Development Of Balanced Scorecard In Malaysia Accounting Essay

Presents, the public presentation of a house is easy influenced by the tendency of planetary market and therefore it is indispensable to use specific public presentation indexs into their concern in order to vie with rivals. These public presentation indexs may including the combination of fiscal ; rival ; human resource ; market or client ; internal concern advancement ; and environmental indexs that are suited to their demands and state of affairs ( D’Souza, 2000 ) . The method of supervising the public presentation of a house should besides be dynamic in order to accommodate to internal and external alterations. However, most of the houses are to a great extent dependance on fiscal or accounting steps that failed to mensurate operational public presentation and therefore it is hard for houses to suit with their internal alterations. One of the most noteworthy public presentation monitoring tools, Balanced Scorecard can assist those houses work outing their job by supplying multidimensional position of public presentation measuring which include fiscal and non-financial steps. So, what is the ‘Balanced Scorecard ‘ really is?

1.0.1 General position of Balanced Scorecard

Harmonizing to Kaplan and Norton ( 1996 ) , “ the Balanced Scorecard translates an organisation ‘s mission and scheme into an extraordinary, comprehensive set of public presentation steps and provides the model for strategic measuring and direction ” . Balanced Scorecard can besides be explained as “ an indispensable facet of the Balanced Scorecard is the articulation of linkage between public presentation steps and scheme aims, one time linkage is understood, strategic aims can be farther translated into actionable steps to assist organisations better public presentation ” ( Banker, 2004 ) . The Balanced Scorecard provides a strategic model that involved the usage of both fiscal and non-financial steps to mensurate steadfast public presentation in multidimensional position. Basically, there are four positions in Balanced Scorecard viz. fiscal, clients, internal procedures, and larning and growing position. The last three positions ( clients, internal procedures, and larning and growing ) are used to supplement traditional fiscal steps for the intent of non-financial steps ( Koh, 2001 ) .

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1.0.2 History and development of Balanced Scorecard

Dated back to two centuries ago, the thought of mensurating the public presentation with an aim to better it was foremost presented by Lord Kelvin, a British scientist. The initial measure towards Balanced Scorecard was taken when a company named General Electronics in 1950s presented the method of mensurating divisional public presentation utilizing a combination of fiscal and non-financial matrices ( Iqra Abdullah, 2013 ) .

In the epoch of 1975 to 1990, Nipponese Management Movement contributed of import move towards Balanced Scorecard when Nipponese companies challenged western corporate universe by conveying new rules such as Just-In-Time and Total Quality Management. In that epoch, western direction was short term and fiscal public presentation oriented. The organisations were dissatisfied with public presentation steps in that clip because these steps were giving misdirecting information. Therefore, a model that can measure the public presentation of organisation from multiple dimensions and supply the information about fiscal and non-financial public presentation was required.

In the twelvemonth of 1992, Balanced Scorecard that ‘translates the scheme into action ‘ was introduced by David Norton and Robert S. Kaplan in a Harvard Business Review article to get the better of the issues faced by organisations ( Iqra Abdullah, 2013 ) . The article was based on a research undertaking conducted in 1990 that studied the public presentation measuring of companies that used intangible assets in value creative activity. The initial Balanced Scorecard measures the public presentation of house from 4 dimensions: “ How make our clients perceive us ( Customers ) ? At what we should stand out ( Internal Processes ) ? How can we make value and better ( Learning and Growth ) ? How do we look at our stakeholders ( Financial ) ? ” ( Sawalqa, 2011 ) .

In 1993, Kaplan and Norton realized that common job faced by different organisations is to aline their long term schemes with short term actions after sing the interview of executive frailty president of FMC Corporation whose had implemented Balanced Scorecard after the publication of their article in 1992. Therefore, they presented the four new direction procedures ( interpreting the vision, pass oning and associating, concern planning, and feedback and acquisition ) that individually or in combination with dimensions of Balanced Scorecard link the organisation short term actions with the long term schemes ( Kaplan R. a. , 1996 ) . The definition of Balanced Scorecard so changed from ‘an improved measuring system to core strategic direction system ‘ .

In 2001, Kaplan and Norton introduced five rules of Balanced Scorecard that can turn an organisation to a strategic focussed organisation. These rules are: interpreting the scheme into operational footings, alliance of organisation with scheme, everyone must be involved in strategic procedure, make the scheme a continual and long term mobilize and procedure the alteration through top direction of leading. Within these five rules, there are several new component added to the theory. For illustration, scheme map, personal scorecards, balanced payroll checks, strategic and operational budgeting, unfastened coverage, and alteration direction.

In the same twelvemonth, Kaplan and Norton realized that fiscal dimension of Balanced Scorecard caused troubles to non-profit organisations and authorities bureaus as this dimension is non the premier aim of the organisations. Therefore, they modified the model of Balanced Scorecard in which fiscal dimension was described in the three caputs: cost of supplying societal service, value of the services provided by bureau and cost of legalizing governments.

In 2007, Balanced Scorecard was linked with different enterprises of organisational betterments that were operational linkage, client linkage, profitableness linkage and budgeting linkage ( Iqra Abdullah, 2013 ) . As it was adopted by 1000s of private, public, and non-profit organisation around the universe, Kaplan and Norton so extended and broadened the construct into a direction tool for depicting, pass oning and implementing scheme ( Kaplan R. S. , 2010 ) .

About the hereafter of Balanced Scorecard, Robert S. Kaplan in the undermentioned words said that:

“ The Balanced Scorecard will likely be about but at that place will hold been developments. The scheme map is intuitively really appealing and will be used more frequently in concurrency with the Balanced Scorecard. Supervisory boards will concentrate more and more on monitoring and steering the scheme of a company, utilizing the Balanced Scorecard. There will be more one-year studies that are arranged harmonizing to the Balanced Scorecard. We will see better ways of mensurating the information needed for the Balanced Scorecard. aˆ¦aˆ¦aˆ¦ . Techniques for better measurement invention, employee capablenesss, information system alliance, clime, civilization, and client success will surely better in the following 10 old ages. aˆ¦aˆ¦aˆ¦ . ” ( Waal, 2003 ) .

1.0.3 Development of Balanced Scorecard in Malaysia

In overall, the Balanced Scorecard is still non so ‘famous ‘ in Malaysia. There are several companies in Malaysia adopted the Balanced Scorecard but the sum of adoptive parents are non so stirred. Meaning to says, the sum of Malayan adoptive parents of Balanced Scorecard is still really small. There is one research paper prepared by Rozhan Othman ( 2005 ) shows the figure of Balanced Scorecard adoptive parents in Malaysia. The intent of this research paper is to demo the effects of the development of insouciant theoretical account of the scheme in the execution of the Balanced Scorecard in Malaysia from twelvemonth 2000 to 2005. Based on one of Othman ‘s determination, there are 17 houses of 38 answering houses have adopted the Balanced Scorecard. The earliest acceptance of Balanced Scorecard in Malaysia was in twelvemonth of 2000. Table below shows the figure of adoptive parents of Balanced Scorecard from twelvemonth 2000 to 2005 in Malaya:

Year of acceptance





















Not reported





Beginning: Othman, R. ( 2006 ) . Balanced Scorecard and insouciant theoretical account development: preliminary findings. Management Decision Vol.44 No.5, pp. 4.

There are an increased figure of Balanced Scorecard adoptive parents from twelvemonth 2000 to 2003 but it is declined in the undermentioned old ages. The research paper shows some grounds of this phenomenon. Based on study conducted, Othman found out that it is more hard to developing wages and inducements for directors who were responsible for non-financial steps in Balanced Scorecard. On the other manus, some houses responded that it is more hard to develop non-financial than fiscal steps and it is caused a batch of troubles in order to cascading the scorecard. Besides, development of Balanced Scorecard takes longer clip.

In this research, researcher adopted the mail study in order to roll up informations. On the other manus, the sample of Othman ‘s research consisted of indiscriminately selected public listed companies. If the populace listed company is a keeping company, its subordinates were chosen for the survey. The entire figure of companies chosen was 311 houses but merely 38 companies responded to the study.

2.0 Common Features of Balanced Scorecard

By and large, the balanced scorecard is a public presentation direction tool which consists of a combined set of public presentation steps that are derived from and back up an organisation ‘s scheme. Harmonizing to Kaplan and Norton ( 1996 ) , “ the balance scorecard translates an organisation ‘s mission and scheme into a comprehensive set of public presentation steps and provides the model for strategic measuring and direction ” . In add-on, Kaplan and Norton describe the invention of balance scorecard as follows:

The balanced scorecard retains traditional fiscal steps. But fiscal steps tell the narrative of past events, an equal narrative for industrial age companies for which investings in long-run capablenesss and client relationships were non critical for success. These fiscal steps are unequal, nevertheless, for steering and measuring the journey that information age companies must do to make future value through investing in clients, providers, employees, procedures, engineering, and invention. ( 1996 )

Basically, the balanced scorecard grouped the public presentation measures into four groups illustrated in figure 1-1: fiscal, client, internal concern procedures, and larning and growing.

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Figure 1-1 Adapted from Robert S. Kaplan and David P. Norton, “ Using the Balanced Scorecard as a Strategic Management System, ” Harvard Business Review ( January-February 1996 ) : 76.

From the fiscal position ( how should we look to our share-holders ) , it describes the touchable result of the scheme in footings of traditional fiscal steps such as stockholder value, gross growing, return on investing ( ROI ) , and lower unit costs ( Kaplan & A ; Norton, 1992 ) . At here, it shows that Kaplan and Norton have non ignore the traditional demand for fiscal informations as traditional fiscal steps are still needed in order to mensurate past public presentation. In fact, the fiscal informations will be critical for directors in their determination devising as accurate and timely informations will take them to better determination doing particularly in determination that involved a big ball of money.

Second, the client position ( how we should look to our client ) , harmonizing to Kaplan and Norton ( 1992 ) , it states the drivers of gross growing. It consists of general client results such as satisfaction, keeping, growing and acquisition. Besides, it helps to distinguish value proposition the organisation intends to offer in order to bring forth gross revenues and obtain trueness from clients. For illustration, an organisation should analyse its client in footings of types of clients and sorts of procedures in which it provide its merchandises to those client groups in developing prosodies for satisfaction.

Third, Kaplan and Norton ( 1992 ) describe the internal procedure position ( what concern procedure must we stand out at ) as the procedure of placing the operating, client direction, invention, and regulative and societal procedure aims for making and presenting the client value proposition and bettering the quality and production of operating procedures. In this position, directors should be allowed to cognize their concern advancement and whether their merchandises and services satisfied the client.

Last but non least, the acquisition and growing position ( how will we prolong our ability to alter and better ) , as conformity to Kaplan and Norton ( 1992 ) , it identify the most of import intangible assets to the scheme. It aims to place the human capital, information capital and organisation capital that are needed to back up the value making internal procedures. In add-on, Kaplan and Norton besides emphasize the demand of “ larning ” instead than “ preparation ” as they continue by their claims for things such as wise mans and coachs to be included within an organisation.

3.0 The Importance of Balanced Scorecard

Basically, an organisation will be guided through the balanced scorecard four position: fiscal, client, internal concern procedures and larning and growing to make analysis on its public presentation as a whole. These four position are linked to each other as the success of one position will take to the success of the other position. Through the four position, it is of import for an organisation to see whether they are traveling in the right way and still in line with their vision.

First and first, the balanced scorecard is of import for a company as a medium of communicating to all members of the company from the top directors to take down degree employees. This is supported by the facts that balanced scorecard was used in finding the aims, steps, marks and the enterprises to accomplish it. In add-on, the balanced scorecard make each individual in the company aware of their functions and actuate them to transport out their responsibilities and duties. This indirectly will take to parts from each of the employees towards the success of an organisation.

Second, balanced scorecard can be served as an of import tool in mensurating the fiscal position of an organisation. As we know, money is the line of life of a concern and the most important plus for an organisation aside of the human capital. Hence, it is critical for an organisation to hold a good public presentation step in footings of their fiscal status. Through the balanced scorecard, the company will be intelligent on their fiscal position and capablenesss. They will at least have the cognition on their capablenesss to pass, to derive money every bit good as to prolong their concern with the available financess. Yet, an organisation must maintain path with their fiscal informations as it will be black if the fiscal information is non manage decently. At the same clip, an organisation can make new ways to gain more net income as the balanced scorecard trades with scheme and the fiscal position will allow the organisation to put to death certain scheme based on their current available balance.

Third, the balanced scorecard is of import for an organisation to put their ends. It is because the balanced scorecard attack can assist to put an organisation ends by giving appropriate weight to both fiscal and non-financial steps. This can be made possible as the balanced scorecard start with the vision and scheme that drives the concern. From here, the balanced scorecard aid to develop marks that measure advancement towards success from the drivers of success identified for the organisation vision. As the marks are intelligent, an organisation will more likely to be success in accomplishing their ends as well-managed employees will work towards the ends. In add-on, the employees will change their attempts by concentrating on the ends set to guarantee the successful bringing of an organisation vision.

Other than that, the balanced scorecard is of import for an organisation as a tool in mensurating the inducements that will be given to each of the employee. In order to give incentive compensation such as fillips, salary addition and publicity, an organisation should has a public presentation measuring tool as their aid in doing such determination. However, with the usage of balanced scorecard, an organisation can bind the inducement compensation to the balanced scorecard public presentation steps. Though, directors must do certain that the public presentation steps use on those who are being evaluated are reasonable, dependable, apprehensible and non easy manipulated. As Kaplan himself, one of the conceivers of the balanced scorecard, one time mentioned in his interview with the CFO Magazine in twelvemonth 2001, “ A Compensation is such a powerful lever that you have to be pretty confident that you have the right steps and have good informations for the steps before doing the nexus ” .

Besides that, the balanced scorecard is of import for an organisation in finding the cardinal drivers for future public presentation. The balanced scorecard can assist to place the key drivers for future public presentation by grouping those cardinal drivers in its four position. For illustration, the balanced scorecard has stated the drivers for gross growing in its client position. It is of import for an organisation to find the right drivers along with the cardinal public presentation indexs for each expected hereafter outcomes. This is to guarantee that the desired results will be achieved if the public presentation indexs is related to the possible results. Furthermore, it can take to the addition of focal point on the peculiar concern scheme that can accomplish the coveted results. With the more focal point on the peculiar concern scheme, the employees will be more cognizant and motivated with their ain functions towards the accomplishment of the organisation ends.

4.0 Advantages and Disadvantages of Balanced Scorecard

Kaplan and Norton developed the Balanced Scorecard ( BSC ) with Masterss in direction accounting, to supply four positions in direction and rating of corporate public presentation or value to directors ( Kaplan and Norton, 1996a, 1996b ) . They besides point out that the execution of the BSC is to achieve the undermentioned ends: ( 1 ) Clarify and interpret vision and scheme ; ( 2 ) communicate and nexus aims and steps ; ( 3 ) program, set marks, and align strategic enterprises ; and ( 4 ) enhance strategic feedback and acquisition.

Kaplan and Norton created the balanced scorecard to assist concern proprietors capture a broad and balanced position of their company ‘s public presentation. The balanced scorecard focuses non merely on the fiscal facets of the concern, but besides on client dealingss and reactions, internal concern procedures, larning and growing. The balanced scorecard gives executives and senior direction an actionable lineation of ends and schemes to increase or keep public presentation degrees. This method of resource direction allows for clear communicating between assorted degrees of direction by supplying an fastidious model for coverage.

A balanced scorecard is a direction tool that concerns use to track how good a staff of people executes their needed activities. The balanced scorecard tracks the aims, steps, marks and enterprises of each subset. It besides raises invention and procedure betterment methods such asA six sigmaA and thin fabrication to a corporate end. It besides ensures that voice of the client is every bit of import. The scorecard has improved some concerns, but it is no cure-all, particularly for companies who have shaky fundss and non adequate clip to implement a company-wide program. The advantages of the Balanced Scorecard are good publicised, but, it has its ain jobs or disadvantages like any concern procedure or application every bit good.

4.1 Advantages

First of all, BSC provides a wide consideration of all concern facets, both fiscal and homo. It is a public presentation direction tool, used to better the organisation value creative activity flow with a more incorporate point of view ( Fletcher and Smith, 2004 ) . The balanced scorecard besides encourages directors to better understand the multiple facets of public presentation. It can assist an organisation to pull off its alterations, and aid directors to develop the full rating manner of act uponing corporate value ( Barsky and Bermser, 1999 ; Norreklit, 2003 ; Davis and Albright, 2004 ) .

Apart from that, BSC takes into consideration how each portion affects another, instead than merely concentrating entirely on the public presentation of one peculiar facet. Once a balanced scorecard system is in topographic point, it allows for ongoing monitoring of ends and aims. Therefore, it helps in naming troubles in front before they arise or possibly germinate into immense catastrophes. Unlike traditional methods ofA tracking the fiscal wellness of a concern, the balanced scorecard gives you a full image as whether your company is run intoing its aims. While it may look that a company is making good financially, it may be that client satisfaction is low, unequal employee preparation, or that theA peculiar concern procedures are outdated.

Besides that, the balanced scorecard allows a comprehensive position of all maps that affect concern public presentation, non merely fiscal consequences. Balanced scorecards include cardinal public presentation indexs in each of the employee, internal procedures, client, and fiscal classs. These KPI are specific to the concern and chosen to back up the corporate scheme. For illustration, if a company believes fiscal success depends on holding well-trained employees, efficient production procedures and satisfied clients, so public presentation in each country would be reported in the scorecard. Once the KPI have been identified, they must be measured. Fiscal public presentation is measured by prosodies such as net income border, while nonfinancial countries need nonfinancial steps. Employee accomplishment can be measured by the sum of preparation completed, production efficiency by the sum of stuffs or clip required per point, and client satisfaction by figure of ailments. Hence, company public presentation in all classs can so be easy presented in a balanced scorecard and compared with the coveted marks.

Similarly, by utilizing the same cardinal public presentation indexs and prosodies systematically, betterment can be tracked over clip. In fact, balanced scorecards are frequently used in companies with uninterrupted betterment plans. It allows comparing to be made with company marks and industry benchmarks. BSC can supply coincident consideration of both the leading and lagging factors of public presentation rating, both fiscal and non-financial, internal and external concern, qualitative and quantitative measuring, as units of a public presentation measuring path to successfully achieve corporate scheme, aims and missions ( Barsky and Bermser, 1999 ; Huefner, 2002 ; Fletcher and Smith, 2004 ) that is, to clear up scheme and interpret it into action. Furthermore, the balanced scorecard can be a prima index of a company ‘s success if used decently. In the contrary, fiscal indexs such as net income and gross are dawdling indexs since they have already occurred. For illustration, a scorecard that evaluates a gross revenues section will number the figure of leads generated, follow-up calls, in the flesh meetings and shutting paperss offered. A pronounced addition in all of these Numberss predicts future gross revenues growing for the house. The fiscal indexs are good balanced with client procedures and growing kineticss focused indexs. It is non about unduly prefering one type of public presentation to the hurt of other constituents. The integrating of the dynamic position of growing is besides one of the strengths of this method.

BSC can clear up mission and long-run scheme, and to interpret vision in footings of all the constructions in an organisation ( Bontis et al. , 1999 ) . It gives important information on organisation public presentation. The purpose of each organisation is doing net income. Yet, it is non an easy undertaking to win if the company does non hold a strategic ends today. Strategic aims suggests that executives review information from BSC to go prepared for likely complications. Certain, it is preferred to repair issues in which a twosome of solutions have been presented. Therefore, BSC is employed while the strategic purposes criterions can be altered. A company must be certain that any strategic action implemented lucifers the desired results. Meanwhile, BSC system besides offer signals on bad effectivity every bit good as bloopers in direction.

A balanced scorecard is non merely a measurement tool, it is a communicating tool. This method of resource direction allows for clear communicating between assorted degrees of direction by supplying an fastidious model for describing. Its alone features of being simple and concise format conveys all the indispensable information about the company ‘s scheme and public presentation in one page. Therefore, it can be used to educate the employees on company scheme and show how their work affects overall public presentation. It can besides be used for internal public presentation and uninterrupted betterment to outside stakeholders such as investors, loaners and the community.

By utilizing a balanced scorecard attack, the immediate hereafter is non the lone thing being evaluated. Often, when an accountant observes the fiscal underside line ( possibly the company is non making good ) , suggestions given are immediate, instead than looking for long-run intents. Therefore, balanced scorecards can let stakeholders to find the wellness of short, medium, and long term aims at a glimpse. The Dow Jones Sustainability Indexes defines corporate sustainability as “ a concern attack that creates long-run stockholder value by encompassing chances and pull offing hazards deducing from economic, environmental and societal developments. ” The balanced scorecard method can be adapted to this theoretical account to include environmental, societal and economic factors. For illustration, environmental public presentation can be measured and tracked in footings of C footmark or conformity to environmental jurisprudence. Social public presentation can include support of community groups and charitable organisations. Companies can mensurate and pass on their sustainability schemes to internal and external stakeholders by utilizing the balanced scorecard.

Finally, BSC system is an easy platform. Users will surely hold to hold balanced scorecard package that is by and large simple to use. Therefore, managers and staff members besides do non necessitate state-of-the-art proficient forte on know-how to cover with balanced scorecard system. It would non needfully intend, nevertheless, that novices may implement BSC system instantly.

4.2 Disadvantages

Due to the facts that the balanced scorecard looks the affect as a whole, the public presentation and encouragement of the person can be lost. For many companies that are non really inclined towards persons and the organisational civilization, implementing the balanced scorecard can be viewed as set uping new monitoring tools instead than echt public presentation measuring tools. The big figure of variables taken into consideration to organize a feasible scorecard can be cumbersome and consequence in unneeded occupations itself. The balanced scorecard is besides the tool for the internal focal point and it mostly ignores developments of the external concern environment. It focuses on selective stockholders and clients and fails to see the activities of rivals and involvement groups such as providers.

Although the balanced scorecard is being praised for equilibrating both fiscal and non-financial prosodies, it has been criticized for being entirely focused on balanced information. Therefore, if the scorecard fails to include fiscal and non-financial aims, it loses its value as a strategic tool. This restriction is worsened by the fact that balanced scorecards do non specify an acceptable balance between the two. The fiscal information included on the scorecard is limited. However, to be successfully implemented, the balanced scorecard must be portion of a bigger scheme for company growing that includes thorough accounting methods.

The balanced scorecard takes forethought. It is non a speedy hole and it takes considerable idea to develop an appropriate scorecard ( Beverly Dianne Calhoun, 2004 ) . It is non a tool that merely provide speedy solution for a job. Alternatively, it is recommended that people hold a meeting to be after out what ends that company would wish to make and accomplish. Once the company have clearly stated its aims, direction can so get down to interrupt down these aims in what company demand, financially, to convey these aims to fruition. Besides, many companies use prosodies that are non applicable to their ain state of affairs. It is notably of import that the information being tracked while utilizing the balanced scorecards is applicable to company demands. Otherwise, the prosodies will be meaningless.

Besides, the different elements that go into making a balanced scorecard make it less attractive. Once the scorecard is created, the nature of concern can alter over clip, necessitating the company to alter the scorecard. There are package plans that can pull off the scorecard care, but taking the incorrect one may put back the company ‘s ability to measure their employees. If the company can non set in the clip to make and alter the scorecard, it might non be a good solution for the concern.

Furthermore, balanced scorecard does non include direct fiscal analysis of economic value orA hazard direction. Goal choice under balanced scorecard does non automatically include chance cost calculations.A As the balanced scorecard can add a new type of describing without needfully bettering quality or fiscal Numberss, it can look to be an extra set of non-value-added coverage or, even worse, a distraction from accomplishing existent goals.A Overly abstract balanced scorecard ends are easy to make but difficult to quantify.A When a company failed to run into its balanced scorecard ends, the ends need to be re-interpreted to the current province of personal businesss to run into success or avoid failure.

Furthermore, implementing a balanced scorecard system can be dearly-won in footings of preparation clip and extra disbursals for any advisers that are required during the procedure. To calculate out the initial cost for a balanced scorecard program, the company must take the figure of employees developing in the new system and multiple their rewards by the sum of hours they will be trained. In fact, the cost of a facilitator of the program, cost for the package, and labour needed to keep it, plus package licence disbursals, and proving and installing of the package are extra costs. In concurrence, there will be care costs for both the package and the preparation.

Due to the high initial costs of the plan assorted with the clip spent on developing the employees, the balanced scorecard plan may do a company look to be non maximising its ain wealth. Stockholders who want the company to do money every bit much as possible may experience that the balanced scorecard program wasted the money of company. While this is problematic throught the claims that developed employees will make more consequences, it will non be wholly apparent to stockholders in the short term.

Other than that, the balanced scorecard is basically a big chart that gives people a top-down overview of the full company. It does non, nevertheless, provide the thoughts to better the public presentation of the company. The balanced scorecard acts as a fact sheet, but it requires that the direction of the company analyze the facts and come up with the rating and suited scheme. It will non be the solution for all of the company ‘s jobs and must be combined with a larger overall scheme in order to accomplish its possible benefits for the company.

Meanwhile, informations excavation is besides a negative facet of the balanced scorecard because of the demand to continually obtain comparatively vague information from directors. Employees may experience they are preoccupied and do non hold clip to make full out signifiers or informations for every action they take. As a effect, this may harm the productiveness of company.

Given that many of the advantages are of an intangible nature, it would be difi¬?cult to quantify them in a robust mode and to obtain satisfactory scientii¬?c grounds of the true value of the balanced scorecard ( Stella Mooraj, 1999 ) . Since there are assorted advantages and disadvantages of balanced scorecards, it is of import for company to acknowledge whether the BSC is genuinely good to be to the full integrated into accounting system. If the company relies upon the balanced scorecard as its sole prosodies for mensurating public presentation, it will probably be disappointed. If, alternatively, the balanced scorecard is used as a stenography glimpse at the wellness of the company, the tool can be rather effectual.

5.0 The Challenges in Implementation of Balanced Scorecard

One of the challenges in implementing the balanced scorecard ( BSC ) is there are few steps can be found in each of the position mentioned in the model of BSC. For information, BSC contains public presentation drivers ( taking indexs ) of the company ‘s scheme and the results of the scheme ( lagging indexs ) . However, an appropriate combination of both the leading and lagging indexs should be made in order to hold a good BSC. Hence, when an organisation constructed excessively few steps in each of the perspective exist in BSC, it fails in accomplishing the balance between both the mentioned indexs every bit good as fiscal and non-financial indexs. In other words, it can be merely said that there is a demand of balance between the taking and lagging indexs in building BSC.

The 2nd challenge is the devising of a quantitative nexus between the non-financial prima indexs and expected fiscal consequences. As we know, the fiscal steps are the lagging indexs that categorized as dependent variables and retrospective in nature. Yet, to bring forth linkage between non-financial public presentation steps and the expected fiscal consequences can be hard and even pointless in bring forthing it. It is merely because the time-lags exist between the action and consequences is unpredictable as it might take longer clip than what have been expected. In add-on, there might be several factors such as the impact of seemingly undistinguished determinations and amused resources can act upon the consequences. Therefore, it will be a immense challenge for a director to make nexus between the non-financial prima indexs and the expected fiscal consequences.

The 3rd challenge is to promote engagement from the organisation as a whole. Basically, to construct and back up the execution of BSC in an organisation, the senior leading squad musk work side by side in puting the aims, steps and marks. As we know, to alter an organisation perceptual experience towards BSC should be led from the top as the top-down attack will most likely excel in advancing the BSC. It is because without committedness from the senior direction squad, there will be no shared committedness among the employees within the organisation in order to aline and implement BSC successfully. Furthermore, when there is proper communicating exist between top direction and the lower degree employees, the BSC will be communicated through the organisation in a more efficient yet effectual mode. In the interim, the scheme and action to back up the execution of BSC need to be shared among the members of the organisation. This is critical in guaranting the important procedure betterments throughout the organisation so that non merely high degree ends will be achieved, but besides successfully bring forth the needed underside line consequence. This can be done, nevertheless, by subdividing the high degree ends into sub procedure degree in which the existent betterment activities take topographic point.

The 4th challenge is to guarantee the efficiency of informations aggregation procedure and coverage in BSC. Since BSC foremost introduced by Kaplan and Norton in twelvemonth 1992, there have been many critics towards the informations aggregation and coverage prevarications within the BSC. One of the most noteworthy critics is there is a deficiency of efficient informations aggregation and coverage in BSC. This is due to the facts that many organisations have overemphasized the fiscal prosodies instead than equilibrating the other prosodies along with the fiscal prosodies. This is because the bing systems within most of the organisations have already back up the demands for roll uping and describing fiscal steps. However, most of the organisations seems to hold ignored the importance of specifying merely the critical prosodies and allotment of resources towards the accomplishing good consequences for those prosodies. They tend to give alibi by stating that informations aggregation procedure for prosodies consumes a batch of clip and attempts. Therefore, in order to guarantee the efficiency of informations aggregation and describing throughout BSC, there is a demand of prioritise the cardinal public presentation indexs to do certain the investing in prosodies is spent on the information that will be most relevant in bettering the public presentation of an organisation as a whole.

Last but non least, the concluding challenge will be how to maintain the BSC development procedure short. As we know, BSC is one of the most comprehensive public presentation measuring tools that includes both fiscal and non-financial measurings. Yet, it development procedure can be complicated as it involved the organisation as a whole. Besides, the scene of taking and lagging indexs in each of the BSC position can be time-consuming every bit good as the information needed for each of the position can be dearly-won in footings of money and clip. For that ground, there is a demand for an organisation to maintain the development of BSC short due to the facts that scheme might alter if the execution procedure takes excessively long. In fact, some of the indexs might go disused and require alterations as mensurating with incorrect indexs can take to distraction of an organisation from its scheme. Nevertheless, an organisation must happen an optimum period of clip for the BSC execution as short development procedure might non justifiable in nature.

6.0 Decision


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