Improving Perfomance Management Systems Of UK Organizations Using The Balanced Scorecard (Dissertation Sample)

IMPROVING PERFORMANCE MANAGEMENT SYSTEMS OF UK ORGANIZATIONS USING THE BALANCED SCORECARD
By
Name
A paper submitted in partial fulfillment of the award of the degree of
…………………………………………………………………………………………
in the faculty of ………………………………………………at the Bristol University
Research Supervisor……………………………...
Date......................................................................
Abstract
The change in the global competitive environment has forced organizations (including UK’s) to seek for new approaches that accurately and effectively manage their performance. The use of traditional performance measures is no long applicable. Studies have been conducted on performance management, and their outcome reveals the use of Balanced Scorecard as the best approach towards performance management. This study, therefore, provides a unique presentation of various aspects of performance management, Balanced Scorecard in particular. The dissertation has been designed in the most convenient way; it consists of six chapters organized in the most convenient way to make it easily understood by readers. The first chapter gives a general introduction of the study and the study plan, including research design. The second and third chapters provide a detailed literature review on performance management and the Balanced Scorecard. The fourth chapter gives a detailed analysis of three companies that have applied the tool in performance management. The fifth chapter evaluates the effectiveness of using the Balanced Scorecard in performance management while highlighting its benefits, strengths and weaknesses. Bases on case analysis and evaluation of the BSC approach, the final chapter provides conclusion and recommendation on how to improve the applicability of the Balanced Scorecard.
Key words: Performance management, Performance measurement, Key Performance Indicators and Balanced Scorecard
List of tables and figures
Table 4.1 Summary of Tesco’s objectives for each perspective ………………………………...49
Figure 2.1Performance Prism……………………………………………………………………22
Figure 3.1: The Four Perspectives of a Balanced Scorecard framework………………………...30
Figure 3.2 Balance of Perspectives ……………………………………………………………...30
Figure 3.3: Measuring strategic financial themes………………………………………………..32
Figure 3.4: The core measures of Customer Perspective………………………………………...34
Figure 3.5: The generic value-chain mode……………………………………………………...35
Figure 3.6: The learning and growth measurement framework………………………………….36
Figure 3.7: The Strategy Map……………………………………………………………………38
Figure 3.8 Balance Scorecard as a Strategic framework………………………………………...39
Figure 3.9: The 6 Critical success factors for the implementation of BSCs……………………..42
Figure 4.1: Tesco Plc’s wheel steering (BSC) model……………………………………………48
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List of Acronyms
BSC Balanced Scorecard
BSCs Balanced Scorecards
CBA Cost Benefit Analysis
CEO Chief Executive Officer
CSR Corporate Social Responsibility
EPS Earnings per share
EU European Union
FMCG First Moving Consumer Goods
KPIs Key Performance Indicators
KPMG Klynveld Peat Marwick Goerdeler
PM Performance Management
ROE Return on Equity
ROI Return on Investment
RSI Renaissance Solution, Inc
TQM Total Quality Management
Table of Contents TOC \o "1-3" \h \z \u CHAPTER 17GENERAL INTRODUCTION AND THE STUDY PLAN71.1Introduction71.2Statement of the Problem81.3 Delineation of Research91.4 Significance of the Research91.5Assumptions of the Research101.6Research Objectives101.7Research Design111.7.1 Research Approach111.7.2 Research Method111.7.3 Data Collection121.7.4 Analysis, Evaluation, Conclusion and Recommendations121.8Outline of the Dissertation121.9 Chapter Summary13CHAPTER 214AN OVERVIEW PERFORMANCE MEASUREMENT142.1 Definitions of Performance Management and Measurement142.2 Purpose of Performance Measurement162.3 Importance of Performance Measurement172.4 Limitation of Traditiona Approaches182.5 Development of Perfomance Measurement Systems192.6 Chapter Summary24CHARTER 3 PAGEREF _Toc330894631 \h 25AN OVERVIEW OF THE BALANCED SCORECARD253.1The Concept and Definitions of a Balanced Scorecard253.2History and Evolution of Balanced Scorecard PAGEREF _Toc330894634 \h 26 3.3 The Five Features of a Sound Balanced Scorecard283.4 Balanced Scorecard Framework293.4.1 The Four Perspectives of a Balanced Scorecard293.4.2 The Cause and Effect Relations of the Four Perspectives363.5 The BSC as a Strategic Performance Measurement system383.5.1 Translating the Vision and Strategy393.5.2 Communicating and Linking Strategic Objectives and Measures403.5.3 Planning, Setting and Aligning Strategic Initiatives403.5.4 Facilitate Strategic Learning and Feedback413.6The Balanced Scorecard Success and Failure Factors413.7 Chapter Summary44CHAPTER 445THE BSC CASE STUDY INVESTIGATIONS454.1 Introduction454.2 Case 1: Tesco Plc454.3 Case 2: Arran Ltd524.4 Case 2: Crosshouse (Multinational FMCG)594.5 Chapter Summary66CHAPTER 567EVALUATION OF THE BSC APPROACH675.1 Introduction675.2 Benefits and Strengths of Using the BSC675.3 The BSC Weaknesses695.4 Chapter Summary70CHAPTER 671CONCLUSION AND RECOMMENDATIONS716.1 Conclusion716.2 Recommendations726.3 Chapter Summary74Reference List75APPENDICES81
CHAPTER 1
GENERAL INTRODUCTION AND THE STUDY PLAN
1 Introduction
As a result of increase in global competitive environment, performance measures are changing from traditional approaches to the use of modernized systems of performance management. The argument is that the use of financial measures alone has developed limitations in their applicability. This is because, there no longer exist one perspective; financial perspective. Ideally, the use of financial measures in performance evaluation systems has been criticized as being historical in nature, and does not have a clear outlook of the organization’s future; they are said to lack predictive capabilities. Thus, there is need for organizations to adopt a performance management system that caters for all perspectives of the organization; the Balanced Scorecard. This project addresses various aspects of performance management and the use of Balanced Scorecard in particular.
The use of the Balanced Scorecard as a performance management tool, by organizations, has gained popularity in the recent past. Unlike traditional performance measures, the Balanced Scorecard is regard as a mul...