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Balanced Scorecard (balanced + scorecard)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	85%

Distribution within Business, Economics, Finance and Accounting

Financial Accounting	32%
General & Introductory Accounting	10%

Selected Abstracts

Value Maximisation, Stakeholder Theory, and the Corporate Objective Function

EUROPEAN FINANCIAL MANAGEMENT, Issue 3 2001
Michael Jensen
This paper examines the role of the corporate objective function in corporate productivity and efficiency, social welfare, and the accountability of managers and directors. I argue that since it is logically impossible to maximise in more than one dimension, purposeful behaviour requires a single valued objective function. Two hundred years of work in economics and finance implies that in the absence of externalities and monopoly (and when all goods are priced), social welfare is maximised when each firm in an economy maximises its total market value. Total value is not just the value of the equity but also includes the market values of all other financial claims including debt, preferred stock, and warrants. In sharp contrast stakeholder theory, argues that managers should make decisions so as to take account of the interests of all stakeholders in a firm (including not only financial claimants, but also employees, customers, communities, governmental officials and under some interpretations the environment, terrorists and blackmailers). Because the advocates of stakeholder theory refuse to specify how to make the necessary tradeoffs among these competing interests they leave managers with a theory that makes it impossible for them to make purposeful decisions. With no way to keep score, stakeholder theory makes managers unaccountable for their actions. It seems clear that such a theory can be attractive to the self interest of managers and directors. Creating value takes more than acceptance of value maximisation as the organisational objective. As a statement of corporate purpose or vision, value maximisation is not likely to tap into the energy and enthusiasm of employees and managers to create value. Seen in this light, change in long-term market value becomes the scorecard that managers, directors, and others use to assess success or failure of the organisation. The choice of value maximisation as the corporate scorecard must be complemented by a corporate vision, strategy and tactics that unite participants in the organisation in its struggle for dominance in its competitive arena. A firm cannot maximise value if it ignores the interest of its stakeholders. I offer a proposal to clarify what I believe is the proper relation between value maximisation and stakeholder theory. I call it enlightened value maximisation, and it is identical to what I call enlightened stakeholder theory. Enlightened value maximisation utilises much of the structure of stakeholder theory but accepts maximisation of the long run value of the firm as the criterion for making the requisite tradeoffs among its stakeholders. Managers, directors, strategists, and management scientists can benefit from enlightened stakeholder theory. Enlightened stakeholder theory specifies long-term value maximisation or value seeking as the firm's objective and therefore solves the problems that arise from the multiple objectives that accompany traditional stakeholder theory. I also discuss the Balanced Scorecard, the managerial equivalent of stakeholder theory. The same conclusions hold. Balanced Scorecard theory is flawed because it presents managers with a scorecard which gives no score,that is, no single-valued measure of how they have performed. Thus managers evaluated with such a system (which can easily have two dozen measures and provides no information on the tradeoffs between them) have no way to make principled or purposeful decisions. The solution is to define a true (single dimensional) score for measuring performance for the organisation or division (and it must be consistent with the organisation's strategy). Given this we then encourage managers to use measures of the drivers of performance to understand better how to maximise their score. And as long as their score is defined properly, (and for lower levels in the organisation it will generally not be value) this will enhance their contribution to the firm. [source]

A Balanced Scorecard for State U's Facilities Management Division?,

ACCOUNTING PERSPECTIVES, Issue 1 2009
Norman T. Sheehan
ABSTRACT This case introduces students to building and implementing a balanced scorecard (BSC) in a setting with which they are familiar , cleaning, maintenance, management, and construction of a university's buildings and grounds. Students are asked to construct or critique a BSC for the facilities management division of a university. This may lead to a discussion of the causal linkages implied in the BSC and how one would implement a BSC in a governmental setting. [source]

Performance Measure Congruity and the Balanced Scorecard

JOURNAL OF ACCOUNTING RESEARCH, Issue 3 2007
JÖRG BUDDE
ABSTRACT This paper studies the incentive effects of a balanced scorecard within a multitask agency framework under both formal and relational contracts. First, the main characteristics of the balanced scorecard are analyzed with respect to performance measure congruity. It is shown that under complete verifiability, a properly designed balanced scorecard is capable of perfectly aligning the interests of owners and employees by means of an explicit contract. I then investigate whether subjective performance evaluation is beneficial when not all the scorecard measures are contractible. It emerges that congruity of the contractible scorecard measures constrains a purely implicit incentive contract, but the first-best solution may still be obtained through a combination of formal and relational contracts. Furthermore, a purely explicit contract in most cases can be improved by incorporating subjective rewards. [source]

CORPORATE GOVERNANCE, ETHICS, AND ORGANIZATIONAL ARCHITECTURE

JOURNAL OF APPLIED CORPORATE FINANCE, Issue 3 2003
James A. Brickley
Effective corporate leadership involves more than developing a good strategic plan and setting high ethical standards. It also means coming up with an organizational design that encourages the company's managers and employees to carry out its business plan and maintain its ethical standards. In this article, the authors use the term organizational architecture to refer to three key elements of a company's design: ,the assignment of decision-making authority,who gets to make what decisions; ,performance evaluation,the key measures of performance for evaluating business units and individual employees; and ,compensation structure,how employees are rewarded for meeting performance goals. In well-designed companies, each of these elements is mutually reinforcing and supportive of the company's overall business strategy. Decision-making authority is assigned to managers and employees who have the knowledge and experience needed to make the best investment and operating decisions. And to ensure that those decision makers have the incentive as well as the knowledge to make the best decisions, the corporate systems used to evaluate and reward their performance are based on measures that are linked as directly as possible to the corporate goal of creating value. Some of the most popular management techniques of the past two decades, such as reengineering, TQM, and the Balanced Scorecard, have often had disappointing results because they address only one or two elements of organizational architecture, leaving the overall structure out of balance. What's more, a flawed organizational design can lead to far worse than missed opportunities to create value. As the authors note, the recent corporate scandals involved not just improper behavior by senior executives, but corporate structures that, far from safeguarding against such behavior, in some ways encouraged it. In the case of Enron, for example, top management's near-total focus on boosting reported earnings (a questionable corporate goal to begin with) combined with decentralized decision making and loose oversight at all levels of the company to produce an enormously risky high-leverage strategy that ended up bringing down the firm. [source]

Using Soft Systems Methodology for Performance Improvement and Organisational Change in the English National Health Service

JOURNAL OF CONTINGENCIES AND CRISIS MANAGEMENT, Issue 4 2004
Brian Jacobs
The Soft Systems Methodology (SSM) advocated by Checkland and Scholes (1990) has considerable potential. It can provide policy makers, professionals, and managers in complex health organisations with a valuable addition to management approaches leading to practical improvements through innovative organisational change. With reference to the English National Health Service (NHS), this author argues that SSM can enable managers and others to address problem situations holistically, identify critical issues, and reach an accommodation of different viewpoints as a basis for improvement. The SSM approach can usefully compliment strategic frameworks, such as the Balanced Scorecard, in achieving clarity of thinking about performance and change issues'. [source]

Rescaling the Balanced Scorecard for Local Government

AUSTRALIAN JOURNAL OF PUBLIC ADMINISTRATION, Issue 4 2000
Dale Quinlivan
Kaplan and Norton's ,Balanced Scorecard' model has gained worldwide interest from managers in private and public organisations. The four perspectives of the model aim to communicate the strategic priorities of the organisation by measuring and setting stretch targets for them. However, the model, which was developed in ,for-profit' organisations, may not be suitable in ,not-for-profit' organisations. A possible solution is the use of the Australian Business Excellence Framework categories to determine the perspectives to be used. [source]

Measuring organizational performance: beyond the triple bottom line

BUSINESS STRATEGY AND THE ENVIRONMENT, Issue 3 2009
Graham Hubbard
Abstract Measuring organizational performance is difficult, especially when what has to be measured keeps changing. Sustainability concepts have dramatically widened the scope of measurement options and leading organizations are grappling with sustainability reporting, but there is no sign of consensus on a common reporting standard and the competing frameworks are impossibly complex. This paper recognizes that measuring sustainable performance has to be conceptually based but simplified to be practically useful. It proposes a stakeholder-based, Sustainable Balanced Scorecard (SBSC) conceptual framework coupled with a single-measure Organizational Sustainability Performance Index to integrate the measures in the SBSC. The Index helps make sustainable organizational performance measurable and accessible to stakeholders. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment. [source]

The Meaning of Balanced Scorecards in the Health Care Organisation

FINANCIAL ACCOUNTABILITY & MANAGEMENT, Issue 1 2001
Lars-Göan Aidemark
This study investigates the introduction of balanced scorecards in a health care organisation. It analyses a top-down control system, built on measurement, in a medical professional context, where attempts at implementing systematic performance auditing are expected to meet resistance. The study shows, however, that balanced scorecards, redesigned by medical professionals and used in a dialogue about service activities and finances, are regarded attractive successors to criticised financial control systems. In the light of the markets, hierarchies and clans perspective, developed by Ouchi, this popularity becomes comprehensible. Balanced scorecards are seen to reduce both the ambiguity of performance evaluation and the goal in-congruence between parties in the organisation. [source]

Balanced scorecard for multinationals

JOURNAL OF CORPORATE ACCOUNTING & FINANCE, Issue 6 2002
Steven P. Landry
To succeed today, multinational companies must focus on their core competencies. But traditional management control systems don't help you implement global strategies, because of their narrow information perspective. What's the solution? It's a balanced scorecard approach specially designed for multinationals, say the authors. © 2002 Wiley Periodicals, Inc. [source]

The Meaning of Balanced Scorecards in the Health Care Organisation

Effect of perceived conflict among multiple performance goals and goal difficulty on task performance

ACCOUNTING & FINANCE, Issue 2 2007
Mandy M. Cheng
M40; M41 Abstract Contemporary performance measurement systems, such as the balanced scorecard, often advocate the use of an array of financial and non-financial measures. Despite many claimed advantages for these systems, recent research shows that the inclusion of multiple performance measures sometimes has undesirable effects. The present study examines one of the potential problems of implementing these systems; namely, the impact of perceived goal conflict on task performance. Using survey data from employees working in multiple call centres in a telecommunication company, we find that perceived goal difficulty increases perceived goal conflict. Additionally, perceived goal difficulty also has a negative, indirect effect of task performance, through the mediating role of perceived goal conflict. Our results have important implications for both the research literature and the designers of performance measurement systems. [source]

Capabilities, processes, and performance of knowledge management: A structural approach

HUMAN FACTORS AND ERGONOMICS IN MANUFACTURING & SERVICE INDUSTRIES, Issue 1 2007
Young-Chan Lee
The purpose of this study is to examine structural relationships among the capabilities, processes, and performance of knowledge management, and suggest strategic directions for the successful implementation of knowledge management. To serve this purpose, the authors conducted an extensive survey of 68 knowledge management-adopting Korean firms in diverse industries and collected 215 questionnaires. Analyzing hypothesized structural relationships with the data collected, they found that there exists statistically significant relationships among knowledge management capabilities, processes, and performance. The empirical results of this study also support the well-known strategic hypothesis of the balanced scorecard (BSC). © 2007 Wiley Periodicals, Inc. Hum Factors Man 17: 21,41, 2007. [source]

A Balanced Scorecard for State U's Facilities Management Division?,

St. Thomas University: Which Balanced Scorecard to Use?,/ST.

ACCOUNTING PERSPECTIVES, Issue 4 2007
THOMAS UNIVERSITY: LE CHOIX D'UN TABLEAU DE BORD
ABSTRACT This case provides background on a university that undertook a formal strategic-planning initiative. Mary White, Vice-President (Administration), was responsible for developing the performance evaluation framework. She established a special task force, which included Peter Crimson, Assistant Vice-President (Administration), Eva Black, Director of Financial Analysis, and Adam Green, Director of Planning and Analysis, to assist her in this endeavor. The special task force had an insightful discussion on the balanced scorecard during its first meeting. When the meeting concluded, Mary White asked Adam Green to conduct research on the different approaches to the balanced scorecard adopted in a number of universities. She expected Adam Green to provide an analysis of the different balanced scorecard approaches in universities, to make recommendations on the balanced scorecard approach that St. Thomas should adopt, and to develop a balanced scorecard for the university. An objective of the case is to provide students with an opportunity to evaluate the implementation of the balanced scorecard in universities, to recommend an approach for developing the performance evaluation framework, and to design a balanced scorecard for the university. RÉSUMÉ Le cas élaboré par l'auteure contient les données de base relatives au projet structuré de planification stratégique entrepris par une université. Mary White, vice-présidente à l'administration, assumait la responsabilité de l'élaboration du cadre d'évaluation de la performance. Elle a constitué un groupe de travail spécial, réunissant Peter Crimson, adjoint à la vice-présidente à l'administration, Eva Black, directrice de l'analyse financière, et Adam Green, directeur de la planification et de l'analyse, pour lui prêter main-forte dans cette entreprise. Lors de sa première réunion, le groupe de travail spécial a tenu une discussion instructive sur le tableau de bord. Au terme de cette réunion, Mary White a demandé à Adam Green de faire des recherches sur la façon dont différentes universités ont choisi de traiter le tableau de bord. Elle souhaitait obtenir une analyse des différentes méthodes utilisées dans les universités, des recommandations quant au choix de la méthode appropriée à St. Thomas et l'élaboration du tableau de bord de l'université. Ce cas a notamment pour objectif d'offrir aux étudiants l'occasion d'évaluer la mise en application du tableau de bord dans les universités, de recommander une méthode d'élaboration du cadre d'évaluation de la performance et de concevoir un tableau de bord pour l'université. [source]

Firm- and Individual-Level Determinants of Balanced Scorecard Usage,/DÉTERMINANTS DE L'USAGE DU TABLEAU DE BORD ÉQUILIBRÉ AU DOUBLE ÉCHELON ORGANISATIONNEL ET INDIVIDUEL

ACCOUNTING PERSPECTIVES, Issue 2 2006
MAJIDUL ISLAM
ABSTRACT The factors influencing the organizational as well as the individual decision to utilize the balanced scorecard (BSC) approach have not been widely researched. In the first part of this paper, we study BSC adoption at the organizational level while utilizing a multifaceted perspective of socio-psychological, economic, and resource-based influences; specifically, we investigate the perceptions of desirability, urgency, and feasibility of BSC adoption. Our findings show that customer norms, competitor norms, and organizational resources are significant predictors of BSC adoption. In the second part of the paper, we discuss individual-level aspects of utilization decisions. Here, we explore the impact of perceived ease of use, perceived usefulness, and awareness on the intentions to use the BSC approach. Our findings show that both awareness of BSC capabilities and perceived ease of use are significantly related to perceived usefulness. However, only perceived usefulness is significantly related to intentions to use the BSC. Implications for research and practice are discussed. [source]

Performance Measure Congruity and the Balanced Scorecard

The promise and perils of the balanced scorecard

JOURNAL OF CORPORATE ACCOUNTING & FINANCE, Issue 3 2010
Gary Cokins
There is lack of consensus as to what a balanced scorecard is. Many organizations develop a balanced scorecard without first developing a strategy map, from which key performance indicators (KPIs) for the balanced scorecard should be derived. In addition, many organizations confuse strategic KPIs, which belong in a balanced scorecard, with operational performance indicators (PIs), which belong in a dashboard. © 2010 Wiley Periodicals, Inc. [source]

The Balanced Scorecard and its Possibilities: The Initial Experiences of a Singaporean Firm

AUSTRALIAN ACCOUNTING REVIEW, Issue 1 2008
Rina Sandhu
This paper examines the multiple possibilities that arise from the translation of actors' hopes and aspirations when implementing a balanced scorecard. The issue is studied in the context of a Singaporean security company in the initial stages of implementing a BSC. We find that the BSC is a ,messy' object, being different things to different people. This messy object is a result of the many possibilities that the BSC might become which ultimately require translating into the local setting. As such, this view challenges Kaplan and Norton's idea of the BSC as a generic and unitary object of performance measurement that is readily applicable to a variety of situations. [source]

An extended performance reporting framework for social and environmental accounting

BUSINESS STRATEGY AND THE ENVIRONMENT, Issue 5 2006
Kittiya Yongvanich
Abstract Internationally, there is growing awareness of the environmental and social impacts of the business activities of organizations. This awareness was heightened by the 1987 report Our Common Future by the World Commission on Environment and Development (WCED, 1987). In order to address the concerns raised, companies have increasingly reported the social and environmental impacts of their business activities to secure their right to operate from society. This paper argues for the importance of an integrated reporting framework that provides information on economic performance via intellectual capital (IC) information and non-economic performance, including that used in the management of performance across social and environmental impacts. This paper briefly reviews three extended reporting approaches, namely IC, balanced scorecard (BSC) and social and environmental reporting. The paper demonstrates that the emphases of these reporting approaches, while diverse, could be complementary to one another and be integrated into an extended performance reporting framework (EPRF), which would provide a more complete account of the management and performance of an organization. The EPRF could empower stakeholders and facilitate change in the way organizations conduct their activities. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment. [source]