), and the extent of its use in our region (form
the available published resources, if any).
Chosen Model: Balanced Scorecard (BSC)
B) [B] Reflection [6 marks]: reflecting on the literature about the
selected topic in Part A, please discuss the following points from
your own perspectives (around 500 words):
1. As a top executive, in a public or private organisation, what will
be your focus areas in the implementation of such tool?
2. How the modern information technology can support the
implementation of such tool?
Solution
Introduction
Balance scorecard is a certain balance system that provides the core management of a
company or organization with a quick and a comprehensive view of the management of the
absolute organizational performance. For a period, the profitability mechanisms have been in use
as the benchmark for determining company performance. These mechanisms have been
inadequate since they only focus on the present status of business with little or no concern for the
tomorrow of the particular organization. It is because of this drawback that balanced scorecard
was generated (Kaplan, & Norton, 2007).
This concept of BSC has attracted a lot of research attention among academics and other
business custodians. Balanced Scorecard is one of the most profound innovations in the field of
business accounting management. Many organizations and corporations around the globe have
adopted the concept.
The Balanced Scorecard
Purpose of BSC in organizations
As observed by (Kaplan, & Norton, 2007), BSC does not function as a control instrument
in a business unit only but also to supplement and complement the various management control
systems. BSC should not just be adopted as a collection of financial and non-financial measures.
A sufficient Balance scorecard reflects the strategy of the organization. to test this, one should be
in a position to, understand the set procedure by observing the scorecard,
BALANCED SCORECARD (BSC) 3
Principles used in BSC
Balance scorecard is a business management strategy that is focused on the development
of an organization. Like any other management strategy, it would follow the following five
principles. Translation of the strategy into operational terms
This principle stipulates that the strategy should emanate from the selection of the
corporation’s market and customer sectors, important internal business mechanisms that are
utilized in delivering value to the targeted clients and lastly choosing of the personal and the
organizational capabilities in support (Sharma, (2009). This implies that a strategy should be
selected based on the exploitation of the unique capabilities, available resources and the main
competencies.
Alignment of the organization to the strategy
The success of this BSC relies greatly on the clear definition of the relationship between
the perspectives thus, creating equilibrium among the various measures of business performance
drivers and impacts, methods of communication and the processes that are necessary for the
implementation of the strategy. According to Gohel, (2007), this requires strategy mapping to
make the relationship to be in line with the organization’s plans.
Making the strategy to be adopted by everyone in execution of daily duties
This principle is accomplished by ensuring that the strategy is the reference point for all
management functions and decisions within and across the delivering partners. All these
processes and procedures would include communication channels, setting of goals and
objectives, provision of incentives and creation of linkages between the various operational units
BALANCED SCORECARD (BSC) 4
and the delivering partners. This means that there should be a clear definition of roles and
responsibilities so that each employee understands well the part should play. The adoption of the
strategy can be realized by offering training and workshops to equip the employees with the
required knowledge concerning their line of work. The strategy should communicate clearly the
institution’s desired outcomes and its hypothesis about how these results can be realized. This
ensures that all employees and organizational units can understand it and find a way on how they
can contribute by being aligned with the strategy (Kaplan, & Norton, 2007).
Ensuring that the strategy is a continual process
The strategy should not be a one-time event but a process that is continuous over a wide period.
Thus, there should be a loop for the provision of feedback on the performance information across
the various perspectives. This is mostly of remarkable significance in the public sector where the
targets are a matter of public record. This implicates that, organizations consider anticipation of
the failure to meet the targeted performance will be visible to the public (Caudle, 2008).
Mobilizing changes through an executive leadership
The leadership should act from the top with the senior officials giving directions on the
balanced scorecard efforts. The leadership has the mandate to align the changes and strategic
initiatives consisting of both short and long-term allocation of resources. Proper leadership
structure provides a balance in the execution of duties since every department is under a leader
who is in a position to spearhead the specific responsibilities. A strong leadership group has the
strength to influence the entire employees to have a favorable attitude towards their duties and
hence lead to improvement in every section. Allocation of resources is the responsibility of the
BALANCED SCORECARD (BSC) 5
management team, and thus, mobilization of change towards the adequate distribution of
resources is the principle behind the functioning of the strategy for better functioning of the
company.
BSC Perspectives
The balanced scorecard provides that an organization should be viewed from four
perspectives that include the learning and growth, the business process, customer and the
financial perspectives.
a) Learning and growth perspective
This incorporates workforce training and corporate cultural attitudes that may be related
to the individuals and the corporate development. In the contemporary world, the knowledge and
expertise of workers are a continuous learning process with the adoption of the prevailing
technological wave. Metrics can be utilized to guide the business administrators and managers in
focusing on the training finances, which is a segment they can contribute significantly. This is
because learning and growth are composed of the essential foundation for the development and
success of any of the knowledge worker organization.
What the founder of BSC stresses on the learning is more than the training since it
incorporates issues like mentoring and tutoring within the enterprise. It also includes easiness of
communication among the workers and thus they are helped in obtaining assistance in case of
any challenge. It also consists of technological tools for a high-performance system. Government
agencies often find it challenging to hire new technical employees and at the same time, there is
BALANCED SCORECARD (BSC) 6
an experience of decline in the training of the existing workers thus, leading to the occurrence of
a brain drain that needs to counteraction.
Continuous learning and development of skills are of great significance in the delivering
of quality products and services and giving a good image of the company. It is a drawback when
the employees tend to quit and look for greener pastures after they have been nurtured. Instead, it
would good if they pay back to the organization for the skills they have gained from being
employees of the particular organization.
b) The business perspective
This is concerned with the internal business functions and procedures. Metrics founded
on this perspective give managers a room to determine how well their organization is running
and whether its services and products satisfy the needs of customers, which is the primary
objective of any business unit. Such metrics need to be carefully designed and formulated by
personnel who understand the procedures most intimately since with the firm’s unique missions,
and these are not things that can be handled by external consultants. Beside the strategic
management procedure, two business processes may be obtained, that is, mission oriented and
support processes.
Mission oriented in this context refers to the particular responsibilities of governmental
offices and many of the unique challenges encountered in the process. Om the other hand,
support processes is the one characterized by repetitive attributes in nature and hence they are
quite easier to determine and benchmark with the aid of generic metrics. A Precise definition of
BALANCED SCORECARD (BSC) 7
business functions would lead to improved performance in that all the aspects will be clearly
outline and allocated resources adequately for better functioning.
c) Customer perspective
The latest management philosophy has evidenced an increasing realization of the
importance of focusing on customer satisfaction in any corporation. The leading indicators of
this issue are that, if the clients are unsatisfied, they will search for other suppliers who will meet
their needs. If this perspective is poorly performed, it implies a future decline even if the present
financial image looks attractive.
In developing metrics focusing the satisfaction, all the customers need to be studied
regarding kinds and the types of processes and procedures, which are being utilized n the
provision of the commodities and services to the client groups.
d) Financial perspective
The traditional needs for finances have not been disregarded in this system. Timely,
accurate, and sufficient funding data will remain to be a priority and thus, the manager are
responsible for doing anything necessary to provide it. With the innovation and implementation
of corporate databases, it is hoped that most of the processing functions stand a position to be
centralized and automated. Unfortunately, about other perspectives, the issue of emphasis on
finances leads to unbalanced situations in organizations (Bogza, n.d.). This means that there is a
need to incorporate additional financial-related data like performing of risk assessments and cost-
benefit analyzes data in this group. This would contribute to the proper monitoring of the
BALANCED SCORECARD (BSC) 8
business performance though it may require some extra cash to implement and thus be a
drawback to the organization in one way or the other.
PART B: REFLECTION
Question 1
Focus areas in the implementation of balance scorecard
The balanced scorecard is essential in constructing a view of a strategy that can implicate
the movement of a corporation from one position to a more desirable position. In the
implementation of the BSC tool, as the top leader in an organization would focus on the
divisional performance by utilization of financial and several nonfinancial metrics below.
Profitability would be used to represent the financial perspective. The organization’s
revenue growth strategy would be utilized in the implementing this strategy. This would be
realized via development of a franchise and the increase of customer value. Moreover, the
productivity strategy would contribute significantly to efficient execution of the operations and
hence improvement of the cost structure and assets utilization.
The market share would represent the customer perspective while productivity, product
leadership, and public responsibility would represent the process perspective. Leaning and
growth perspectives would be captured by studying the personal development and my employee
attitudes towards their responsibilities while the balance between short and long-term objective
would aid in the understanding of the entire Balance scorecard since it would encourage the
managers of various departments to achieve the set goals and objectives.
BALANCED SCORECARD (BSC) 9
The cause-effect linkages in BSC strategy maps would be crucial in the description of the
way forward regarding the improvements in the capabilities of the intangible assets to be
translated into tangible clients and financial returns. For instance, to improve the return on the
invested capital performance, two strategic themes would be employed. That is, the operational
excellence in reducing the costs while improving on the quality of the output and secondly,
customer management to have an existing partnership with the targeted customers.
Question 2
Balance scorecard software
Without the support of the information technologies, the implementation of the BSC will
be restricted to particular projects only. The software plays a significant role in the
implementation process depending on the features of a particular project. The automation of the
software also depends substantially on the organizations specifics, thus, when selecting software
to use with balanced scorecard, the priority should be given more on the criterion of management
logistics of implementation. The rule of structure-follows-strategy should be put into
consideration when selecting the information technology solutions to automate Balance
Scorecard. In short, the information technology plays a significance role in supporting the
efficiency of the BSC software system (Krylov, 2015). The development and implementation of
information technology strategic BSC require a linkage between the objectives which the
business has set to achieve in a given manner within a stipulated time frame (Grembergen, Saull,
& De Hae, 2013).
BALANCED SCORECARD (BSC) 10
References
Bogza, R. M. (n.d.). The balanced scorecard in a strategy-focused organization. Retrieved
from http://www.tksi.org/JOURNAL-KSI/PAPER-PDF-2009/2009-4-12.pdf
Caudle, S. (2008). The Balanced Scorecard: A Strategic Tool in Implementing Homeland
Security Strategies | HOMELAND SECURITY AFFAIRS. Retrieved from
https://www.hsaj.org/articles/115
Gohel, H. J. (2007). Relevance of Balanced Scorecard for Performance Evaluation of Selected
Indian Corporate Units (Doctoral dissertation, Saurashtra University).
http://etheses.saurashtrauniversity.edu/49/
Grembergen, W. V., Saull, R., & De Hae, S. (2013). Linking the IT balanced scorecard to
the business objectives at a major Canadian financial group . Retrieved from
http://www.antwerpmanagementschool.be/media/287506/linking%20it%20scorecard
%20to%20bus%20objectives%20can.pdf
Kaplan, R. S., & Norton, D. P. (2007). Using the Balanced Scorecard as a Strategic
Management System. Retrieved from https://hbr.org/2007/07/using-the-balanced-
scorecard-as-a-strategic-management-system
Krylov, S. I. (2015). Balanced scorecard and information technologies. Retrieved from
http://www.fin-izdat.com/journal/interbuh/detail.php?ID=66773
Sharma, A. (2009). Implementing balance scorecard for performance measurement. IUP Journal
of Business Strategy, 6(1), 7.
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