Advanced Management Accounting: Balanced Scorecard and its Application in NHS Trust

This study explores the concept of balanced scorecard and its application in performance management within organizations, specifically focusing on its implementation in NHS Trust. It discusses the advantages and disadvantages of using balanced scorecard and its impact on organizational performance.

Advanced Management
Accounting

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Balanced Score card and how it may be used for performance management within
organisations:...............................................................................................................................3
How BSC approach be applied within NHS trust to assess and control organisation
performance:................................................................................................................................5
Critically analysing strengths and weaknesses of balanced score card:......................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Advanced managerial accounting consists of various aspects which enable management to think
analytically and deal with different contingent circumstances. Balance scorecard is major
element of advance managerial accounting which help management to take busines decisions
effectively and mange business’s performance (Chong, Ong, Abdullah and Choo, 2019). The
study based on case study of NHS which is a trust having 4 hospitals and consists of discussion
regarding how balance scorecard will help NHS to measure as well as control trust performance.
Further the study discusses about advantages and disadvantages relating to use of balance
scorecard.
MAIN BODY
Balanced Score card and how it may be used for performance management within organisations:
The term balanced scorecard stems from the principle of focusing at strategic metrics, in
comparison to basic financial metrics, in order to achieve more balanced views of results. The
idea of concept balanced scorecard has developed from the mere use of viewpoints and is
now holistic strategy management framework. The primary advantage of having a disciplined
structure is that this allows organisations a chance to "link dots" among the various elements of
tactical planning including management, ensuring that there'll be a tangible correlation between
the tasks and activities that individuals are focused on the metrics utilized to track
progress and strategic goals that the organisation is seeking to attain. This was initially presented
as paper by Robert Kaplan with David Norton in year 1992. And later, legally, as a publication in
1996. That both journal and book have contributed to its mainstream popularity (Asiaei and
Bontis, 2019). It is important to recognize that while Kaplan with Norton published their first
article, they were unprecedentedly alluded to in work of Art Schneiderman, whom was presumed
to be balanced scorecard creator. Balanced scorecard framework promotes positive behaviour in
the enterprise by separating four different fields which have to be analysed. Such four fields, also
known as legs, include learning and growths, business's processes, consumers and finances.
Balanced scorecard technique is being used to accomplish the goals, metrics, strategies and
priorities that arise from such four main market functions. Companies will quickly define issues
that impede market success and prioritize planned improvements that can be monitored by
potential scorecards. The scorecard can provide details on the business as whole when reviewing

the goals of the organization. An organisation can use balanced scorecard framework to apply a
strategy projecting to determine where an organisation adds value. In addition, an organisation
utilizes balanced scorecard to establish competitive plans and strategic goals. The BSC
approach is not only scorecard, it's a framework. It continues by defining a limited range of
monetary including non-financial targets relevant to strategic goals. It then focuses at initiatives,
sets goals for action, and ultimately, at organisational projects (often named initiatives). It
encourages an enterprise to think regarding how the goals should be assessed and just to then
define programmes for the purpose of meeting the targets. This prevents the development of
expensive schemes that have little effect on the plan.
Information are obtained and evaluated from 4 business aspects:
Learning and advancement are evaluated by analysis into preparation and information
opportunities. This initial leg deals with how good information is collected and how easily
workers use information to turn it into a strategic edge over the sector (Dinçer, Yüksel and
Martinez, 2019).
Company processes are measured by analyzing how well the goods are made. Operational
control is evaluated in order to monitor any holes, failures, bottlenecks, constraints or waste.
Consumer insights are gathered in order to assess consumer satisfaction with the standard,
price and affordability of goods or services. Consumers have reviews on their success with new
goods.
Financial statistics, like sales, investment and revenue, are utilized to explain finance
performance. Such financial indicators can involve monetary sums, financial proportions, budget
variability, or sales projections.
Such four legs incorporate the organisation 's mission and philosophy and enable careful
monitoring to evaluate the data gathered. Therefore, balanced scorecard is sometimes alluded to
as monitoring instrument instead of a measuring mechanism. The four viewpoints of scorecard
are in particular order and represent strategic goals that relate to vision and goal. Targets are
related in a systematic direction from bottom to top. More specifically, there is cause and effect
interaction between viewpoints. Running across bottom towards top: Improvements in
organisational capability will trigger improvements in corporate processes which will affect
consumers and boost financial efficiency. The causal interaction cannot be assured if a new

viewpoint is introduced. The outcome could be a valuable scorecard, although it may not, by
necessity, be balanced scorecard (Krylov, 2019).
How BSC approach be applied within NHS trust to assess and control organisation performance:
In order to construct balanced scorecard, the organisation like NHS trust can begin with its
strategical priorities and organise them into main fields. The four main fields referenced by
the Kaplan and Norton included Financial Perspectives, Internal Operations Viewpoint,
Consumer Perspective, Learning and Development. These aspects were selected by the Kaplan
and Norton since the performance of the organization relies on how it works financially, that is
directly connected to the organization's internal processes, how the client perceives and
communicates with the organization, and the path wherein company is going. The usage
of balanced scorecard helps the business to evaluate stakeholder's viewpoint from the
shareholder's perspective. Stockholders are owners of the corporation 's securities and are
therefore more associated with the performance of the corporation and therefore rely mainly on
financial performance (Dincer and Yuksel, 2019). In this regard following are multiple
perspectives of NHS with regard to BSC, as follows:
Financial Perspective: This perspective of Balanced Scorecard preserves the kinds of measures
that have traditionally been established by organizations like NHS to measure performance. The
basic measurement utilized in scorecard will differ based on the form of organisation concerned
like NHS is trust, whose being tested and what has been assessed. As in case of NHS found that
the ROI, RI, as well as EVA of 4 hospitals could be utilized to measure performance and results.
There are other accounting metrics that can also be used, such as profits growth, revenue
increase, operating margins, liquidity ratio and many more. The form of financial metrics
employed should include the elements of decision-making activities of the individual being
measured. Financial metrics may be quite broad in scope, like sales increase, or more precise
such as number of patients in Hospitals.
Internal Business Perspective: An effective organisation Like NHS should function like a well-
crafted system. This allows the organisation to track and assess its internal activities in order to
assure that the overall priorities of the business are fulfilled. There are several factors that may
be considered as inner business metrics, including the no. of mistakes generated, system
downtime, operation performance, and value of transactions performed in day per staff, or more
sophisticated measures, like the percentage of patients in a particular period or ensures that in

which period demand of hospital beds will grow. For NHS, internal controls may include control
over medical products used in hospital including their physical handling and quality of services
provided by nursing staff (Firk, Hennig and Wolff, 2020).
Customer Perspectives: Enterprise NHS have patients or customers; enterprise will cease to work
without them—so it is necessary for an organisation to evaluate how good it performs with
regard to its customers. Instances of different variables that may be calculated include customer
loyalty, numbers of frequent patients, percentage of new patients, no. of young patients and
industry share. Factors which are more unique to a single sector include considerations including
being rated first in market by patients and patients successfully treated. Customer metrics for
NHS may involve patient engagement, Quality of services and the no. of new patients.
Learning and Growth: The industry climate is very competitive and needs an organisation to
continually adapt in attempt to thrive, let alone expand. In order to attain competitive goals such
as expanded market share, administration must concentrate on approaches to expand the
business. Learning and growth assessments are a way of determining how nursing staff and
managers in NHS work together to develop the business and help staff improve within the
organization. Instances of metrics in this section involve number of staff recommendations made,
staff productivity, employee working hours, extent of process change and no. of new items. NHS
can utilise learning and development interventions like days of nursing staff training and days of
work-related training.
Critically analysing strengths and weaknesses of balanced score card:
Sum up, balanced scorecard allows the GSP to concentrate on success assessment in far more
than single area. This takes into consideration things that can often be ignored in a organisation,
like internal procedures and existing service quality. Here's several of the greatest benefits of
applying this approach in NHS:
1. Framework of the business strategy
Multiple teams within an organisation can have their very own method of assessing success and
also what they deem relevant in respect of measures. In balanced scorecard, individual
executives and teams will also tailor their success metrics, but much of this comes under a fixed
framework which can be recognized throughout the enterprise. It offers anyone in the business a
shared position to assess success.
2. It makes communication better

Communication between team mates and agencies gets simpler as everyone speaks same
language. Generally, having streamlined performance measurement framework makes it easy to
speak about policy and success within enterprise.
3. It encourages better coordination
With balanced scorecard, the participants of the organisation can conveniently relate their
strategic goals to various levels of business. This takes guesswork of attempting to grasp
everybody's roles, and it's keeping teams and divisions synchronised under one system. It also
contributes to much better view of programmes and plans, which ideally turn into faster
processing period with more effective outcomes (Guix and Font, 2020).
4. Connects individual employee to the organisational objectives
A healthy scorecard lets staff keep their sights on the objective" so to describe in pursuit of
targets. Individual employees can feel that it improves their own success when they consider the
larger meaning behind the aims and priorities that they strive to accomplish. It also has additional
advantage of encouraging workers find a target in the organisation, while maintaining them
involved in their duties.
Although there's so much benefits of introducing balanced scorecard framework in the trust,
there are indeed possible obstacles and drawbacks to the balanced scorecards.
1. It needs to be customised to the enterprise:
Balanced scorecards are designed to offer a structure with which to function, but it would
also have to be adapted to the company that uses this method. This can consume lot of efforts,
time and whereas examples are useful, they cannot be replicated precisely because of the
particular needs of any company.
2. It requires buy-in from leaderships to be effective:
In order to be completely efficient, balanced scorecard framework must be enforced
from bottom up to top of the organisation. This involves having buy-in from management, which
can often take some persuasive, not to overlook the learning phase inherent in having the entire
enterprise to adopt the new method.
3. This could get confusing
It requires patience and effort to grasp the structure itself with balanced scorecards.
Although, there endless tools and example studies that can be understand from as well as this
is easy to get the bogged down by the many diverse situations to use this tool.

4. This needs lot of data/information
Much of time balanced scorecards enable supervisors and staff members to record
information, i.e. recording data. A lot of people don't want that because they consider it dull, and
they could get in way of completing the work needed to achieve the goals (Benková, Gallo,
Balogová and Nemec, 2020).
CONCLUSION
From above study this has been articulated that The Balanced Scorecard preserves
conventional financial indicators. Yet financial metrics tell the tale of previous incidents, an apt
storey for modern age firms for which longer-term investments and client partnerships have not
been key to growth. Although these financial metrics are insufficient to direct and assess the path
that data age businesses would take to generate future wealth via investment in consumers,
vendors, staff, systems, technologies and creativity.

REFERENCES
Books and Journals:
Chong, P., Ong, T., Abdullah, A. and Choo, W., 2019. Internationalisation and innovation on
balanced scorecard (BSC) among Malaysian small and medium enterprises
(SMEs). Management Science Letters, 9(10), pp.1617-1632.
Asiaei, K. and Bontis, N., 2019. Using a balanced scorecard to manage corporate social
responsibility. Knowledge and Process Management, 26(4), pp.371-379.
Krylov, S., 2019. Strategic customer analysis based on balanced scorecard. Ekonomicko-
manazerske spektrum, 13(1), pp.12-25.
Dinçer, H., Yüksel, S. and Martinez, L., 2019. Analysis of balanced scorecard-based
SERVQUAL criteria based on hesitant decision-making approaches. Computers &
Industrial Engineering, 131, pp.1-12.
Dincer, H. and Yuksel, S., 2019. Balanced scorecard-based analysis of investment decisions for
the renewable energy alternatives: A comparative analysis based on the hybrid fuzzy
decision-making approach. Energy, 175, pp.1259-1270.
Firk, S., Hennig, J.C. and Wolff, M., 2020. Can the Balanced Scorecard Help in Designing
Conference Calls? The Effect of Balanced Information Composition on the Cost of
Capital. European Accounting Review, 29(1), pp.115-146.
Guix, M. and Font, X., 2020. The Materiality Balanced Scorecard: A framework for stakeholder-
led integration of sustainable hospitality management and reporting. International
Journal of Hospitality Management, 91, p.102634.
Benková, E., Gallo, P., Balogová, B. and Nemec, J., 2020. Factors Affecting the Use of Balanced
Scorecard in Measuring Company Performance. Sustainability, 12(3), p.1178.