Investigating the Relevance of Adopting Balanced Scorecard as a Strategic Tool for Measuring Financial Performance

Investigating the relevance of adopting Balanced Scorecard as a strategic tool for measuring financial performance.

This paper aims to debate, based on a literature review how relevant it is for companies to adopt the use of balanced scorecard as tool for measuring financial performance. The findings in literature shows that balanced scored restore the linkage between financial and non-financial measures in the operational and management control systems of most companies and helps them to achieve long-term strategic objectives. On the other hand, the use and importance of balanced scorecard has been evidenced through several studies but some companies still find it difficult and challenging to implement it because it suggests what to do but ignores how the strategy can be measured.

KEYWORDS: Performance measurement systems, Balanced Scorecard, Implementation, Strategy, Literature review, Management Accounting, Non-financial measurement, cause-and - effect relationship.

Nowadays manager’s act in a very complex environment which makes it difficult for them to set the right objectives and appropriately align these objectives to ensure the development of the organisation. According to Kennerley and Neely (2002) performance measurement is very important in an organisation as it helps the management of an organisation to make clear, efficient and effective decisions. Similarly, Martinez and Kennerley (2006) claims that for an organisation to be successful they need to ensure that there’s a process in place that ensures measurement systems is modified as the organisation face changes.

There has been an increasing problem on how organisations performance should be appraised for many years and in the 1980’s it was realised that organi...

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