Discussion Board #1: Balanced Scorecard 2
Key Concept Explanation:
As an Internal Auditor, there is an expressed love for the profession as it allows one to
understand the organization from a holistic perspective and add value to the different areas of the
organization. This feeling has led to an interest in Kaplan and Norton’s balanced scorecard
approach (BSC). This is so as the perspectives of the BSC allow organizations to plan and
control the company strategy in a holistic way (Sartor, 2019). The introduction of the BSC
brought to organizations an approach to understand how well the business performed beyond
financial/economic indicators alone. The BSC offered a multidimensional set of indicators
divided into four measurement perspectives: financial perspective, customer perspective,
internal business perspective, and innovation and learning perspective; thus, the BSC a diverse
and balanced structure of indicators deriving from different business areas, such as finance and
control, marketing, operations, human resources, etc. (Sartor, 2019).
Comparison:
While the textbook, and even the article used above in the key concept explanation, provide a
solid foundation to understanding the intent of Kaplan and Norton’s introduction of the BSC
approach, the additional articles researched for this discussion aim at understanding how the
BSC has impacted the real world. For instance, Daft and Sartor went into great detail to
breakdown the four perspectives of the BSC, acknowledging it as a way to understand the
dynamics of operations via if–then statements, and how a strategy map based on the perspectives
gets created. However, the BSC was introduced in 1992 and quickly gained practitioner
acceptance (Tawse & Tabesh, 2023), as such 30 years has passed since its introduction which
allows researchers to truly study the impact the approach has had for implementing
organizations.
Discussion Board #1: Balanced Scorecard 3
In a study of the BSC in Vietnamese Commercial Banks via the use of regression models, one
can see the correlation of the BSC on performance. For instance, the aspects of BSC are affected
co-directionally with the performance of the business, which means that if the more we applied
the aspects of BSC, the higher of the performance of the higher business will beA(Tuan, 2020).
Despite this study’s focus on the impact of the BSC on performance, the author did not deviate
from the description of the BSC as done in the textbook. There were heavy commonalities in the
identification of the four perspectives and their intent in each article, however, a question often
asked in different aspects in life is on the cost. In reading about criticisms and factors affecting
the use of the BSC, not only is BSC a relatively complex, it is also a costly measurement system
(Aryani & Setiawan, 2020). Each business has its own unique environment, and the correct
implementation of BSC isn’t a universal issue applied equally across businesses. Due this
premise, it is necessary to contact advisory and consulting firms that implement this concept for
relatively high prices (Benková, Gallo, Balogová, & Nemec, 2020). Studies have shown the
implementing of the BSC has a high level of success and a little of failure.
Article Summary:
In returning back to the publishing by Sartor, this has the most commonalities with the course’s
text, but provides more elaboration on the BSC. This allowed the reader to understand more
aspects of the BSC such as the barriers of success for the effective use of the BSC. From the
reading, it was noted the BSC may experience failure in one of three stages: design,
implementation, or the use upon implementing the approach. In reading this discussion post, one
may find the recurring mentioning of the implementation of the BSC for organizations (whether
referring to its difficulty or costliness for an organization). What Sartor does in the text is include
the three additional activities that Kaplan and Norton identified in 2007 as requirements for the
Discussion Board #1: Balanced Scorecard 4
actual implementation of the BSC and following the identification of the three activities with
more elaborative details for the reader. Those three activities as provided by Sartor are (1)
communicating objectives and measures, (2) defining targets to reach, and (3) linking results to
incentive systems. What Sartor also elaborated on was how Kaplan and Norton stated, in 1996,
that the use of the BSC approach should be based on a performance management process that’s
organized in five phases: (1) articulation of business strategies; (2) identification of causal
relationships; (3) definition of performance indicators; (4) development of the action plan; and
(5) construction of a reporting system.
Biblical Integration:
Proverbs 20:23 tells us, “Unequal weights are an abomination to theALord, and false scales are
not good” (ESV). Prior to the introduction of the BSC, organizations focused on the financial
perspectives of the business and it led to failures in their operations. With the adoption of the
BSC, organizations are adhering to Isaiah 43:18-19 when it was guiding us by saying “Forget the
former things; do not dwell on the past. See, I am doing a new thing!” (NIV). By getting away
from a singular focus, organizational leaders can be more productive through learning from more
vital aspects of the business to further strategic objectives. As it says in Titus 3:14, “Our people
must learn to devote themselves to doing what is good,Ain order to provide for urgent needs and
not live unproductive lives” (NIV).
Application:
As mentioned above in the Comparison section of this discussion, articles covering studies on
the BSC in the real world were sought after. What was uncovered was the positive correlation on
Discussion Board #1: Balanced Scorecard 5
performance as Kaplan and Norton intended for the BSC to be based on a performance
management process. This correlation was the result of Tuan’s study of Vietnamese commercial
banks. What Tuan did in 2019 using a regression model was select 35 banks that had
implemented the application of the Balanced Scorecard or the perspective of Balanced
Scorecard. This study shines a positive light on the BSC, but the BSC approach has received
some criticisms as well. Aryani and Setiawan noted in their article that there has been skepticism
around the connection between BSC and organizational outcomes. However, Aryani and
Setiawan concluded practitioner-oriented literature showed that the BSC has useful values
especially in improving organizational performance and strategy attainment (Aryani & Setiawan,
2020).
Discussion Board #1: Balanced Scorecard 6
References:
Aryani, Y. A., & Setiawan, D. (2020). Balanced scorecard: Is it beneficial enough? A literature
review.AAsian Journal of Accounting Perspectives,A13(1), 65-84.
https://mjes.um.edu.my/index.php/AJAP/article/view/22455
In this literature review on the balanced scorecard, Aryani and Setiawan study over 70
articles that are focused on business, management, and accounting to perform an analysis
on the BSC. The performed analysis was segmented into three parts for the reader, the
use of the BSC in private sectors, BSC with organizations in the public sectors, and
finally found criticisms of the BSC. The study goes on to define the intent of the BSC and
the perspectives introduced by Kaplan and Norton, while also presenting the reader with
limitations of the BSC and whether the findings of the study outweigh the benefits of the
BSC to organizations.
Benková, E., Gallo, P., Balogová, B., & Nemec, J. (2020). Factors affecting the use of balanced
scorecard in measuring company performance.ASustainability,A12(3), 1178.
https://doi.org/10.3390/su12031178
As the title of this article suggest, this scholarly resource presents the results from
research on the factors influencing the use of the Balanced Scorecard methodology in
measuring company performance in the engineering sector. The research the authors
presented makes material use of non-financial indicators alongside the concepts of the
BSC. While the research studied the BSC in the engineering sector, the results allow the
reader to have an understanding of the impacting factors from the BSC relationship on
Discussion Board #1: Balanced Scorecard 7
other organizational sectors as well. The reader and potential managers contemplating use
of the BSC will find that human and financial resources are main barriers to the
successful implementation or use of the BSC.
Sartor, M. (2019). The balanced scorecard. InAQuality management: Tools, methods, and
standardsA(pp. 55-76). Emerald Publishing Limited.
https://www.emerald.com/insight/content/doi/10.1108/978-1-78769-801-720191004
This scholarly resource from Sartor allows the reader to further their understanding of the
Balance Scorecard from the section established in the course textbook. Sartor presented
the reader with more aspects of the BSC such as the barriers of success for the effective
use of the BSC (i.e., failure identified one of three stages: design, implementation, or the
use). Sartor goes on to provide more foundational details to the BSC based on Kaplan and
Norton or other resources, including the expansion on the three additional activities that
Kaplan and Norton identified in 2007 as requirements for the actual implementation of
the BSC; (1) communicating objectives and measures, (2) defining targets to reach, and
(3) linking results to incentive systems.
Tawse, A., & Tabesh, P. (2023). Thirty years with the balanced scorecard: What we have
learned.ABusiness Horizons,A66(1), 123-132. https://doi.org/10.1016/j.bushor.2022.03.005
This article by Tawse and Tabesh does a combination of things via a historical view of the
balanced scorecard (e.g., research on the reception of the BSC by academics and
practitioners). In the setting the stage for the research, Tawse and Tabesh discussed the
introduction of the BSC approach by Kaplan and Norton and their intent of BSC when it
Discussion Board #1: Balanced Scorecard 8
was established for as a management tool. This was fitting as the research included a
literature review to identify sources of ambiguity in the connection between the adoption
of the BSC and the performance levels of the adopting organizations which found that
there were three potential issues for organizations.
Tuan, T. T. (2020). The impact of balanced scorecard on performance: The case of Vietnamese
commercial banks.AJournal of Asian Finance, Economics and Business,A7(1), 71-79.
https://oak.go.kr/central/journallist/journaldetail.do?article_seq=23456
Tuan’s article does three things for the reader in regards to the balanced scorecard; (1)
provide the definition of the BSC and a overview of the four perspectives, (2) discuss the
impact of the BSC on organizational performance for managers implementing the
approach, and (3) provide a publishing of the Tuan’s 2019 research with the outcome.
What Tuan’s research was founded on was the application of the BSC approach in 35
Vietnamese Commercial Banks. These banks had either implemented the application of
the Balanced Scorecard or the perspective of Balanced Scorecard so the reader may know
whether there was a positive or negative impact of the BSC and organizational
performance.
Powered by TCPDF (www.tcpdf.org)
