Implementation of Balanced Score Card System - Research Proposal Example

Project Proposal for Independent Study Implementation of Balanced Score Card System INTRODUCTION In today’s intensely competitive business environment, the competitive advantage lies in how successful an organisation is in linking its strategic intent and direction to its overall operations. In order to steer an organisation in its intended direction and be successful in achieving its overall objectives, correct evaluation of organisational performance is critical (Thomson & Strickland 2003). Evaluating organisational performance not only provides an assessment of the current situation but also provides information for corrective action if the performance is deviating from desired levels. However the effectiveness of performance evaluation depends on whether the right things have been evaluated. If a company has focused on evaluating the wrong aspects or neglected evaluating key aspects, which has significant implications on its performance, then results from the evaluation process will not be complete (Jonson & Kaplan 1986). Traditionally the norm of evaluating the success of the organisational performance was solely restricted to the financial perspective, measured by financial performance indicators. These financial measures had its advantages of being quantified measures that are standardised. Even today, most organisations are using financial performance as benchmarks of the overall organisation performance and in doing so, inevitably fail in focusing on other aspects of critical importance such as customers, internal processes and the human resources of the organisation. Focus on financial performances; at most times encourage management decisions to be skewed towards trade-off decisions favoring financial gains based on short-term perspectives. Thus, there is a critical need for management evaluation that takes a broader and balanced view of the organisational performance. 2. AREA OF STUDY The proposed area of study for the independent study is the implementation of a Balanced Score Card concept within a real life organisation in place of its traditionally used financial measures of organisational performance evaluation. This area of study is linked to Strategic Business Management where the focus in on overall business operations. The study will provide an insight in to how strategic objectives are converted in to a set of operationalised targets, which facilitate evaluation and providing a balanced view of overall organisational performance. 3. STUDY TITLE Independent Business Management Study: Implementation of Balanced Score Card Evaluation System in ……………………….. Company Ltd. 4. METHODOLOGY The independent study will be carried out through filed research whereby the author will be involved to gain first hand knowledge of the process of implementing the above management system within ………………………….. Company Limited. Data will be collected in the form of maintaining a diary so that observations over a period of time can be recorded and used in the final report formulation. By seeking management approval to be a part of the special task team entrusted with the BSC implementation task, access to the process of implementation as well as the evaluation meetings will be arranged. For reasons of confidentiality and maintaining privacy, some of the sensitive data will not be duplicated within the final report, as the key objective of this study is to understand the management application process of the Balanced Score Card System and linking the theoretical aspects of BSC with the practical application process. 5. LITRETURE REVIEW In response to the need for a strategic management tool which takes a long-term perspective of organisational goals and address the development of organisation’s overall resource base, Balanced Scorecard (BSC) was introduced in year 1992 by Robert Kaplan and David Norton. BSC is a strategic management system with a dual functionality of planning as well as a built in measurement system linking performance to organisational objectives (Kaplan & Norton, 1992). Balanced Scorecard provides today’s executives with a comprehensive framework that translate a company’s strategic objectives in to a set of measurable performance objectives. In place of the traditional focus on so-called “lag indicator” – the financial perspective, BSC aims at enhancing the organisational performance by introducing three additional business drivers in to the planning and measurement process. Under the BSC, the financial perspective is complimented by internal process perspective, customer perspective and learning and innovation perspective. Balanced Scorecard concept hinges upon a number of core principles, which the implementers need to fully understand and appreciate for deriving success from the system. Effectiveness of the BSC lies in that it derives its strategic objectives, not from the financial perspective, but though a clearly defined organisational mission and strategy. Importance of identifying and selecting the critical indicators within each of the four perspectives allows equal attention to these areas than bias for financial performance (Kaplan & Norton 2001). These objectives are then expressed in terms of quantitative measures so that they can be influenced or controlled by the user. This allows the managers to focus on improving those processes that are the most critical to the company’s strategic success. Another key factor related to the concept of BSC is that it uses its measurements to inform employees about the key objectives of the organisation. It also provides employees an understanding of how their work contributes to the achievement of overall company goals. Targets set through the BSC cascades down through the structure to individual level from the organisational level. Effectiveness of BSC as a strategic planning and management too as well as a performance measure lies in its emphasis on regular monitoring and reporting of actual performance. The multiple measures consist of a linked series of objectives and measures that are both consistent and mutually reinforcing (Kaplan & Norton 1993). Concept of BSC model illustrating the importance of interlinking the four perspectives is provided in figure 1. Figure 1- Conceptualization of Balanced Scorecard Model 6. PROJECT TIME PLAN # Activity Target Date 1 Proposal Submission 15th Feb 2 Study Project Approval 25th Feb 3 Securing Company Approval for Research 20th Feb – 30th Feb 4 Field Research Work / Diary records 1st March – 5th April 5 Final Report Formulation 5th April – 20th April 6 Final Report Submission 25th April 6. CONCLUSION The intention of this independent study is to gain valuable first hand insight in to how theoretical knowledge on management practices can be applied in practical settings. Balanced Score Card concept being a fairly recent management concept holds vocational value for the future career purposes, as it is set within the background of strategic management. The knowledge gained through this study will not only be applicable in large corporate settings but even in small to medium business operations where the importance of converting the business vision in to operational actions is the underlying theory behind the study topic. As the project involves not only planning but also implementation, monitoring, evaluating and correcting and course setting, the study also provides opportunity to observe a full array of management functions at work within a real organisational setting. References: Kaplan, R. S. & Norton, D. P. (1992). “The Balanced Scorecard: Measures that Drive Performance,” Harvard Business Review, Jan-Feb, pp. 71-79. Kaplan, R.S. & Norton, D. P. (1996). The Balanced Scorecard: Translating Strategy into Action, Harvard Business School Press, Boston. Jonson T.H & Kaplan, R.S. (1986) Relevance Lost: The Rise and Fall of Management Accounting, Harvard Business School Press, Boston, pp. 61-124. Kaplan, R.S. & Norton, D. P. (2001) The Strategy Focused Organisation, Harvard Business School Press, Boston, pp. 1-27. Thomson, A. A. Jr. & Strickland, A. J. (2003). Strategic Management Concepts and Cases. 13th ed. New York: McGraw-Hill Publishing Company Ltd. Read More