Balanced Scorecard in Performance Management - Research Paper Example

Balanced Scorecard Table of Contents Balanced Scorecard 2 Boston Scientific Corporation: A Brief Overview 3 Current Situation 3 Triggers Requiring Change 4 Current Culture 5 Shared Diagnosis 5 Redesign 6 Systems and Structures 6 End Result 7 References 8 Balanced Scorecard The importance of performance management has been rising since the early 1990s. Performance management enables an organization to measure, plan and control activities in accordance with its proposed strategies. This is the reason why performance measurement tools such as balanced scored, Economic Value Added (EVA), and Activity Based Costing etc. started to gain huge acceptances in the market place. However in this study we will only discuss about balanced scorecard. The concept of balanced scorecard was initiated by Kalpan and Norton in the beginning of 1990. Balanced scorecard is a strategic management tool used by organizations for the purpose of measuring their performance. While measuring the performance level it considers factors such as employee knowledge, customer satisfaction, and innovation of the company (Cambridge Dictionaries Online, n.d.). It provides ways to the organizations for balancing strategic priorities and other associated factors such as customers, finances, processes and people. The balanced scorecard also ensures that the performance standards at both individual and organizational level remains balanced (Houldsworth & Jirasinghe, 2006, p.143). It not only offers a framework for performance measurement, but also enables planners to discover what must be accomplished and measured. A number of companies have therefore incorporated balanced scorecard into their system of operation, so as to facilitate effective and well-organized performance measurement system. These organizations with the help of performance management have been able to align their strategies & visions with the business objectives. In the context of the study Boston Scientific Corporation has been chosen to assess how balanced scorecard can be utilized for optimum organizational performance. Hence before getting into further discussion, brief introduction of the organization has been presented in the next half of the project. Boston Scientific Corporation: A Brief Overview Boston Scientific Corporation manufactures and markets medical devices. The company was founded in the year 1979 and has its present base of operations in Natick, Massachusetts (Boston scientific, n.d.). Boston Scientific Corporation or BSC was founded by John Abele. As of December 2011 the company had employee strength of around 24,000. The products of the company are used for various medical specialties such as gynecology, electrophysiology, urology, interventional cardiology, neuro-modulation, cardiac surgery, vascular surgery, oncology, peripheral interventions, neurovascular intervention, and endoscopy. The company is well-known for developing Taxus Stent, a drug used for the purpose of opening blocked arteries. The major competitors of the company are Medtronic, Johnson & Johnson, and St. Jude Medical. However in the year 2006 the company acquired Guidant, who used to be one of its strong competitors. Current Situation Since going public from the year 1992, the company has made acquisition as a key business strategy. To accomplish the strategy the company acquired Guidant. However during the last couple of years the main products of Guidant, pacemakers and defibrillators have malfunctioned, which caused demise of several patients. This has hugely impacted the reputation of company. In addition to that recently Medicare has slashed its benefits for cardiology products. Hence around one third of the compensations for implantable defibrillators and stents will be no more covered. Due to this price slash Boston Scientific will address increased number of patients, but the profit levels will decrease. Apart from this the company is also facing problems in meeting the specified standard of Food and Drug Administration (FDA) standards on a number of products. Hence in this context, FDA has ordered Boston Scientific not to release any further new products until and unless the present issues get sorted out. It has hugely impacted the overall sales of the company and simultaneously the profit levels have also dropped. These prevailing issues will also play a major role in the overall performance of Boston Scientific Corporation. Triggers Requiring Change Triggers or the triggering events are the situations that act as the catalyst towards the learning of the organization. An organization is said to be learning if it is in the process of continuous improvement and learning (Marsick & Watkins, 1999, p.10). Therefore any form of dislocating pressure which is arising either from inside or outside of the company, is an indication about the fact that the present procedures, systems, organizational structure, rules and other process are no longer valid. These dislocating pressures are also known as triggers causing change. In the context of the report both internal as well as external pressures acted as triggers of change. The internal triggers of change are the malfunctioning of devices which caused extreme external pressure. Moreover pressure from FDA regarding the substandard quality of several products and banning any further product launch can be also referred to as trigger causing change. Current Culture Every organization has its own style and culture. Similarly Boston Scientific also has a unique organizational culture. The company follows an extreme result driven culture. It has been able to develop this culture by identifying the fact, that everyone within the organization has high value and importance. The company also encourages the culture of working within the groups for accomplishing the tasks. Boston Scientific also gives high value to those employees who follow their organization’s culture. Hence from an overall perspective presently the company has healthy culture. However due to ongoing issues with the company, there are small impacts on the culture of the company. Shared Diagnosis Shared diagnosis is a method by which problems within the organization are identified (Brown & Harvey, 2006, p.154). It has a wide acceptance. In the process of shared diagnosis opinions are collected from both managers as well as employee. Even this method can involve all the other members associated with the organization. Shared diagnosis also offers a number of advantages to the organization. The basic advantage that it offers is the identification of problem at all the levels. Since every members of the organization are involved in the process, identification of problem gets easier. In the context of Boston Scientific upper level managers are not able to spend long durations towards the administration of the front line staffs. Hence a shred diagnosis will help to identify the maximum number of problems. Therefore in order initiate shared diagnosis the company should allow all its employees to present any internal as well as external issues that are affecting the operations of the company. The process can be carried out by using simple suggestion box. The employees can provide the company with the issues that have been identified by them. Once all the issues have been identified, based on its nature the company can develop remedies. Redesign The basic problem lies in the productivity of the company. The company is performing to a certain extent but has been unable to deliver according to the set standards. Due to this reasons the company is facing extreme pressures from the external environment. The products of the company are also malfunctioning. Therefore problem also exists internally. Now in order to rectify the problems the company has to implement a program that will solve both internal as well as external issues. After diagnosing the issues it has been found that the main problem lies in the organization’s performance measurement tool. There is an absence of a performance management tool. Therefore Boston Scientific needs to redesign their performance management tool. Hence implementation of a balanced scorecard will greatly help to serve the purpose. According to Johnson a balanced scorecard facilitates organizations to achieve their desired goals (Johnson, 2007, p.1-2). A balanced scorecard will not only offer the company a framework for performance measurement, but also enables them to discover what must be accomplished and measured. Furthermore it also assists the managers to execute the proposed strategies. Systems and Structures The system of balanced scorecard is a framework that makes a strategy operational. Hence the organizational structure needs to be adjusted according to the proposed strategy. Moreover balanced scorecard helps in the process of balancing both long term as well as short term goals. It measures different perspective of the organization in determining the performance of the company. The different perspectives are financial, internal operations, customer, and learning and growth (Mowen, Hansen & Heitger, 2011, p.509). Hence it is important that the company should develop or create an organizational structure that will facilitate efficient and effective implementation of the strategy. Likewise the system of operation also needs to be changed in accordance with the proposed strategy. End Result The end result or the desired outcome after implementing the balanced scorecard is that the performance level of the company must reach higher standards. Also with the implementation of balanced scorecard the company will be able to execute its business strategies. Further the areas of weaknesses can be rectified. One of the most import tasks that can be accomplished by the implementation of balanced scorecard is that it will help to monitor the performance of organization in accordance with the proposed objectives. The performance management can be applied to all the segments of the company. Hence according to this way the company can develop its productivity, control the quality of the products and can offer better products in the future. References Boston scientific. (No Date). About Us. Retrieved from http://www.bostonscientific.com/AboutUs.bsci/,,/navRelId/1000.1004/seo.serve. Brown, D. R., & Harvey, D. (2006). An Experiential Approach to Organization Development. New Delhi: Pearson Education India. Cambridge Dictionaries Online. (No Date). Balanced Scorecard. Retrieved from http://dictionary.cambridge.org/dictionary/business-english/balanced-scorecard. Houldsworth, E., & Jirasinghe, D. (2006). Managing and Measuring Employee Performance. London: Kogan Page Publishers. Johnson, C. C. (2007). Balanced Scorecard for State-Owned Enterprises. Mandaluyong: Asian Development Bank. Marsick, V. J., & Watkins, K. E. (1999). Facilitating Learning Organizations: Making Learning Count. Hampshire: Gower Publishing, Ltd. Mowen, M. M., Hansen, D. R., & Heitger, D. L. (2011). Cornerstones of Managerial Accounting (4th ed.). Connecticut: Cengage Learning. Read More