The current research is based on appropriateness of non-financial metrics in examining firm performance. Therefore, the paper focuses on critical analysis of BSC as a performance measurement tool. That is, the researcher intends to answer the following primary research question: To what extent does the balance scorecard (BSC) approach influence both performance appraisal and strategic management?
Specifically, the paper reviews what BSC is and how it is applied in various firms. The paper also attempts to link performance appraisal and strategic management. In doing so, it answers the following study sub questions:
How effective is the application of the balance scorecard?
What importance does performance appraisal have to the growth of a firm?
What are the consequences of not implementing non-financial measures within an organisation?
To answer the questions, the researcher conducts a critical literature review of past studies and theories on performance management, strategic management and BSC. The goal of the review is to explain the impact of BSC as a firm performance management tool on the strategic success of the firm. The rest of the paper is, therefore, organized in two sections i.e. literature review and conclusion and recommendations. Literature review section presents a critical evaluation of past studies and theories on BSC and performance management and appraisal. The conclusion and recommendations section summarises the findings and make suggestions for practice and future studies.
Inhaltsverzeichnis (Table of Contents)
- Rationale
- Research questions
- Literature review
- Balanced scorecard is basically defined as a performance management report that the management team use to monitor implementation of strategy and operational activities
- Effectiveness of application of the balance scorecard
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
The objective of this paper is to critically evaluate the Balanced Scorecard (BSC) approach and its influence on performance appraisal and strategic management. It explores the effectiveness of BSC application, the importance of performance appraisal for firm growth, and the consequences of neglecting non-financial measures.
- The influence of the Balanced Scorecard approach on performance appraisal and strategic management.
- The effectiveness of the Balanced Scorecard as a performance measurement tool.
- The importance of performance appraisal for firm growth.
- The consequences of not implementing non-financial measures.
- A critical evaluation of BSC usage, application, benefits and the need for non-financial measures.
Zusammenfassung der Kapitel (Chapter Summaries)
Rationale: This section introduces the concept of strategic management and its importance in maximizing resource absorption to achieve business objectives. It highlights the limitations of traditional financial-based performance measurement tools and introduces the Balanced Scorecard (BSC) as a more comprehensive approach developed by Kaplan and Norton in 1992. The widespread adoption of BSC among Fortune 1000 companies is noted, along with its role in enhancing the objectivity and effectiveness of performance measurement. The section concludes by stating the paper's aim to explore the extent to which the BSC approach influences performance appraisal and strategic management.
Research questions: This section outlines the primary research question: "To what extent does the balance scorecard (BSC) approach influence both performance appraisal and strategic management?" It further details three sub-questions focusing on the effectiveness of BSC application, the importance of performance appraisal for firm growth, and the consequences of omitting non-financial measures. The methodology of a critical literature review is described, explaining the paper's approach to answering these questions.
Literature review: This chapter provides a critical evaluation of past studies and theories related to the Balanced Scorecard (BSC) and performance management. It defines BSC as a performance management report used to monitor strategy implementation and operational activities, highlighting its use in strategic and operational management, as well as individual performance tracking. The chapter discusses key features of BSC, including its focus on the organization's strategic agenda, unique performance monitoring measures, and the ability to combine financial and non-financial data. It contrasts BSC's holistic approach with traditional financial-based performance measurement tools, emphasizing its objective evaluation of data relevant to the organization's mission and vision. The evolution of BSC since its introduction by Kaplan and Norton is discussed, acknowledging its widespread adoption and its strengths in measuring performance from financial and non-financial perspectives (financial, customers, internal business processes, and learning and growth).
Effectiveness of application of the balance scorecard: This section focuses on the application of the Balanced Scorecard (BSC) in performance measurement. It explains Kaplan and Norton's emphasis on four key performance metrics: financial, customer, internal process, and learning and growth. The importance of these metrics in tracking essential aspects of the firm's strategy and fostering continuous improvement is highlighted. The section also differentiates between the financial metric's focus in various organizational types (e.g., profitability and market share for private firms, result-oriented measures for government and non-governmental organizations). The role of customer perception in supporting overall mission and revenue generation is also examined.
Schlüsselwörter (Keywords)
Balanced Scorecard, Performance Appraisal, Strategic Management, Performance Measurement, Financial Metrics, Non-Financial Metrics, Strategic Performance Measurement, Performance Management System, Organizational Performance, Strategy Implementation.
Frequently Asked Questions: A Comprehensive Language Preview
What is the purpose of this document?
This document provides a comprehensive preview of a research paper, including the table of contents, objectives, key themes, chapter summaries, and keywords. It aims to give a structured and professional overview of the paper's content for academic analysis.
What are the main topics covered in the research paper?
The paper critically evaluates the Balanced Scorecard (BSC) approach and its influence on performance appraisal and strategic management. Key themes include the effectiveness of BSC application, the importance of performance appraisal for firm growth, and the consequences of neglecting non-financial measures. The paper also explores the various perspectives of the BSC model (financial, customer, internal processes, and learning & growth).
What are the research questions addressed in the paper?
The primary research question is: "To what extent does the balance scorecard (BSC) approach influence both performance appraisal and strategic management?" Supporting sub-questions focus on the effectiveness of BSC application, the importance of performance appraisal for firm growth, and the consequences of omitting non-financial measures.
How does the paper define the Balanced Scorecard (BSC)?
The paper defines the Balanced Scorecard as a performance management report used by management teams to monitor the implementation of strategy and operational activities. It highlights the BSC's ability to combine financial and non-financial data for a more holistic view of organizational performance, contrasting it with traditional, solely financial-based approaches.
What are the key benefits of using a Balanced Scorecard (BSC), according to the paper?
The paper emphasizes the BSC's ability to provide a more objective and effective performance measurement, enhancing strategic management and aligning performance appraisal with organizational goals. It stresses the importance of including non-financial metrics alongside financial ones for a more complete understanding of organizational success.
What are the limitations of traditional performance measurement tools discussed in the paper?
The paper argues that traditional, solely financial-based performance measurement tools are limited in their scope and fail to capture crucial non-financial aspects of organizational performance, such as customer satisfaction, internal process efficiency, and learning and growth. The BSC is presented as a solution to overcome these limitations.
What methodology is used in the research paper?
The paper employs a critical literature review methodology to analyze existing research and theories related to the Balanced Scorecard and performance management, answering the research questions posed.
What are the key chapters or sections of the research paper?
The paper includes sections on the rationale, research questions, literature review (including a detailed look at the effectiveness of BSC application), and a summary of key findings. It concludes with a list of keywords summarizing the main themes.
What are the key keywords associated with this research paper?
Key terms include Balanced Scorecard, Performance Appraisal, Strategic Management, Performance Measurement, Financial Metrics, Non-Financial Metrics, Strategic Performance Measurement, Performance Management System, Organizational Performance, and Strategy Implementation.
- Citation du texte
- Anonym (Auteur), 2019, To what extent does the balance scorecard approach influence both performance appraisal and strategic management?, Munich, GRIN Verlag, https://www.grin.com/document/961647