Literature Review Performance Management and the Balanced Scorecard

Chapter 2
Literature Review

Since the Balanced Scorecard was developed in the 1990’s by Robert Kaplan and David Norton (1992), it has gained in popularity amongst academics and practitioners. In 1990, Kaplan and Norton led a research study of a lot of companies with the purpose of exploring the new methods of performance management. The importance of the study was an increasing belief that the financial measures of performance management were not as effective as before with the development of modern business enterprise. Representatives involved in the study companies, including the researchers Kaplan and Norton, were persuaded that the reliance on financial measures of performance had an effect on their ability to create value. After deep discussions the group brainstormed on several alternatives but finally settled on the balanced scorecard, which featured performance measures, customer issues, internal business processes, employee activities, and shareholder concerns. Kaplan and Norton introduced the new tool as the Balanced Scorecard and summarized the concepts of the study in the first of three Harvard Business Review articles, “The Balanced Scorecard-Measures That Drive Performance”. Many organizations in both the private and public sectors have embraced the concept of the balanced scorecard. Most have implemented it in an attempt to improve performance (Chan & Ho 2000; Hoque & Jamesl Ittner & Larcker 2003). However, it appears that the term balanced scorecard is subject to different interpretations. For example, a document published by CMA Canada (1999) suggests that the term “Balanced Scorecard” maybe understood differently by different individuals/organizations. They state that many organizations believe that if a performance measurement system includes both financial and nonfinancial measures, it is a balanced scorecard, whereas Kaplan & Norton claim that a BALANCED SCORECARD is much more than just a collection of performance

References: Armstrong, M. 2000. Performance management: Key strategies and practical guidelines (Second ed.): Kogan Page Limited. Emerald Group Publishing. Accessed: 12 November 2012 < http://www.emeraldinsight.com/books.htm?> Atkinson, A Chandler, A. D. 1962b. Pattern in organizational analysis: A critical examination. Business History Review (pre-1986), 36(2): 233-236. Emerald Group Publishing. Accessed: 12 November 2012 < http://www.emeraldinsight.com/journals.htm?> Chang, O Cleland, D.I. (1994). Project Management: Strategic Design and Implementation. Second Edition Cornell University, (2010). The Performance Management Process Model. Cornell University, Division of Human Resources: accessed on 12 November 2012. Dinesh, D. & Palmer, E. 1998. Management by objectives and the Balanced Scorecard: will Rome fall again? Management Decision, 36(6): 363 Flanagan, N. and Finger,J. (1998). Just About Everything a Manager Needs to Know inSouthAfrica. Emerald Group Publishing. Accessed:9November2012<http://www.emeraldinsight.com/books.htm> Frigo, M Frigo, M. L., Pustorio, P. G., George, W., & Krull, J. 2000. The balanced scorecard for community banks: Translating strategy into action Bank. Accounting & Finance, 13(3):17-23 Frigo, M. L. 2001. 2001 CMG survey on performance measurement: Trends and challenges in performance measurement, Cost Management Update: 1. Emerald Group Publishing. Accessed: 12 November 2012 < http://www.emeraldinsight.com/journals.htm?> Frigo, M Ittner, C. D., Larcker, D. F., & Rajan, M. V. 1997b. The choice of Performance Measures in Annual Bonus Contracts Jones, C. 1991a. Qualitative interviewing. In G. Allen & C. Skinner (Eds.), Handbook for research students in the social science: 203-214. London: Farner Press. Accessed: 12 November 2012 < http://www.emeraldinsight.com/journals.htm?> Jones, C Kaplan, R. S. & Norton, D. P. 1992. The Balanced Scorecard Measure That Drive Performance