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Evaluate the Relevance and Adequacy of the Balanced Score Card as...

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Evaluate the Relevance and Adequacy of the Balanced Score Card as an Instrument for Perfomance Management.

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Question

(a)Evaluate the relevance and adequacy of the Balanced Score Card as an instrument for perfomance management.

Introduction

The Balanced Scorecard is a strategic performance management framework that has been designed to help an organisation monitor its performance and manage the execution of its strategy. Kaplan and Norton (1996a, 1996b) pointed out that the implementation of the Balance Score Card is to attain the following goals clarify and translate vision and strategy, communicate and link objectives and measures, plan, set targets, and align strategic initiatives; and enhance strategic feedback and learning.

A growing number of firms are replacing their financially-based performance measurement and compensation systems with a "balanced scorecard" incorporating multiple financial and nonfinancial indicators. Proponents of the balanced scorecard concept contend that this approach provides a powerful means for translating a firm's vision and strategy into a tool that effectively communicates strategic intent and motivates performance against established strategic goals (Kaplan and Norton, 1996).

Kaplan and Norton (1992, 1996) developed the balanced scorecard concept to address the perceived shortcomings in financially-oriented performance measurement systems. The balanced Score card approach supplements traditional financial measures with non-financial measures focused on at least three other perspectives--customers, internal business processes, and learning and growth. According to the Financial Gazette dates 24 July 2009, it pointed out that more and more organisations today are resorting to the balanced scorecard as a performance management system. This method of performance management allows performance to be measured across four different perspectives, where traditionally it was based on financial indicators alone. The four balanced scorecard perspectives are financial, customer, internal business processes and learning...