Criticism of BSC and BSC--Paper代写范文

Paper代写范文:“Criticism of BSC and BS”，这篇论文主要描述的是管理者在企业运营中往往采用绩效评估的方法来管理企业，管理者们会避免使用多种指标，因为采用多种指标会比较的难进行设计平衡计分卡，采用单一的指标来考核是比较的清晰和直观，但他们往往忽略了平衡计分卡中独特措施的问题，这能够比较有效的降低使用平衡计分卡的潜在影响。

Executives often avoid using multiple indicators because they are difficult to design and sometimes difficult to relate one to another. They have a strong preference for single indicators of performance which are well established and which produce obviously clear signals. Lipe and Salterio (2000) indicated that the effective of the BSC mainly depends on the cognition of managers. However, managers tend to ignore the unique measures that are more leading and non-financial measures in performance evaluation. Inefficient use of unique measures decreases the potential effect of the BSC.

In addition, some structural defects exist when using BSC. Schneiderman (1988) observed that there is some problem of the original goal setting part. Yet BSC failed to clearly indicate how to set appropriate goals. He believed that the goals have to be set based on the means that will be used to achieve. However, in the practice, the goal is neither too high nor too low which leads to undesirable performance relative to expectation. Butler et al (1997) also think the model of the BSC is too general and may not fit the organizational culture, may ignore corporate missions.  Many organizations may add some non-financial indicators, like customer satisfaction, market share. However, these measures ignore how to communicate with employees of what to do to achieve goals. They are lack of sufficient instructs. It is also criticized inability to use as a multi-hierarchical framework to measure all function comprehensively (Marston and Neely 2010).

Besides, some organizational defects arise from the process in implementing BSC. BSC put much attention on the significance of measurement. But measure what and how is still a problem. (Lingle, 1996) argued that not all the measurement are worth to established. It is difficult to design a set to measures since the complicity feature of different organizations. Cause and effect relationship in establishing BSC is essential. However, it is also hard to achieve, it requires the ability to judge the coherent and predict results (Norreklit, 2000). Laitinen(1996) and Norrekilt (2000) all questioned the inter-relationship between the four perspectives, they felt there is unclear connection of the four perspectives and unable to help the company to achieve success performance measurement results.

The coherent of manager’s actions are difficult to judge as well since the cause and effect relationship are usually separated in time and space in a complex organization (Sterman, 2000). In terms of the four perspectives of BSC, Neely et al.(2002) argued that there is no sufficient capacity of the four perspectives to deal with sustainability and stakeholders’ approach comprehensively. Similar criticism from Taticchi(2010), It is lack of connections between stakeholders’ interests and other perspectives.

Thus if include other stakeholders’ concerns, such as the impacts of products and services made by the company, in the internal processes perspective will break the entire system in some extent (Taticchi, 2010). Also the current structure of BSC does not help managers to form strategy which could concern about external stakeholders and sustainable development. In terms of Smit(2000), BSC has the disadvantage that it ignores the contribution of employee and supplier. In other words, it ignores the external value chain which is an important part in today’s business industry. Also, it fails to identify the significance of collaboration in organization. Moreover, he argued that BSC does not consider performance measurement as a two-way process. It focuses on top-down performance measurement.

To sum up, BSC has been doubted that it over stressed the status of managers. In the implementation process, mangers could made mistakes in setting goals and measures. Some substance problems are considered from the original designing of BSC that there was insufficient information of how to setting goals and what to measure in detailed direction. Some people even suspected the internal relationship and the capacity of the four perspectives to meet external needs.

2. Implementation of BSC

Kaplan and Norton (1996) observed that balanced scorecard based on four perspectives and it integrates short-term objectives and long-term strategy. Besides setting up a good indicator to measure the four perspectives, it is also important to implementing it. However ‘Even the best objectives and measures can be achieved in bad ways’ which was said by Kaplan (1996). There are lots of successful cases in the application of BSC, but also numbers of failure cases can be observed. So how to apply it in a useful way is significant.

Niven (2005) stated the process of implementation of BSC is a constant and long path. It has a close connection with the internal and external environment so it should be viewed as a dynamic navigation system capable of course adjustments as a condition warrant’.

As Schneiderman has found, lacking of the commitment from top management is considered as one of the most important reason that BSC can not work effectively (Schneiderman,1999). No mention a good communication with the employees. Thus, the basic stage in implementing a BSC in the organization is a good communication with top managers and other employees in order to get sufficient support. The goals have to be disaggregated and applied downward so that everyone in the organization could have the concept and they can share ideas and contribute to the big strategic change.

When an organization decides to implement BSC as a strategic management tool, there should be a complete plan. Setting an adequate metrics at first is essential for the implementation. Financial metrics are relatively easy to set since they have been used in traditional performance measurement system for many years. How to establish good non-financial metrics is the key point. There are seven principles which were provided by Schneiderman in 1998. He mentioned there have to be a reliable proxy for stakeholder satisfaction, these measures have the ability to orient the defect, and they are easy for people to understand; besides, there should be a well explanation of each step in the BSC plan; it should be able to use anytime; there is data system to support the accomplishment; and continuous review and adjustment is acquired.

Then it needs to set goals for the organization to achieve in the future. These goals can neither be set too high nor too low. The rate depends on several variables including organizational readiness, the sense of urgency within the company, commitment of senior leadership to the tool, scope of the work and the availability of resources Niven (2005).

The above processes are only the initial part in the implementation of BSC. Kaplan and Norton (1996) indicated translating the vision is essential in the implementation stage. For example, if the strategy is satisfy targeted customers, then who were the target customers and what can satisfy them should be considered by executives. Evans (2002) indicated that strategic plans are established perfectly, but the people who are required to execute the strategic plan intend to disappoint us. According to Balanced scorecard collaborative, only 5% of the staffs understand their company strategy, only 25% of managers use incentives linked to strategy. 86% of executive teams spend less than one hour per month to discuss strategy (Evans 2002). So the communication with staff is inevitable. As Kaplan observed communicating and Linking is the second factor to successfully take BSC into practice. It is important since the application can not be accomplished without all staff work together. So after the scorecard is established, the next critical thing to do is communicate with employees so they can know the strategy of the company and work for it cooperatively. It is also helpful to improve the cohesive force within organization. In addition, business planning is essential as well. There are often separate departments to execute the strategy in an organisation. So agreement of performance measures for the four balanced scorecard perspectives in different department is important. After achieve an agreement, and then the detailed indicators could be set up to ensure the implementation. Last factor to implement successfully is feedback and learning. BSC helps to review the feedbacks and find out problems exist in operation and it also forces the company to learn to avoid problems in the future. In the process of implementation of BSC, the manager could know if the strategy is working and if not, why (Kaplan & Norton 1996). The measure of BSC is better being designed more than 15 financial and non-financial measures combined with the four perspectives.

Now, the BSC has been applied in multiple ways not only on measuring the performance of organization. Sustainability balanced scorecard is employed as a multi-criteria framework for evaluating SRI (socially responsible investment) model to understand sustainable development and social responsibility (Tsai 2009). Health care systems also apply the BSC to help to improve the quality and safety of care provision. Combining with other management tools such as EFQM help the hospital to achieve complementary effect (Groene 2009).

In summary, the implementation of BSC is critical and complicated. Gaining support within the organization is the fundamental stage. Then set goals for the company to define the direction of development. After established a perfect strategy, it is necessary to translating the goal into measures. To make these measures actionable, it is indispensible to communicate a lot within the organization to deliver strategies and achieve agreements. At last, reviewing and summarizing is helpful to improving constantly.

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