Balanced Scorecard and KPIs: Decision Making in Oil and Gas Industry

This report examines the significant effects of Balanced Scorecards and Key Performance Indicators (KPIs) on the decision-making processes of top management within the oil and gas industry. The introduction establishes the importance of these tools for continuous improvement and innovation, emphasizing how they aid in measuring performance, improving business outcomes, and fostering learning perspectives. The report delves into specific areas such as financial, customer, learning and growth, and internal business processes, highlighting how KPIs and Balanced Scorecards influence decisions related to financial performance, customer satisfaction, innovation, and operational efficiency. Further, it explores the impacts on marketing, human resource management, strategy implementation, teamwork, and strategic goal setting. The analysis also addresses potential challenges like causal delays, and the importance of long-term profit generation, total quality management, and stakeholder value. It concludes by emphasizing the importance of these tools in driving effective decisions, enhancing employee productivity, improving financial performance, and achieving organizational objectives. The report is supported by references to academic journals and books.

Short Effects:- The Effect of Balanced
Scorecards and KPIs on Decision Making of
Top Management in Oil and Gas Industry

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................1
Effects of Balance Scorecard and KPI's on decision making.....................................................1
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Balance Scorecard and KPI helps in decision making within oil and gas industry so that
continuous improvement and innovation can be attained. Balance Scorecard is the measure
through which the performance is measured which assist the employees to focus upon quality
and aids in improving business performance (Wu, 2012). Further, KPI's are another performance
management measure which has been adopted by the top management to make effective
decisions so that productivity of the firm can be improved. Both these methods aid in developing
innovative and learning perspectives so that competitive success can be attained.
Effects of Balance Scorecard and KPI's on decision making
Following are the effects of balance scorecard and KPI's on the final decision of top
management such as-
 Financial perspective- It is essential for the top management to make effective decisions
regarding finance so that balance scorecard and KPI's can measure the performance of
individual to attain success within oil and gas sector (Sainaghi, Phillips and Corti, 2013).
 Customer perspectives- Both these methods helps the top management to make decision
regarding identifying customers needs and providing them with innovative products so
that satisfaction can be attained. Thus, introducing new methods within oil and gas sector
helps in evaluating the customer enhancement.
 Learning and growth perspective- Effect of Balance Scorecard and KPI on the final
decision aids the management of oil and gas sector to obtain effective learning and
growth perspective so that best results can be attained (Grigoroudis, Orfanoudaki and
Zopounidis, 2012). Thus, it facilitates the firm to create value and innovation to achieve
maturity stage within the product life cycle.
 Internal business processes perspectives- It affects the top management to improve and
identify the measures so that customers can be satisfied. Such methods assist the internal
processes and help the company of oil and gas industry to yield and develop new product
innovation to enhance the performance (Northcott and Smith, 2011).
 Marketing effect- It is essential for the organization to make decision regarding
marketing and promotional strategies so that oil and gas industry can attain the desired
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success. Improving marketing opportunity aids in improving performance of the
company in market.
 Human resource management- HRM effect also plays a crucial role within oil and gas
sector to measure the productivity of the workers. Thus, it is essential for HR manager to
effectively measure workers performance and enhance their skills towards organizational
goals (Niven, 2011).
 Improving implementation of strategies and objectives- Through implementing
balance scorecard strategy, it assists in significantly implementing the strategies and
tactics so that proper monitoring can be done over business success. With regard to this,
it aids in making effective decision which results in obtaining high performance (Elyna
Myeda, Nizam Kamaruzzaman and Pitt, 2011).
 Management effect- Balance Scorecard and KPI affects the business performance and
thus aids value to the firm to bring improvement in achieving the desired success. It is
essential for oil and gas sector to enhance the operations of the firm towards business
goals.
 Team work- Balance Scorecard and KPI helps in developing effective team work and
enhance the overall team performance. Also, such objectives facilitate employees in
working as a team and which enhances the sales and profitability of the organization.
 Strategic goals- It assesses that business is required to develop effective strategic goals
as it affects the functioning of enterprise and thus employ skilled candidates so that they
can efficiently work towards business goals (Soderberg and et.al., 2011).
 Causal delays- It can be assessed that if such factors are not carried out effectively by the
firm it will impact the performance of individuals and carries out causal delays that
affects the working culture of firm.
 Long term profit generation- Managers of oil and gas industry assesses that the
organization is required to execute the balance scorecard and KPI's which results in
attaining long term profits. Thus, it will affect the business if profit maximization
situation is not attained in an effective way (Kurien and Qureshi, 2012).
 Total quality management- It can be stated that balance scorecard and KPI's affects the
total quality management of firm if employees are not rendered appropriate training
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programs. Hence, it is essential for the oil and gas sector workers to employ effective
strategies to maintain appropriate quality within firm and attain success.
 Improve stakeholder value- It also affects the organisation if they does not value the
stakeholder appropriately. As it is essential for the enterprise to value their stakeholders
and provide them with proper information regarding business operations so that desired
targets can be attained.
 Process innovation- It is important for the oil and gas sector to measure its product or
service so that specific improvement can be attained within the existing processes. It
impacts the corporate in developing innovative products within firm and thus influences
the operations of company in the market.
 Cost effect- Balance Scorecard and KPI's impacts the cost of the firm and thus it is
essential for top management to make effective decision regarding using performance
measures to enhance productivity of the organization (Wu, 2012).
 Quality- Top management of the organization is required to maintain its quality as it gets
affected if employees are unable to perform at the desired level. Therefore, it is essential
for the management to make effective decision regarding maintaining quality so that
success can be attained.
 Leadership- Balance scorecard and KPI's impacts the leaders as they are under pressure
to make effective decisions upon firm's performance to attain leadership goals.
 Controlling performance- Top management needs to take correct decision so that
performance can be controlled in an effective way. Further, KPI's and balance scorecard
are the effective measure that assists in affecting individual performance towards
business goals (Northcott and Smith, 2011).
 Individual performance- It affects the firm to make effective decision regarding
effective balance scorecard and KPI so that performance of employees can help in
increasing sales and profitability.
 Enhance capabilities- Effect of balance scorecard and KPI's assesses top management to
take effective decision so that capabilities and skills can be improved.
 Strategic performance management- It evaluates that that KPI’s and Balance Scorecard
upon enhancing the strategic performance management towards success.
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 Spread sheets- It impacts the top management of oil and gas sector to make effective
spread sheets to influence firm's performance and make optimum utilization of resources
(Grigoroudis, Orfanoudaki and Zopounidis, 2012).
 Decision engineering- Such factor affects the decision of top management as they need
to make best decisions regarding implementing balance scorecard and KPI towards
obtaining success.
 Process mining- KPI's and Balance Scorecard impact on improving process mining
factor so that top management can make their final decisions.
 Data warehousing- It also affects the final decision of top management and thus bring
positive outcomes which helps in attaining success in the organization.
 Business processes- It affects the final decision of top management in relation to develop
effective business processes (Elyna Myeda, Nizam Kamaruzzaman and Pitt, 2011).
 Creating new future- Here, the firm also aims to develop effective future by adpting
innovative ideas and thus implement the same to obtain best results.
 Local information system- Firm aims to develop effective information and technology
system and communicate with each other otherwise which positively impacts the
performance of the organization.
 Developing reporting tools- Such tools need to be developed effectively by the top
management otherwise it affects firm's decision to gain better outcomes.
CONCLUSION
It can be concluded from the study that there are various factors which impact the
decision making of top management. Therefore, it is essential for them to undertake effective
final decision in relation to attaining organizational objectives. Balance Scorecard and KPI's
facilitates in measuring employee productivity so that business targets can be attained. Both
these methods also assist in improving financial performance of firm and thus specific measures
can be achieved.
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REFERENCES
Books and Journals
Elyna Myeda, N., Nizam Kamaruzzaman, S. and Pitt, M., 2011. Measuring the performance of
office buildings maintenance management in Malaysia. Journal of Facilities Management.
9(3). pp.181-199.
Grigoroudis, E., Orfanoudaki, E. and Zopounidis, C., 2012. Strategic performance measurement
in a healthcare organisation: A multiple criteria approach based on balanced scorecard.
Omega. 40(1). pp.104-119.
Kurien, G. P. and Qureshi, M. N., 2012. Performance measurement systems for green supply
chains using modified balanced score card and analytical hierarchical process. Scientific
Research and Essays. 7(36). pp.3149-3161.
Niven, P. R., 2011. Balanced scorecard: Step-by-step for government and nonprofit agencies.
John Wiley & Sons.
Northcott, D. and Smith, J., 2011. Managing performance at the top: a balanced scorecard for
boards of directors. Journal of Accounting & Organizational Change. 7(1). pp.33-56.
Sainaghi, R., Phillips, P. and Corti, V., 2013. Measuring hotel performance: Using a balanced
scorecard perspectives’ approach. International Journal of Hospitality Management. 34.
pp.150-159.
Soderberg, M. and et.al., 2011. When is a balanced scorecard a balanced scorecard?.
International Journal of Productivity and Performance Management.60(7). pp.688-708.
Wu, H. Y., 2012. Constructing a strategy map for banking institutions with key performance
indicators of the balanced scorecard. Evaluation and Program Planning. 35(3). pp.303-
320.
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