CHAPTER TWO
2. LITERATURE REVIEW
2.0 Introduction
This section covers briefly the historical, theoretical, and background of the topic in the broader body of knowledge. Such as basic concepts of the balanced scorecard, Perspectives of the balanced scorecard, BSC in the public sector, BSC as a tool for performance measurement in public sector, Advantages and disadvantages of the BSC in public sector and Result oriented performance management change initiation in Ethiopia.
2.1 Basic Concepts of the Balanced Scorecard
The concepts of Balanced Scorecard was first conceived by Kaplan and Norton in 1992, it has been implemented in thousands of corporations, organizations, and government agencies worldwide and its functions have evolved as the number of organizations applying this methodology has increased.
The Balanced Scorecard was developed out of a belief that traditional ways of thinking that relied primarily on financial accounting measures were becoming obsolete. As the developers explained, so as to appreciate sustainable growth and organizational success in the future, an organization should:
Pursue its strategy in a balanced and coherent manner, with the vision placed above, and strategic objectives broken down into four perspectives;
Promote communication within an organization vertically and horizontally while balancing various management and operational elements;
Think logically about strategic hypotheses for achievement in terms of cause-effect relationships; and
Build business processes by forecasting, then verifying them by quantification;
2.2 The Four-Perspective Model
The notion of the Balanced Scorecard was described as "a framework for multi- dimensional performance evaluation and performance management." This framew...
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...ing various issues, monitor and adjust the implementation of their strategies and to make fundamental changes in them. If used correctly, BSC not only creates concrete results, but also creates a long-term balance in the organization. This balance can be described from many different angles. It provides a balance between the short-term and the long-term. This means that it offers a balance between what is important today and what is important tomorrow. It also gives a balance between external and internal measures, indicating a balance between what is important to us and to our key stakeholders. Moreover, BSC gives you a balance between financial and non-financial measures. Finally, it gives a balance between different levels in the organization. This balance is the one established between what is important to the management and what is important to all employees.
With the goals of 2010 in mind, it is important for the AHA to be able to measure the actions of their employees and ensure the alignment of their behaviors with the strategic goals of the association. The Balance Score Card developed below serves as universal tool to do just that, but also sends a message to leaders and employees across the association that this is the new strategic direction the association will be moving, and this is it will be mapped and measured to ensure we reach our goals for 2010.
The Balanced Scorecard is a business strategic planning system used by management to make decisions based on information provided about the business from four different perspectives. The first of the four perspectives is the financial perspective. Which means that we evaluate our business and conduct research from the shareholders perspective. Next is the internal business perspective, which is an internal evaluation of what the business must be good at to excel. Next is the innovation and learning perspective which is an evaluation of the firm’s ability to continue to improve and create value. The final perspective is the customer perspective, which is looking at the business activities from the customers
‘Though it is intricate to demonstrably prove in quantitative terms that the balanced scorecard can deliver efficiency improvements at the start of its implementation, it can be shown in quantitative terms that a well designed fully cascaded balanced scorecard system should address the needs of a health care system. ’ (Radnor and Lovell, 2003, p. 105)
A balance score board is mainly focus on gathering and reporting info to the company’s management system. Thus includes the company’s financial view, method of internal and external operations, learning and growth and the customer’s perspective. In this paper I am going to focus on this four areas to achieve the extreme accomplishment in our products.
The "balanced scorecard is a model and performance tool used to monitor financial and quality performance" (Pane, 2011) and "translates mission and strategy into outcomes and
Within an organization one of the key tools that they use is that of: communication. Communication is a primary key to any organization and without it there is no cohesion, no leadership, and no functionality. As communication begins to diminish, so does the organization – as one article puts it: “These new economic…. imperatives have significantly contributed to the demise of the old classic command-and-control bureaucracy…” (Tiernan et al, 2002, 47-48). From what this article states, the lack of communication has led to a semi-collapse of the mechanistic structure of an organization. Though communication does seem like a huge factor of an organization, communication does not come without its troubles within the inter-organizations; if there is communication going on in a company, there is going to also be a lack of communication. When a company has employed thousands of people (or maybe just a small amount) they are hiring a whole selection of individuals to work as whole group in unity – though this does seem like an amazing idea, these sets of individuals will have quite ...
The Mayo Clinic (Mayo) provides a compelling and instructive example of the critical role of performance measurement in managing performance behaviors. An analysis of the Mayo approach offers insightful understanding of effective performance management practices. Accordingly, this paper reviews the Mayo performance management system from four perspectives (a) leadership strategy, (b) performance measurements, (c) human resources management, and (d) the alignment of performance with strategy. The discussion concludes with an assessment of the alignment of the elements comprising the Mayo performance management system with recommendations for strengthening those alignments.
Balanced scorecards are a tool a nurse leader can use in strategic planning to assess how the organization is meeting its strategic goals and objectives. It allows for a well-rounded analysis of four different metrics: fiscal measures, customers, processes and learning and growth (Marquis & Huston, 2015). The intention of a balanced scorecard is to help “organizations set strategic goals, allocate resources, set priorities for process tasks (operations), and evaluate progress and strategy effectiveness” (Sare & Ogilvie, 2010, p. 158). Appendix A outlines the balanced scorecard for this planned change.
In the mid 1980s, and into the 1990s, business leaders realized that a renewed focus on quality was required to continue to compete in an expanding global market. (NIST, 2010) Consequently, several strategic frameworks were developed for managing, and measuring organizational performance. Among them were the Malcomb Baldrige National Quality Award, which was created by and act of congress and signed into law by the President in 1987, and The Balanced Scorecard, which is a performance management tool that was born out of research conducted in the late 1980s and early 1990s by Robert S. Kaplan, and David P. Norton published in 1996 (Kaplan, 1996). Initially the renewed emphasis on quality management systems was a reaction to the LEAN approach
A Balanced Scorecard can be defined as a “performance management tool which began as a concept for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision and strategy” (Wikipedia 2009, ¶ 1). Scents & Things will need to develop a balanced scorecard that will assist in meeting and help define the company’s values, mission, vision, and SWOT analysis. The balance scorecard is made up of four perspectives; financial, customer, learning and growing, and internal process. This paper will define each of the four perspectives objectives, performance measures, targets, and initiatives. The paper will also show how the perspectives relate to Scents & Things vision, mission, values, and SWOTT analysis.
The balanced scorecard was introduced by Robert Kaplan, a professor at Harvard University, and David Norton in 1990. The concept was later adopted for a study on new methods to measure performance involving multiple organizations. The balanced scorecard enables organizations to measure performance by providing balance to the financial perspective. Organizations used to measure performance by measuring only the financial measurements and this did not reflect the true performance of the organization. The BSC methodology includes information about the operational measures which gives the management a clearer picture that makes it easier for organizations to plan for short and long term goals.
Gibson, J.W. & Hodgetts, R. (1991). Organization communication: A Managerial Perspective. New York: Harper Collins Publishers.
Communication which flows from the superiors to subordinates is known as downward communication means a process of starting communication process from upper level to lower level. Group leaders and managers use it to assign goal, provide jod instruction, explain policies and offer other feedback about performance. Managers can do this in various ways such as via speeches, messages in newsletter, e-mails, leaflets, bulletin boards, memos and others. When the managers of the organization assign goals to their employees, they are using downward communication. The downward communication occurs when information and messages flow down through an organization's formal chain of command or hierarchical structure. In other words, messages and orders start at the upper levels of the organizational hierarchy and move down toward the bottom levels. Responses to downward communications move up along the same path.In an organization structure, the superiors utilize their abilities to attain the desired targets which mean that they may be engaged in issuing commands, directions and policy directives to the persons working under them at lower levels. When engaging in downward communication, managers must explain the reason why a decision was made. One study found employees were twice as likely to be committed to changes when the reasons behind them were fully explained. Although this may seem like common sense, many managers feel they are too busy to explain things or that explanations will “open up a big can of worms.” Downward communication is to provide relevant information, orders, instruction to subordinates. Downward communication is called as instruction type communication system.
Communication helps the organizational members to make both personal and organizational goals. And also help them to co-ordinate on the internal activities of the organization. To the extent the less effective communication of any organization is the less e...
...ement systems which combines both financial and non-financial measures which are considered more appropriate with the growing market. For instance, the two well-known performance measurements used by wide range of companies: Balanced Scorecard (BSC) and Performance Prism.