Balanced Scorecard BSC the Concept 'Literature Review' chapter

  • Length: 9 pages
  • Sources: 12
  • Subject: Business - Management
  • Type: 'Literature Review' chapter
  • Paper: #68130658

Excerpt from 'Literature Review' chapter :



Chang and Young (1995) points that the process of measuring performance give an organization an opportunity to have focus, projections, common understanding as well as quality knowledge to enhance good decision making process in any organization. It also helps organizations to have a mechanism of getting feedback on the improved efforts of service delivery. In addition to this due to the fact that measurement of performance is closely related to achievement of an organizations goals and objectives, it provides the management with an opportunity to control and monitor all the processes of the organization geared towards the achievement if the organizations overall vision and mission through the vigorous implementation of the chosen strategies (Aid mark 2001). However, with ever changing business environment and embracing of new strategies by the different organizations, dissatisfaction and discontent with the traditional methods of measuring performance is growing. This has consequently resulted into many organizations interrogating and being critical of the new methods of measuring performance within their structures while identifying the shortcomings and agitating for change. Consequently the old methods are shelved since they are seen to be inefficient and inappropriate to the growth and development of the organizations. As a result the senior management of many organizations are forced to face a number challenges in regards to the assessment of measuring performance of different employees within their respective organizations and institution.

In the current world and business environment that is highly dynamic, the survival and viability of any organization is mostly influenced by the new strategies they either choose to embrace or reject. According to Eccles (1991) these new strategies coupled with the realities of cut throat competition in the markets, need new systems of measurement because the old systems that apply a lot of pressure on the financial indicators can no longer meet the high demands of the modern business organizations. He argues the globalization, cut throat competition, increased sophistication of the public as well an informed population of consumers that are actively pursuing their rights, have all contributed to the shift in performance of the systems of measurements that manifest themselves towards thematic indicators that are non-financial in nature such as customer satisfaction as well as quality of service offered to customers.

To maintain the same levels of success as well as be competitive, organizations need to have a holistic and balanced approach while measuring their performance. These systems should not only display past consequences as displayed by the financial indicators but should also be capable to predict the future expected in the future through utilization of the measures that are non-financial, commonly called forward looking,( MacStravic.1999). As the trend of measuring performance move towards this direction, concerns that need to be addressed but the senior management in a more explicit way due to their impact on the nature of the business include; recognition of different existing trade off that occur between the different systems of measure, e, g cost and quality of production; and the tradeoffs that exist between the long-term position that is competitive an d the short-term return of the financial gains, (Morisawa, 2002).

In addition to this the practice of management using strategies needs to begin to be incorporated into the day-to-day running of businesses or organizations even as the top management of the different businesses acknowledge the significance of communicating their new business strategies down the job cadre with the intention of attaining and aligning their respective business objectives as well as goals. This should therefore appeal to all the to managers to link strategies and actions because the type of measurement system will act as a barrier to the organizations development if the systems applied are not appropriate. This is because such systems of measurements will lead to actions that are not consistent with strategies of the organization no matter how well they are drafted and formulated or passed down to other employees in the organization (Oliverira, 2001).

According to Zelman, Pink, & Matthias, (2003), recent trends show that there has been an increase in using balanced as an indicator of performance. Evidently in the feasibility studies and valuing of performance using balance scorecard needs to understand further, (Chan and Ho 2000). Cost of making sure these measurements are true representation of the indicators force many employers and employee to embrace the concept of using balanced scorecard to measure their performances. Many institutions are slowly but surely developing and implementing performance measurement systems that are formal. Coupled with these attempts to develop and implement the use of balanced scorecard to measure performance are a myriad of hurdles including culture structure of the organizations, ancient managerial practices that are archaic to modern competitive business practices such as ineffective costly operating practices. Lack of experienced members of management board also cause a lot of friction in the implementation of the newly developed by balanced scorecard strategies. Employee participation should also be encouraged at the inception stages to enhance ownership of the process. The service industries hat offer intangible value addition to our daily lives makes it almost impossible to measure the value addition in quantifiable components.

Kaplan and Norton (1992) argue that the sure way to achieving aims and targets of improving performance lives in a nay organization is to embrace the…

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