BUSN11080 Managing Organisational Health Assignment Sample 2024
Introduction
A balanced scorecard is a performance metric for strategic management that is mainly used for identification and improvement purposes in business. Furthermore, through a balanced scorecard, internal functions of business along with the external outcomes are easily obtained. Based on the balanced scorecard, performance feedback is provided to the organisations.
Balanced scorecards are quite common in both the public and private sector of organisations including in countries such as Japan, the United States, Europe and the United Kingdom. Companies mainly utilise the information gathered from the balanced scorecard to plan better strategies for growth and development.
The concept of a balanced scorecard was introduced by Robert Kaplan and David Norton in 1992 by taking previous scorecard or performance metrics and incorporating those ideas in a balanced scorecard. The main function of a balanced scorecard involves evaluating the four aspects of business: Business processes, Growth and Learning, finance and customers. The main advantage of a balanced scorecard is that all this information is available in a single report and that helps in improving efficiency and performance.
Main Body
Uses and role of balanced scorecard in business
In organisations or businesses, a balanced scorecard is utilised to evaluate and measure performance. It is a strategic management metric for performance. Initially, a balanced scorecard was introduced for general businesses and organisations, however, later it was adopted by government agencies and non-profit businesses and organisations (Fatima and Elbanna, 2020). The model of a balanced scorecard is structured around four aspects that entails good behaviour and a positive environment within the organisation. The four aspects that are isolated for evaluation are
Growth and Learning
Business processes
Customers
Finance
The balanced scorecard is utilised to collect information such as measurements, objectives, goals and initiatives based on these four primary aspects. Through a balanced scorecard, the companies can track factors that are considered obstacles or hindrances in business performance. Furthermore, a balanced scorecard is used for planning strategies and transforming weak points of organisations into strengths (Quesado et al. 2018).
The scorecard can easily obtain information on the company while reviewing the company’s objectives. The organisations utilise a balanced scorecard for mapping strategies and identifying the weak points within the organisations.
The Balanced scorecard model is developed on specific characteristics and the information is gathered from the four major aspects of a business.
Growth and Learning: These two factors are reviewed and analysed by investigating knowledge and training resources. The scorecard assesses these criteria by analysing how fast information is being captured within an organisation and the effectiveness of the handling process of the same information (Andrade Arteaga et al. 2020). In this aspect, the balanced scorecard provides a positive remark if the information that is collected can be utilised as a competitive advantage in the market.
Business Processes: This factor is analysed by examining the manufacturing of the products. Furthermore, operational management is also investigated to identify the gaps, shortages, wastes and delays. Nowadays, efficiency in business performance is analysed by their sustainable methods.
Customer Perspectives: The views and feedback from the customers are collected to analyse customer satisfaction with the quality and service of the company. Other factors involving customer satisfaction include the availability and price of the services and the products (Aryani and Setiawan, 2020). Good feedback from the customers is marked as positive in the balanced scorecard.
Financial Data: Financial data mainly refers to sales, income and expenditures and they are mainly analysed to judge the financial performance of the company. The metrics involving financial data include financial ratios, income targets, dollar amount and budget variances.
Impact of balanced scorecard in business performance
A balanced scorecard has several benefits and in general, it can be mentioned that a balanced scorecard has a positive impact on organisational performance (Aujirapongpan et al. 2020). The main benefits that are obtained with the utilisation of a balanced scorecard are
Improved Strategic Planning: With the help of a balanced scorecard a powerful structure can be created that effective communication and building strategies. The model of the balanced scorecard is quite useful as it provides elaboration regarding the company’s performance with a cause-and-effect analysis. Furthermore, with a balanced scorecard, the main drivers that can enhance future performance can be identified.
Improved Execution and Strategy Communication: A balanced scorecard provides a single report containing the strengths and weaknesses of a company, it helps the company in planning its strategies both externally and internally at a better level (Harahap and Wardhono, 2020). The strategies that are planned based on balanced scorecard performance are quite improved in structure and not difficult to execute by the employees.
Improved Alignment of Initiatives and Projects: Balanced scorecard helps the organisation by providing a detailed report based on which the company plan their strategic objectives which are completely aligned with their project initiatives (Aimagambetov and Karabayev, 2020).
Improved Management Information: Balanced scorecard is responsible for designing the key indicators of efficient performance. This helps the companies measure the values that are related to their strategic objectives and goals. Based on a recent study, it has been identified that organisations that use a balanced scorecard have higher abilities regarding decision-making and management information.
Better Performance Reporting: Balanced scorecard can be utilised as a guide to improve performance. A balanced scorecard is responsible for ensuring that the companies, especially their management, are focusing on issues that are important and their plans are being executed properly (Simmons, 2020).
Improved Organisational Alignment: Balanced scorecard also helps the organisations to align their structure with the objectives. For excellent plan execution, it is essential to ensure that every unit within the organisation is properly functioning with the same goal.
Improved Process Alignment: Balanced scorecards that are well-implemented help the organisation in risk management, budgeting and analytics (Muller et al. 2018). With a balanced scorecard, a true organisation that is focused on strategy can be created.
Based on the above benefits the impact of a balanced scorecard on the organisation is quite clear, it helps the organisations in multiple ways, and primarily it reduces inefficiencies and mistakes in the business process.
Challenges and Recommendations
A balanced scorecard is mainly viewed as a positive factor that enhances business performance. However, it is not completely flawless, there are several obstacles and disadvantages of balanced scorecards. A balanced scorecard is responsible to provide a detailed structure that is followed by the organisation (Purnomo and Prayati, 2020).
As every organisation has a different structure, hence achieving the perfect structure or using the balanced scorecard after optimising it with the company is a quite time-consuming process. Furthermore, to be the balanced scorecard to portray effective results the implementation should be from bottom to top of the company. Hence, again the concept of excessive time consumption and without the cooperation from the leaders the balanced scorecard will be ineffective.
8The balanced scorecard is built on a framework that requires additional knowledge to understand the specifics along with dedication and again time. As there are innumerable resources available on the topic it is quite easy to be confused regarding the various ways this is utilised (Mahesha and Karthikeyan, 2018).
Lastly, in a balanced scorecard, the members, leaders and the employees of the organisation are required to report the requested information. As a result, there are countless data entries, and in time the task can become quite tedious. Hence, as a result, the preparation of a balanced scorecard can hinder business performance by interfering in regular business activities.
Based on the challenges it can be mentioned that a balanced scorecard can create a few hindrances in business, however, the benefits of the scorecard outweighs the negatives. With proper training and dedication, the workings and utilisation of a balanced scorecard can be easily understood.
Moreover, most of the challenges that are mentioned are based on time consumption, hence, to overcome these challenges the organisations require a dedicated team for handling and managing a balanced scorecard (Pham et al. 2020). With this innovative approach, the organisation can easily overcome the challenges presented by these balanced scorecards; however, on the positive side, they will be able to reap the benefits that are only available with using these balanced scorecards.
Conclusion
In conclusion, it can be mentioned that with the adoption of a balanced scorecard both the public and private firms can analyse their business performance quite effectively. Furthermore, the companies can utilise the balanced scorecards for enhancing their strategic objectives and business performance.
most of the challenges that are mentioned are based on time consumption, hence, to overcome these challenges the organisations require a dedicated team for handling and managing a balanced scorecard. With this innovative approach, the organisation can easily overcome the challenges presented by these balanced scorecards; however, on the positive side, they will be able to reap the benefits that are only available with using these balanced scorecards.
The balanced scorecard is utilised to collect information such as measurements, objectives, goals and initiatives based on these four primary aspects. Through a balanced scorecard, the companies can track factors that are considered obstacles or hindrances in business performance. Furthermore, a balanced scorecard is used for planning strategies and transforming weak points of organisations into strengths.
The scorecard can easily obtain information on the company while reviewing the company’s objectives. The organisations utilise a balanced scorecard for mapping strategies and identifying the weak points within the organisations.
Reference List
Aimagambetov, Y. and Karabayev, S., 2020. Marketing strategy formation of universities using the balanced scorecard. OF SOCIAL AND HUMAN SCIENCES, p.32.
Andrade Arteaga, C., Rodríguez-Rodríguez, R., Alfaro-Saiz, J.J. and Verdecho, M.J., 2020. An ANP-Balanced Scorecard methodology to quantify the impact of TQM elements on organisational strategic sustainable development: application to an oil firm. Sustainability, 12(15), p.6207.
Aryani, Y.A. and Setiawan, D., 2020. Balanced scorecard: Is it beneficial enough? A literature review. Asian Journal of Accounting Perspectives, 13(1), pp.65-84.
Aujirapongpan, S., Meesook, K., Theinsathid, P. and Maneechot, C., 2020. Performance evaluation of community hospitals in Thailand: An analysis based on the balanced scorecard concept. Iranian Journal of Public Health, 49(5), p.906.
Fatima, T. and Elbanna, S., 2020. Balanced scorecard in the hospitality and tourism industry: Past, present and future. International Journal of Hospitality Management, 91, p.102656.
Harahap, R.M. and Wardhono, F.W., 2020. Modifying Balanced Scorecard as a Strategic Tool of Public Sector Organisations: Evidence from a Community Health Centre in Indonesia. IR–PERPUSTAKAAN UNIVERSITAS AIRLANGGA.
Mahesha, M.P. and Karthikeyan, R., 2018. Balanced Scorecard in an Indian Public Sector Enterprise–A Framework for Implementation. IBMRD’s Journal of Management & Research, 7(2), pp.1-10.
Muller, R., Smith, E. and Lillah, R., 2018. THE IMPACT OF EMPLOYEE ENGAGEMENT ON ORGANISATIONAL PERFORMANCE: A BALANCED SCORECARD APPROACH. International Journal of Economics and Finance Studies, 10(2), pp.22-39.
Pham, C.D., VU, S.T., Pham, Y.T.K. and Vu, N.T., 2020. Evaluating performance of Vietnamese public hospitals based on balanced scorecard. The Journal of Asian Finance, Economics and Business, 7(6), pp.339-349.
Purnomo, M.R.A. and Prayati, K.T., 2020, September. Performance analysis using Fuzzy Balanced Scorecard-based performance prism. In IOP Conference Series: Materials Science and Engineering (Vol. 931, No. 1, p. 012018). IOP Publishing.
Quesado, P.R., Aibar Guzmán, B. and Lima Rodrigues, L., 2018. Advantages and contributions in the balanced scorecard implementation. Intangible capital, 14(1), pp.186-201.
Simmons, S.D., 2020. Factors that affect the adoption of the balanced scorecard and its implementation process in Australian healthcare organisations (Doctoral dissertation, University of Southern Queensland).
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