Robert S. Kaplan and David P. Norton introduced the balanced scorecard, which supplemented traditional financial measures with criteria that measured performance from the perspectives of customers, internal business processes, and learning and growth. The scorecard enabled companies to track financial results while monitoring progress in building the capabilities they would need for growth.
Traditional management systems rely on financial measures, which bear little relation to progress in achieving long-term strategic objectives. The scorecard introduces four new processes that help companies connect long-term objectives with short-term actions. The first–translating the vision–helps managers build a consensus around the company’s strategy and express it in terms that can guide action at the local level. The second–communicating and linking–lets managers communicate their strategy up and down the organization and link it to unit and individual goals. The third–business planning–enables companies to integrate their business and financial plans. The fourth–feedback and learning–gives companies the capacity for strategic learning, which consists of gathering feedback, testing the hypotheses on which strategy was based, and making the necessary adjustments.
Many companies adopted early balanced-scorecard concepts to improve their performance measurement systems. They achieved tangible but narrow results. Adopting those concepts provided clarification, consensus, and focus on the desired improvements in performance. More recently, we have seen companies expand their use of the balanced scorecard, employing it as the foundation of an integrated and iterative strategic management system. Companies are using the scorecard to: clarify and update strategy, communicate strategy throughout the company, align unit and individual goals with the strategy, link strategic objectives to long-term targets and annual budgets, identify and align strategic initiatives, and conduct periodic performance reviews to learn about and improve strategy.
The balanced scorecard enables a company to align its management processes and focuses the entire organization on implementing long-term strategy. At National Insurance, the scorecard provided the CEO and his managers with a central framework around which they could redesign each piece of the company’s management system. And because of the cause-and-effect linkages inherent in the scorecard framework, changes in one component of the system reinforced earlier changes made elsewhere. Therefore, every change made over the 30-month period added to the momentum that kept the organization moving forward in the agreed-upon direction. The balanced scorecard provides a framework for managing the implementation of strategy while also allowing the strategy itself to evolve in response to changes in the company’s competitive, market environments. The Balanced Scorecard: what is the score? A rhetorical analysis of the Balanced Scorecard Hanne Nørreklit
Accounting, Organizations and Society 28 (2003) 591–619
This article analyses the means by which the authors of the Balanced Scorecard have created that attention. The Balanced Scorecard (BSC) is one of the latest innovations in management. It is a tool of strategic control developed by Kaplan and Norton and described in their 1996 book The Balanced Scorecard. In the business world, the balanced scorecard has engendered great interest internationally. The question of whether this is due to its substance as an innovative and practical theory or simply to its promotional rhetoric is the focus of this paper. The balanced scorecard aims to solve the problem related to the historical nature of the financial measures of accounting systems. It does so by integrating financial and nonfinancial strategic measure variables in a cause-and effect relationship which assumes the following: measures of organizational learning and growth, measures of internal business processes, measures of the customer perspective, financial measures. The assumption that there is a cause and- effect relationship between the suggested areas of measurements is essential because the measurements in non-financial areas make the performance measurement system a feed-forward control system, which solves the problem of the historical nature of accounting data
This paper investigates whether the book entitled The Balanced Scorecard has the features characteristic of sound argumentation, i.e. whether it uses an appropriate combination of ethos, logo s and pathos when appealing to its readers; if it does not, it will be further examined which features characterize the text, which will then allow us to draw conclusions as to the genre of the text and, in turn, to tell how the BSC is promoted.
All the author’s analysis shows that rhetoric is a key management tool. Management constantly requires new rhetoric. The only problem is that, if the rhetoric is combined with theory that is full of mistakes, the sources of errors are numerous. In that case, the managers cannot use the theories to analyses the problems of their companies and they will not have an instrument which actually allows them to control and direct the company. Instead, more argumentative and empirically valid theories should be combined with entertaining rhetoric. Researchers who are preoccupied with developing more cogent and realistic models possibly forget or are outright against the popularized communication of research results, which means that many managers do not ever become acquainted with the theories. Our conclusion, therefore, is that both researchers and managers have to become better at selling theories and models in a way that is persuasive yet convincing. Further research is therefore that more rhetorical analyses should be carried out, not only of management guru texts but also of academic texts in the area, like management and accounting. The purpose is to allow identification of good as well as problematic rhetoric as part of a learning process which may offer directions for the development of theories. The balanced scorecard: the effects of feedback on performance evaluation Gerui (Grace) Kang, Amy Fredin
Management Research Review, Vol. 35 No. 7, 2012, pp. 637-662
The use of a balanced scorecard (BSC) for performance evaluation is meant to help evaluators make more complete decisions, as they have a variety of financial and non-financial measures to assess. The problem is that users have difficulty taking all of the measures into consideration. The tendency to place more weight on common measures (measures that are the same across divisions) while either ignoring or placing very little weight on unique measures (measures are unique to a particular division) has become known as a “common measures bias”. The purpose of this paper is to extend a line of research that works to understand how this common measures bias might be mitigated.
This study examines whether the presence of task property feedback, a form of cognitive feedback, prior to a performance evaluation task, can help evaluators overcome the tendency to rely primarily on common measures. This study used an experimental design where subjects were asked to evaluate the performance of two managers under either feedback or non-feedback conditions. In the feedback condition, subjects were provided with their supervisor’s suggestions about performance evaluation in the use of BSCs. In practice, more straight forward and simple feedback information is likely easier for companies to implement and easier for evaluators to follow. Feedback information that is too complex or that requires too much effort may frustrate evaluators, at which point they may abandon the effort. The authors’ findings also indicate that direct and clear guidance from the top manager of a business may be seen as pressure by lower-level managers. It is important for top managers to create such a performance evaluation environment so that all BSC measures are considered.
The paper finds that when evaluators judge the performance of managers through the use of a BSC, they tend to weight common measures more heavily than they do unique measures. Where this study contributes to the literature is in the use of task property feedback, a form of cognitive feedback, to overcome this bias. Since the use of unique measures is a key attribute of BSCs as they help users capture the nuances of a specific division’s or firm’s strategy, it is crucial that performance evaluators pay careful attention to them. The findings also indicate that direct and clear guidance from the top manager of a business may be seen as pressure by lower-level managers, thereby suggesting that they (the lower-level managers) use all BSC measures in their evaluations. It is important for top managers to create such a performance evaluation environment so that all BSC measures are considered. This study is the first to examine the influence of task property feedback on performance evaluation in the context of a BSC. Going forward, it will be important to evaluate how this type of feedback, along with other forms of feedback, may influence performance evaluations over a longer time frame.