"The Balance Scorecard:
Judgemental Effects of Common
And Unique Performance Measures"
I. Introduction
The article I decided to critique for the purpose on management accounting 2 is by Marlys Lipe and Steven Salterio. There article entitled The Balanced Scorecard: Judgmental Effects of Common and Unique Performance Measures ' came from the July 2000 edition of the Accounting Review journal.
The Balance Scorecard (BSC) was originated by Robert Kaplan and David Norton in the early 1990 's as a strategic approach, and performance management system that would enable organisations to translate a company 's vision and strategy into implementation. It essentially gives managers and executives a more balanced ' view of the company 's
…show more content…
Lipe and Salterio after considering the above issues and theories want to assess if Slovic and MacPhillamys (1974) findings are directly transferable to a BSC scenario, they have reasons to believe that the reliance on common measures may not be so obvious with regard to BSC results; due to managers better understanding their business units and being able to analyse them individually should reduce their emphasis on common measures.
IV. Methodology
For the purpose of this article, Lipe and Salterio wanted to examine if there was an over dependence on common measures when it comes to evaluating a BSC of a business unit. For this purpose they used 58 M.B.A. students with on average, more than five years of work experience. The students had to evaluate two divisions of a fictitious clothing firm WCS Incorporated.
The experimental case quotes WCS 's mission statement, introduces the managers of the two business units (divisions), describes the strategies of each division, and presents a balanced scorecard for each division. The M.B.A. student 's task was to act as WCS senior executive and decide a judgement for each division 's manager based on the facts provided. The case follows Kaplan and Norton 's strict theory that each unit develops its own specific scorecard and a superior manager (MBA students) evaluates the unit relative to this scorecard.
The two divisions were 1.) RadWear;
By analysing those elements stated above, it is likely that the higher authority could evaluate the organisations in terms of its strategic performance level which would definitely lead to a better overall understanding on
concept of the Balanced Scorecard (BSC) and to find out the actual meaning of using it.
1. (TCO B) Identify four categories of measures that might constitute a Balanced Scorecard of performance measures and provide an example of each. Also explain how a Balanced Scorecard could assist your organization. This answer must be in your own words—significant cut and paste from the text or other sources is not acceptable. (Points : 30)
This report provides the analysis of case study given to me. Gail Palmer Ashton Graduate School of Business ranks among the top schools of USA but the dean of the institute feels that the school has deviated from its foundations. This analysis proposes implementation of the balanced scorecard and performance metrics in order to achieve the four strategic goals of the institution.
This case study looks at the evidences at hand and delivers 3 primary alternatives: to do nothing which might probably widen the benchmarking gaps within the future, to implement the BSC immediately that risks duplicating some of the processes of the CIL project or to require a wait-and-see approach which might offer the firm 3 years to work out the success of the CIL project before implementing the BSC. In weighing every different, it is determined that the suitable course is to start implementation of the BSC immediately because the risks of waiting are too detrimental.
I agree the implementation of the BSC should be from the top down. The BSC design team should have an additional function on its chart. This function should include managers from the 3
1. The implementation of the Balanced Scorecard had improved Worldclass management review practices. Previously the management review was done only with the general manager and the controller. Where as with introduction of Balanced Scorecard now management review is done with the whole management team. Furthermore the balanced scorecard practised by Worldclass essentially measures both strategic and operational targets i.e organizational and departmental.
A great advantage of the BSC is the ability to measure not only the financial but also the non-financial measures. According to the BMA Group Pty Ltd., the strategic management system aides in accomplishing critical management processes like (The BMA Group, 2004):
between OCB and business unit performance, which is one of the major research questions in the present study. In one of these studies, Podsakoff, Ahearne, and MacKenzie (1997) examined the
“Putting the Balanced Scorecard to Work,” Robert S. Kaplan and David P. Norton, Harvard Business Review, September-October, 1993, pg 134-147.
1. The implementation of the Balanced Scorecard had improved Worldclass management review practices. Previously the management review was done only with the general manager and the controller. Where as with introduction of Balanced Scorecard now management review is done with the whole management team. Furthermore the balanced scorecard practised by Worldclass essentially measures both strategic and operational targets i.e organizational and departmental.
The BSC was originally developed as a performance measurement system in 1992 by Dr. Robert Kaplan and Dr. David Norton at the Harvard Business School. Unlike earlier performance measurement systems, the BSC measures performance across a number of different perspectives—a financial perspective, a customer perspective, an internal business process perspective, and an innovation and
The BSC method for breaking the finance as the only index of measuring tools and did the balance of various aspects. Compared with traditional performance measure system, the benefits of adopting BSC is the BSC can provide strong support for the strategic management of the enterprise. With the continuous development of global economic integration, strategic management is more important in terms of sustainable development of enterprises. The benefit of Balanced Scorecard is can improve the efficiency of enterprise overall management. The four elements involved in Balanced scorecard, are key factors in the success of the enterprise for the future development, through the balanced scorecard report provided by the management, will seemingly unrelated elements organically unifies in together, it can greatly saves the time of enterprise managers, enhance the whole efficiency of company governance, and build a strong basement for the future success of the enterprise.
The primary focus of BSC’s few measures for each perspective is to avoid overloading managers with information. This is supported by proponents Milad, Norlena and Nor Hasni-“The dependence on a few measures in the BSC is to identify and measure those actions that are required to improve desired outcomes. Mohobbot (2004) and Henk and Kim (2002) point out that the advantage of checking just a few number measures becomes a disadvantage when the right numbers are not selected for the BSC.” (Milad Abdelnabi Salem, Dr. Norlena Hasnan, Dr. Nor Hasni Osman). All of the critic’s viewpoints depend on the fact that BSC lacks the mechanism for maintaining the relevance of chosen metrics which leads to the possibility of missing some critical measures. Although BSC provides good exposure on the performance measurements, it provides no validation mechanism for the defined metrics.
Whereas the SWOT analysis is an organizational vignette depicting where the company excels and falters, the balanced scorecard (BSC) details specific elements necessary to achieve identified goals and indicates how to achieve these goals. Blocher et al. (2016) described these elements as critical success factors and characterized the BSC as a benchmark or a model. This management tool is a blueprint of how the company will