Essential characteristics of organisational performance management
Balanced scorecard or the BSC is a management tool. It presents an order of concepts and pre-existing ideas in a logical, objective and intelligent way. It is a strategic planning and management system. It has the characteristics of a strategic planning and management system. It helps in communicating what the company is trying to accomplish, align the daily activities which everyone at the organisation is doing in accordance with the strategies, prioritizing projects, products, and services and the measurement and monitoring of the progress towards strategic targets (Shafiee, Lotfi and Saleh, 2014).
The organisation uses Balance score card for managing its strategies towards the accomplishment of the necessary goals of the company or the organisation concerned. Through the usage of the Balance Score card, the goals and objectives of the organisation is broken down into four main arenas consisting of the financial component of the company, customer component, processes component and learning and growth component of the company. For each of these four objectives, a particular set of measures, targets and initiatives are created and performed. All these objectives, are been taken care of with the help of certain ‘Key Performance Indicators’. With the help of all the necessary strategies and actions, these four objectives are performed and regularly measured (Ebrahimi and Sadeghi, 2013). For a vivid description of the internal working of the company and the usage of the balance score card, a diagram has been provided below. This diagram shows the main aspects of the working of the balance score card.
The main objective of BSC in regards to that of strategic planning with the operational actions of the business organisation with the help of the following actions: to elucidate and to decipher the vision and the strategy of the concerned organisation; to effectively communicate and relate aims and strategic steps of the company; for the purpose of planning, establishment of the goals for the completion of the company’s objectives and improving the feedback and the strategic learning.
The organisations use the balance score card for a variety of uses. Beneath all the uses, the balance score card is used by the organisations for ensuring better performance management and control. The primary use of the procedure involves the following:
Communicating what the organisation is trying to achieve.
Orientation of the daily work of the organisation’s employees in accordance with the strategies of the organisation.
Prioritizing projects, products and services of the organisation in accordance with the goals and aims of the organisation.
?Regular measurement and monitoring of the progress of the working of the organisation, as per the strategic aims and targets of the organisation.
BSC helps in the process of organisational performance management as has been indicated its three perspectives, which are the financial perspectives, client perspective and the internal process perspectives. The financial perspective shows if the strategies selected and applied by a business entity are contributing to the upsurge of the market value of the enterprise, helping in the generation of economic value and whether it is increasing of the wealth of the owners (Valmohammadi and Ahmadi, 2015). For a better implementation of the BSC in any business organisation, it must begin with a strong dialog between the chief executive of the business concern and the financial director of the business concern on the financial objectives and the specific objectives of the concerned business unit.
The client perspective shows if the strategic steps applied by an organization are causing the increase in the value supposed by the client with regards to the products and services provided by the organisation. The viewpoint of the internal processes implies the subject of strategy execution, which implies, the executive spearhead and the project group identifies all the critical procedures of the business which are vital for changing the proposal of value into a reality for the client, which would eventually act as a source of competitive advantage for the organisation at large (Hoque, 2014). All these factors go on to explain the significance of BSC in terms of contribution towards organisational performance management
Performance measurement as a starting point for analysing organisational performance
Characteristics of a great performance management system:
A good performance management system usually takes note of all the necessary functions of any business organisation. The management of the performances of all the employees and workers of a business concern is essential for its all-round success. Some of the characteristics of a good performance management system and the respective performance of the BSC in those areas have been discussed too.
?Illustrating the employee’s role and contribution: A good management system makes sure that the employee of the concern properly understands his or her roles, responsibilities, so that they take note of their contribution. BSC excels in this area, as it duly notes the contribution of the employees of the concern by taking it into the process and organisational capacity of the concern.
Fulfilment of the objectives of the concern: A good management system makes sure that all the objectives of the concern are fulfilled. Whether it is the financial, marketing, human resource, managerial, social or any other objectives must be sought after. BSC takes special care into this area, by seamlessly blending all its four working objectives of financial, customers, process and organisational capacity.
Failure of the BSC:
BSC, though might have been highly successful in such a short span of time, but it does lack in some areas, where it requires significant amount of improvement. Some of these areas, impact the management of the organisational performance of the company. Some of these have been presented below:
It has an overwhelming framework of data and information, which must be read and analysed in detail in order to have a proper and in-depth understanding of its working mechanism. This is a lengthy procedure, which the stakeholders are reluctant to go through and while preparation, it takes a toll on the management too.
Every new system requires significant amount of support from all the levels of the management. The support from the top management is most important in this regard. This system, although is becoming popular with every passing day, but it still needs the support of the top management and the support of the middle and the lower levels of the management, in order to ensure its smooth implementation.
Conclusion:
Thus every system needs an overwhelming amount of support in order to ensure its smooth implementation and eventual acceptance. It also must not take a toll on the management of the organisation, which makes it irksome to implement. Balance score card, needs to work in this arena. BSC , on the other hand, it is a comprehensive way of judging the organisational performance of any company. Right from the financial aspects, customers, internal organisational capacity and all the internal processes, it takes due note of all of these and ensures their proper management and evaluation. This comprehensive mechanism sets BSC apart from the other kinds of organisational system evaluation and management mechanisms.
References:
Akkermans, H.A. and Van Oorschot, K.E., 2018. Relevance assumed: a case study of balanced scorecard development using system dynamics. In System Dynamics (pp. 107-132). Palgrave Macmillan, London.
Balancedscorecard.org. (2018). What is the Balanced Scorecard?. [online] Available at: https://www.balancedscorecard.org/BSC-Basics/About-the-Balanced-Scorecard [Accessed 29 Jun. 2018].
Ebrahimi, M. and Sadeghi, M., 2013. Quality management and performance: An annotated review. International Journal of Production Research, 51(18), pp.5625-5643.
Hoque, Z., 2014. 20 years of studies on the balanced scorecard: trends, accomplishments, gaps and opportunities for future research. The British accounting review, 46(1), pp.33-59.
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.
Shafiee, M., Lotfi, F.H. and Saleh, H., 2014. Supply chain performance evaluation with data envelopment analysis and balanced scorecard approach. Applied Mathematical Modelling, 38(21-22), pp.5092-5112.
Tenera, A. and Pinto, L.C., 2014. A Lean Six Sigma (LSS) project management improvement model. Procedia-Social and Behavioral Sciences, 119, pp.912-920.
Trunk Širca, N., Babnik, K. and Breznik, K., 2013. Towards organisational performance: understanding human resource management climate. Industrial Management & Data Systems, 113(3), pp.367-384.
Truss, C., Shantz, A., Soane, E., Alfes, K. and Delbridge, R., 2013. Employee engagement, organisational performance and individual well-being: exploring the evidence, developing the theory.
Valmohammadi, C. and Ahmadi, M., 2015. The impact of knowledge management practices on organizational performance: A balanced scorecard approach. Journal of Enterprise Information Management, 28(1), pp.131-159.
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