Contribution of ‘Balanced Scorecards’ to Organisational Performance Management

This essay explains and evaluates the contribution of ‘Balanced Scorecards’ to the organizational performance management. It also explains the instances in which different perspectives of ‘Balanced Scorecard’ system can add a new dimension to performance measurement concept.

Running head: CONTRIBUTION OF ‘BALANCED SCORECARDS’ IN PERFORMANCE
MANAGEMENT
Contribution of ‘Balanced Scorecards’ to Organisational Performance Management
Name of the University:
Name of the Student:
Authors Note:

1CONTRIBUTION OF ‘BALANCED SCORECARDS’ IN PERFORMANCE
Introduction
Leading companies are observed to successfully employ performance measurement in
attaining a detailed insight within organization along with its effectiveness of the implemented
programs, processes and people (Al-Hosaini and Sofian 2015). Considering such importance of
effective performance management system, the “Balanced Scorecard” method is considered as
most widely applied performance management system in the current competitive environment.
The objective of the essay is to explain and evaluate the contribution of the “Balanced
Scorecards” to the organizational performance management. It will also explain the instances in
which different perspectives of “Balanced Scorecard” system can add a new dimension to
performance measurement concept.
Discussion
Bourne, Melnyk and Bititci (2018) stated that maintaining effective performance
management system is vital for organizational success that includes two major aspects. One
aspect considers that the performance of the organization along with the effectiveness of the
management of company’s capabilities is necessary for running successful business. Another
aspect considers that performance management system evaluates employees and supports them
in reaching their respective goals along with ensuring that the organization addresses overall
objectives of the business. Corrall (2015) revealed that the business environment is becoming
highly competitive that resulted in introduction of balanced scorecards that added strategic non-
financial performance measures in addition to traditional financial metrics to offer a balanced
view of organizational performance. The balanced scorecard serves as a strategic management
tool employed for converting a company’s strategic objectives into a performance indicators set

2CONTRIBUTION OF ‘BALANCED SCORECARDS’ IN PERFORMANCE
among four quadrants. Such indicators are maintained in measuring companies’ achievement
against its vision along with analysing long term success drivers (Quesado, Aibar Guzmán and
Lima Rodrigues 2018).
Through the balanced scorecard approach, the companies monitor its current performance
along with its recent strategies in improving processes along with educating and motivating
employees. For instance, a renowned and globally successful organization, Apple Inc employs
balanced scorecard approach in measuring the critical factors in successful implementation of
strategies in order to drive high performances. The company employs five performance
indicators as an aspect of holistic approach to its long term performance plan (Quesado, Aibar
Guzmán and Lima Rodrigues 2018). This encompass core competencies, consumer satisfaction,
shareholder value, employee commitment and alignment and market share in order to determine
whether their business is progressing towards its strategic objectives. There are several
advantages of using “Balanced Scorecard” approach as the performance management system in
organizations. Hansen and Schaltegger (2017) evidenced that implementation of “Balance
Scorecard” performance management system can serve as a simple way to focus on the overall
organization based on few performance indicators. Moreover, this system facilitates to rapidly
and simply convey the complexity of a company as a major enabler to transform vision into
strategy and then to practices. It also enables the company to align or integrate the corporate
programmes in making sure that they focus on the long term performance drivers.
Hladchenko (2015) aalso added that in maintaining effective performance measurement
system, “Balanced Scorecard” approach can be employed to break down strategic measures in all
job levels so that employees can observe the aspects those is required at their level in attaining
exceptional overall performance. It can also be employed in determining whether the company is

3CONTRIBUTION OF ‘BALANCED SCORECARDS’ IN PERFORMANCE
progressing towards attaining strategic objectives. For instance, Microsoft is another
organization that has implemented balanced scorecard as its performance measurement system.
In implementing this system, the company has developed six areas of focus within the scorecard
covering strategies, best practices, and metric management, and business intelligence, actionable
and operational tools along with knowledge management. Kutsch, Ward, Hall and Algar (2015)
indicated that “Balanced Scorecard” serves as a tool that monitors organizational performance
measurement strategies through employing a combination of financial and the non-financial
measures. These four balanced perspectives include financial, consumer, internal business
process along with learning and growth perspective. This strategy directs to develop metrics,
gather data and analyse them in order to have an overall viewpoint of the company’s
performance. For instance, Volkswagen successfully implemented strategy map and balanced
scorecard in accomplishing a turnaround and cultural change (Quesado, Aibar Guzmán and Lima
Rodrigues 2018). The company used this performance measurement tool in motivating its
employees through communicating its strategies in several manners along with aligning financial
and project resources to strategy. Balanced scorecard performance measurement tool facilitates
in envisioning organisational operations as a map referred as strategy map and its cardinal
directions include objectives, initiatives and measurements.
Okongwu, Brulhart and Moncef (2015) revealed that the financial perspective explains
the ways in which companies performance are presented before their stakeholders trough
reflecting return on capital employed, return on investment, market share, profitability, revenue
growth and economic value added. The performance metrics those are considered by the
companies in within the consumer perspective encompass number of complaints, on-time
deliveries, repeat purchases, consumer retention and acquisition. The internal business process

4CONTRIBUTION OF ‘BALANCED SCORECARDS’ IN PERFORMANCE
perspective is considered to have increased impact on consumer satisfaction along with attaining
business objectives (Quesado, Aibar Guzmán and Lima Rodrigues 2018). The potential
performance measurement metrics against this perspective include amount of reworking,
increase in productivity, percentage of defects and increase in capacity utilization. The learning
and growth perspective concentrates on the areas where companies must improve performance
such as through ensuring continuous improvement and generating value in future (Quesado,
Aibar Guzmán and Lima Rodrigues 2018). Certain performance measurement metrics those are
used by companies against this perspective include number of new products introduced, number
of trainings done each period research and development as sales percentage and implementation
of employee suggestions.
Conclusion
The objective of the essay was to explain and evaluate the contribution of “Balanced
Scorecards” to the organizational performance management. It was gathered from completion of
the essay that the business environment is becoming highly competitive that resulted in
introduction of balanced scorecards that added strategic non-financial performance measures in
addition to traditional financial metrics to offer a balanced view of organizational performance.
Moreover, it is also revealed that through the balanced scorecard approach, the companies
monitor its current performance along with its recent strategies in improving processes along
with educating and motivating employees.

5CONTRIBUTION OF ‘BALANCED SCORECARDS’ IN PERFORMANCE
References
Al-Hosaini, F.F. and Sofian, S., 2015. A review of balanced scorecard framework in higher
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Bourne, M., Melnyk, S. and Bititci, U.S., 2018. Performance measurement and management:
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Hansen, E.G. and Schaltegger, S., 2017. Sustainability balanced scorecards and their
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Hladchenko, M., 2015. Balanced Scorecard–a strategic management system of the higher
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Quesado, P.R., Aibar Guzmán, B. and Lima Rodrigues, L., 2018. Advantages and contributions
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