The Effect of Balanced Scorecards on Decision Makers in the Oil & Gas Industry

“The Effect of Balanced Scorecards on Decision
Makers of Management in the Oil & Gas Industry

CHAPTER 1
INTRODUCTION
In every business enterprise, employees are considered as the firm's most
valuable asset as well as its biggest expense. It means that firm's
productivity and profitability depends upon ensuring that the worker's
performance needs to exceed to their full potential. To survive and prosper
in current economic times, businesses can no longer manage using financial
methods alone. A firm should focus upon improving non-financial measures
such as product quality, customer satisfaction and brand preference in order
to attain desired objectives. Using Balance Scorecards is beneficial method in
order to attain sustainable development of the firm and it will lead business
to the level of success management of oil and gas industry focuses upon
undertaking Balance Scorecards which help them to make effective decision
making so that number of operational activities can be managed in an
effective way. These business tools have helped business units in making informed
business decisions which has enhanced the overall growth and success aspects of
the business units.
The study reveals that performance measurement tools has developed
significant impact on the decision making aspect of the business
development and growth of the business units (Nudurupati and et.al., 2011)The
study has made an analysis on increased use of performance measurement systems as per the
emerging dynamic business environment. It has helped organizations in enhancing
the decision making aspect as the performance and evaluation of the
company develop widely through implementation of the stated method.
Also, a Balanced Scorecard refers to a “strategic planning and management
system” which is used extensively in industries, businesses, Non-
Governmental Organizations (NGOs) and even in governments across the
world in order to align business activities to their strategy and vision. A

Balanced Scorecard is also used in enhancing both the external and internal
communications and in monitoring of organizational performance against the
strategic goals. It is important to note that the use of a strategic scorecard
evolved during the early use when it was just used as “simple performance
measurement” tool to the current “strategic planning and management”
system.
1.1 Background of the Study:
During the last decade, most researchers and academics have devoted some
of their time to increase attention to not only the measurements of
organizational performance, but also towards the influence or impact of the
Balanced Scorecard (BSC) on it as well as on the strategic planning (Agostino
and Arnaboldi, 2012)This article asserts that how organisations use to develop and apply balance
scorecard system to match the design of performance measurement system. Since it was
developed by Kaplan Norton in the year 1992, the use of the Balanced
Scorecard has been adopted widely by various organizations across the
world. It has greatly evolved from a tool that is used in measuring
performance to an instrument used in the implementation of strategy. The
use of the Balanced Scorecards has a significant impact on most of the
decision makers in the oil and gas industry (Tapinos, Dyson and Meadows, 2011)
Balance scorecard is a strategic tool which is not only a performance measurement tool but also
aids in growth of organisation through increased learning. . This is attributed to the fact
that BSC are used in respect to the achievement of target strategic goals of
operation and development by decision makers in the oil and gas industry.
The use of BSC helps in the promotion of an organization’s strategy
realization and also helps organizations to select the most preferred
strategies that can effectively be applied in their specific organizations (Mellat
Parast, Adams and Jones, 2011) The study of article states that various activities supported by

top management like training and development are helpful in improving quality of
performances.. It can truly be asserted that for the sustainable development of
any contemporary enterprise in any business field, there is need to design
not only long-term strategies, but also assure the strategic partnership with
associated production units (Ratnayake, 2012) For effective decision making it is
necessary that all processes related to production should be monitored to ensure optimisation and
cost effectiveness of procedures.. In the most recent past, the significance
associated to the strategic vision of most corporate entities across the world
allows has greatly surged. In the modern world, world practice presents a
broad range of instruments which make it possible for the harmonization of
economic interests for the organizational units (Melnyk and et.al., 2014)The present
article states about fit of performance measurement tools as per the changing business
environment.
The use of the Balanced Scorecard is an example of such one instrument
that is used by decision makers in both the oil and gas industry. It is
important to note that the Balanced Scorecard is capable of transforming the
strategic plan of organizations in the oil and gas industry from an attractive
and passive document to provision of marching orders for such organizations
(Huang, Lai and Lin, 2011) The study shows that use of Balance scorecards help organisation in
efficient decision making by achievement of competitive advantage. This is because it
provides an effective framework for the performance measurements and
also helps decision makers in the Oil and Gas industry to identify what needs
to be done as well as what needs to be measured.
The improper application in the use of Balanced Scorecards has actually
emerged as one of the most critical issues facing most of the contemporary
organizations across the world (Rompho, 2011)The research reveals about uses along
with limitations of using balance scorecard system in organisations. Despite the fact that