Role Of Performance Measurement Accounting

Table of Content

Chapter 2


2.1 Introduction

This chapter will cover the literature on public presentation measuring, scheme map, balance scorecard and its function in alining organisational ends to the scheme. By analyzing related literature on BSC, it is seen that BSC truly plays a important function in the success of an organisation and that it helps to mensurate the success of the scheme ( Kaplan and Norton, 2001 ) . Schneiderman ( 1999 ) stated that balanced scorecards that did non hold a sound foundation would neglect. Therefore, this chapter will sum up the positive and negative effects of BSC collected from many surveies and luxuriant hypotheses to foretell the effects of BSC in pattern of a specific organisation. Additionally, it is learnt from this chapter that the four positions of BSC are inter-related, and that even though fiscal consequences are really of import, presenting long term value and success will necessitate a focal point on non-financial factors including high acting people, efficient procedures and effectual client services ( Kaplan and Norton, 1996 ) . The undermentioned portion is related conceptualisation on the research content.

2.2 Performance Measurement

2.2.1 Definition

Performance measuring is defined by Lebas ( 1995 ) as a system by which a company monitors its day-to-day operations and evaluates whether it is achieving its aims. Meanwhile, Lichiello and Turnock ( 1999 ) specify it as the choice and usage of quantitative steps of capacities, procedures, and results to develop information about critical facets of activities, including their consequence on the populace. Basically, it is considered portion of a public presentation direction system ( Sanayei et al. , 2011 ) and is set aligned with the organisation ‘s scheme.

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Harmonizing to Hronec ( 1993 ) , public presentation measuring system is a tool for equilibrating multiple steps ( cost, quality, and clip ) across multiple degrees ( organisation, procedures and people ) . While it was suggested by Green et Al. ( 1991 ) to “ aim the value-added activities of the company ” , Kaplan ( 1991 ) suggested that an effectual public presentation measuring system “ should supply seasonably, accurate feedback on the efficiency and effectivity of operations ” . In fact, organisations ever plan to construct an effectual tool to assist them pull off the public presentation and good accomplish the marks.

2.2.2 The function of public presentation measuring

Harmonizing to Christian C. Johnson ( 2007 ) , it is of import to understand why mensurating an organisation ‘s public presentation is both necessary and critical.

aˆ¦ An organisation runing without a public presentation measuring system is like an aeroplane winging without a compass, a Formula One race auto driver steering his auto blindfolded, or a Chief executive officer runing a company without a strategic planaˆ¦

The intent of mensurating public presentation is non merely to cognize how a concern is executing but besides to enable it to execute better. The ultimate purpose of implementing a public presentation measuring system is to better the public presentation of an organisation so that it may better function its clients, employees, proprietors, and stakeholders.

Basically, a public presentation measuring system enables an endeavor to program, step, and command its public presentation harmonizing to a pre-defined scheme ( Johnson, 2007 ) . Many writers including Atkinson and McCrindell ( 1997 ) , De Toni and Tonchia ( 2001 ) , as cited in Pongatichat and Johnston ( 2008 ) , have identified its benefits as a tool to ( I ) communicate the organisation ‘s strategic way, strategic precedences, ( two ) create a shared apprehension, ( three ) proctor and track the execution of scheme, ( four ) align short-run actions with long-run scheme, ( V ) make clear the links between public presentation of persons and sub-units, and sub-units and overall organisational public presentation, ( six ) promote integrating among assorted organisational procedures, ( seven ) focal point alteration attempts, and ( eight ) facilitate organisational acquisition.

2.2.3 Different public presentation measuring theoretical accounts

Many researches on banking public presentation measuring used traditional steps like statistical analysis ( Arshadi & A ; Lawrence, 1987 ; Devlin & A ; Gerrard, 2005 ) , structural equation theoretical accounts ( SEM ) ( Collier, 1995 ) , multi-criteria categorization methodological analysis ( PARCLAS ) ( Kosmidou et al. , 2006 ) and DEA ( Giokas, 2008 ) . In the interim, Wu et Al. ( 2011 ) , Chen et Al. ( 2008 ) , and Meyer and Markiewicz ( 1997 ) chose to follow the four BSC positions, including both fiscal and non-financial indexs. In their 1992 work, Kaplan and Norton besides described public presentation measuring as a manner to reexamine an organisation ‘s fiscal and non-financial ends. Figure 2.1 summarizes the choice indexs of banking public presentation measuring that have been investigated in several of import surveies, along with their chief analytical methods ( Wu et al. , 2011 ) .

Harmonizing to Weber et Al. ( 2001 ) and Bible et Al. ( 2006 ) , traditional measures no longer worked efficaciously because those steps relied so strongly on fiscal indexs and did non sufficiently cover other critical factors like accomplishments, competences, and motive of employees ; client and supplier relationships ; advanced merchandise development ; databases and information engineerings ; efficient and antiphonal operating processes ; invention in merchandises and services ; client trueness and relationships ; and political, regulative, and social blessing. Meanwhile, the BSC can cover all these steps in a more specific and appropriate manner that supports direction in implementing organisational ends.

Furthermore, amongst some major theoretical accounts listed out by Johnson ( 2007 ) in public presentation measuring including Activity-based Costing and Management, Economic Value Added, Quality Management, Customer Relationship Management and Balanced Scorecard, BSC seems to be most widely used. It differs from other tools as it foremost begins with the inquiry: “ What is the scheme? ” When replying this inquiry, a strategic map is used, that is “ a logical and comprehensive architecture for depicting scheme ” ( Kaplan and Norton, 2001 as cited in Kocakulah and Austillm, 2007 ) . Literature on scheme map will be articulated in the undermentioned portion after the theories on BSC.

2.3 Balanced Scorecard

2.3.1 Definition

As mentioned by Kaplan and Norton in their 1992 work, BSC is an incorporate set of public presentation steps consisting both current public presentation indexs and drivers of future public presentation, and fiscal every bit good as non-financial steps. It is considered a strategic public presentation direction system that links public presentation to scheme utilizing a multi dimensional set of fiscal and non-financial public presentation steps. In add-on, it helps companies better corporate administration ( Dye, 2003 ) through the direction of concern public presentation and accomplishment of strategic ends. The construct of BSC was so extended into a direction tool for depicting, pass oning and implementing scheme ( Kaplan, 2010 ) .

As highlighted by Sharma ( 2009 ) , BSC is alone in two ways compared to the traditional public presentation measuring tools: ( 1 ) it considers the fiscal indices every bit good as the non-financial 1s in finding the corporate public presentation degree and ( 2 ) it is non merely a public presentation measuring tool, but besides a public presentation direction system.

Harmonizing to Tseng ( 2010 ) , BSC is a multi-criteria rating construct that highlights the importance of public presentation measuring. For directors of organisations, the map of the BSC is to supply a position of what is go oning both inside and outside the organisation, affecting placing the cardinal constituents of operations, puting ends for them, and so researching ways to mensurate advancement toward accomplishing those ends ( Luu and Venkatesh, 2010 ) . The term “ balanced ” reflects the balanced consideration given to long and short term aims, fiscal and non-financial steps, taking and lagging indexs, and external and internal public presentation positions, said Kaplan and Norton ( 1996a ) . Many surveies, as mentioned in Gates ( 1999 ) , Lingle and Schiemann ( 1996 ) , proved that organisations pull offing through ‘balanced ‘ public presentation measuring systems perform better than those that are non.

The BSC ‘s cardinal feature is that the included steps are linked to the entity ‘s mission and scheme, and are explicitly designed to inform and actuate uninterrupted attempts toward their attainment ( Hoffecker, 1994 ; Kaplan & A ; Norton, 1996a, 1996b, Kurtzman, 1997 ; Maisel, 1992 ) . Meanwhile, Bible et Al. ( 2006 ) said that a major feature of a BSC is that it combines long-range strategic fiscal ends with twenty-four hours to twenty-four hours operations and that it is a utile tool in assisting companies focus on the hereafter.

As such, the BSC is an built-in portion of the strategic planning procedure, and non merely a system for tracking public presentation after the fact ( Kocakulah and Austill, 2007 ) . An effectual balanced scorecard by and large includes a mix of result steps and public presentation drivers. Furthermore, an effectual balanced scorecard embodies a balance between diagnostic steps and strategic steps. Gumbus et Al. ( 2003 ) found that it measures results and focal points on uninterrupted betterment. The balanced scorecard articulates a theory, or theoretical account, of the organisation ‘s causal concatenation of public presentation drivers and results. At the organisational degree, developing the balanced scorecard involves placing several cardinal constituents of operations, set uping ends for these and so choosing steps to track advancement toward these ends.

In a research by Morisawa ( 2002 ) , the five kernels of BSC are described as ( I ) accomplishing a balance among short-run, medium and long term direction aims through a diverse measuring of public presentations ; ( two ) making a sense of apprehension by set uping non-financial quantitative indexs other than fiscal indexs ; ( three ) extinguishing vagueness by maintaining to quantitative indexs ; ( four ) advancing organisational acquisition through a perennial rhythm of hypothesis confirmation and cognition direction for organisational accomplishment ; ( V ) supplying a common strategic communicating platform associating the caputs and members of the organisation. With using the BSC conceptualisation to the instance of HSBC, the writer would wish to suggest the undermentioned hypothesis.

H1: Balanced Scorecard is an effectual public presentation measuring tool.

2.3.2 Four positions of BSC

Harmonizing to Smith and Kim ( 2005 ) , execution of a balanced scorecard normally starts with senior direction who defines the organisation ‘s mission and scheme. This scheme is so translated into aims for sections and persons ( Bible et al. , 2006 ) . These aims are aligned with the overall corporate scheme and converted into four diverse positions: fiscal, client, internal concern procedures, and larning and growing ( Kaplan and Norton, 1992 ) as illustrated in Figure 2.2 below.

Figure 2.2: Four positions of Balanced Scorecard ( Source: Kaplan and Norton, 1992 )

With Financial position, it indicates how good the organisation is interpreting its operational consequences into fiscal well being ( Kaplan and Norton, 1992 ) . The aim of every organisation is to present maximal value to stakeholders ( Pangarkar and Kirkwood, 2008 ) . Measures are runing income, gross growing, return on capital, and economic value added. In add-on, Cohen ( 2003 ) as cited in Smith and Kim ( 2005 ) highlighted that since the scorecard includes both fiscal and other steps, direction can see how determinations will impact non merely the fiscal steps, but besides the general wellness of the company.

With Customer position, it reveals how good the organisation is run intoing the outlooks of its clients. It includes aims for coveted customer-related results, such as to get, satisfy, and retain targeted clients ( Kaplan and Norton, 1992 ) . As clients are the beginning of concern net incomes, fulfilling client demands is the ultimate aim of endeavors ( Prahalad and Ramaswamy, 2004 ) . Harmonizing to Smith and Kim ( 2005 ) , most companies are interested in client satisfaction, client keeping, new client acquisition, market place and market portion in mark sections. They can get this information in assorted ways, such as client satisfaction studies, focal point groups, and market analyses ( Quick MBA, 2004 ) , and so work out specific marks to be incorporated into the balanced scorecard.

With Internal Processing position, it focuses on the internal procedures that the entity must execute good if it is to run into clients ‘ outlooks and fiscal aims for productiveness betterments ( Kaplan and Norton, 1992 ) . Internal concern procedures are the mechanisms through which public presentation outlooks are achieved ( United States Department of Energy, 2004 ) .

With Learning and Growth perspective, it is critical to concentrate on employee accomplishments that drive betterments and successes with regard to the other positions ( Kaplan and Norton, 1992 ) . Aims are to depict the ends for employees, information systems, and organisational alliance. The steps here are normally employee-related and include informations on turnover, lost clip accidents, productiveness, preparation hours, enfranchisements, calling and leading development, and occupation satisfaction. Harmonizing to Smith and Kim ( 2005 ) , larning and invention position is much more than merely the preparation of employees. It includes cultivating an environment where mentoring and tutoring of employees by other employees is portion of the corporate civilization ( The Balanced Scorecard Institute, 2004 ) and where aid is readily available for anyone in the organisation who needs it. It besides includes doing information available to everyone in the company. Figure 2.3 gives a sample of generic measurings of the 4 positions with categorization of fiscal and non-financial, short term and long term, taking and lagging, internal and external factors ( Martin, 2012 ) .

2.3.3 The positive effects of BSC

BSC is commented by many writers to hold many good points which are mentioned below. Harmonizing to Waal et Al. ( 2009 ) , the more complete the BSC system execution is, the more positive effects an organisation will hold and, in other words, the more it will profit from this system.

Clarification and interlingual rendition of the organisation ‘s vision and scheme

Harmonizing to Kaplan and Norton ( 1996, 2001 ) , balanced scorecard, when right understood and decently implemented, clearly communicates the organisation ‘s scheme to its employees. Kaplan and Norton ( 2007 ) emphasized that the scorecard lets directors pass on their scheme up and down the organisation and associate it to departmental and single aims. It provides executives with a comprehensive model that can interpret the company ‘s vision and scheme into a coherent and linked set of public presentation steps ( Kaplan, 2010 ) . In add-on, Johnson ( 2007 ) agreed that the scorecard helps to interpret the organisational schemes into more easy understood operational prosodies and ends. In the interim, interpreting a bank ‘s schemes into actions was listed by Hung-Yi Wu ( 2012 ) as one of the benefits of utilizing the BSC for Bankss.

Alignment between concern strategic ends and operation programs

Kocakulah and Austill ( 2007 ) agreed that it combines long-range strategic fiscal ends with daily operations and enables companies to incorporate their concern and fiscal programs. Harmonizing to Sorenson and Sullivan ( 2005 ) , a good BSC system makes the organisation and its sections concentrate on carry throughing the mission through the linking of aims, enterprises and steps to an organisation ‘s scheme. This will let direction to aline the concern and service units, squads, and persons around strategic ends to implement and accomplish corporate schemes successfully ( Bible, et al. , 2006 ) . Furthermore, it improves alignment among divisional ( or person ) ends and the organisation ‘s end and schemes. It besides aligns one-year or short-run operating programs and performance-evaluation measuring with long-run schemes ( Pineno & A ; Cristini, 2003 ) .

Efficiency betterment and better strategic planning

Harmonizing to Kocakulah and Austill ( 2007 ) , it is a successful trailing record of efficiency betterment and better strategic planning. Lovell et Al. ( 2002 ) and Tapinos et Al. ( 2005 ) agreed with that, whereas Pieper ( 2005 ) said that BSC provides a snapshot of the organisational public presentation that is easy to understand, and it can heighten communicating with cardinal stakeholder groups from clients to employees. A instance survey of Ahn ( 2001 ) showed that, in fact, the BSC contributed to clear up and depict scheme, of a concern unit, into clear elements that are easy apprehensible by all people: “ A clear strength of the Balanced Scorecard was that of being an easy understood construct ” ( Ahn, 2001 ) . The consequences of the research of Geuser et Al. ( 2009 ) showed that the BSC helps to clear up scheme at the operational degree. On the other manus, it makes employees understand the value of their work and how it relates to the organisation ‘s strategic aims ( Inamdar and Kaplan, 2002 ) .

Hung-Yi Wu ( 2012 ) pointed out that BSC provides a manner to step and supervise the public presentation of cardinal public presentation drivers that can take to the successful executing of a bank ‘s schemes, whereas Frigo et Al. ( 2000 ) said it is an effectual tool to guarantee uninterrupted betterment in the systems and procedures of Bankss.

Dumond ( 1994 ) and Sandt et Al. ( 2001 ) suggest that utilizing balanced public presentation measuring systems improves the decision-making public presentation of directors and employees. Lawson et Al. ( 2003 ) and Dumond ( 1994 ) found that utilizing public presentation measuring systems and associating scorecards to compensation significantly increased employee satisfaction, whereas Ittner et Al. ( 2003b ) presented grounds to the reverse.

Enhancement of strategic feedback and larning throughout the organisation

Harmonizing to Salterio and Webb ( 2003 ) , BSC makes it possible for strategic acquisition and feedback. It is to supply counsel and feedback toward the desired results. It can supply motive and way, give feedback on the effectivity of programs and their executing, and aid in scheme preparation and alteration ( Weng, 2011 ) . It enhances employee ‘s acquisition and uninterrupted betterment by mensurating and supplying feedback on their actions ( Kaplan and Norton, 2001 ) . It speeds up the gait of acquisition because the existent consequences are compared to anticipations ( Inamdar & A ; Kaplan, 2002 ) .

The below Figure 2.4 summarizes some cardinal good points of BSC and lists the literature beginnings in which they were found.


Positive effects of BSC

Literature beginnings


Clearly communicates the organisation ‘s scheme to its employees

Kaplan & A ; Norton ( 1996, 2001 ) ; Pieper ( 2005 )


Linkss scheme to departmental and single aims

Kaplan & A ; Norton ( 2007 ) ; Bible et Al. ( 2006 )


Translates scheme into more easy understood operational prosodies and ends

Johnson ( 2007 ) ; Hung-Yi Wu ( 2012 ) ; Geuser et Al. ( 2009 )


Combines long-range strategic fiscal ends with daily operations

Kocakulah & A ; Austill ( 2007 ) ; Pineno & A ; Cristini ( 2003 )


Gives a clear focal point for the organisation and its sections on accomplishing marks and carry throughing the mission

Sorenson & A ; Sullivan ( 2005 )


Gives a trailing record of public presentation, efficiency betterment and better strategic planning

Kocakulah & A ; Austill ( 2007 ) ; Lovell et Al. ( 2002 ) & A ; Tapinos et Al. ( 2005 ) A ; Hung-Yi Wu ( 2012 )


Brands employees understand the value of their work and how it relates to the organisation ‘s strategic aims

Inamdar & A ; Kaplan ( 2002 )


Additions employee satisfaction

Lawson et Al. ( 2003 ) and Dumond ( 1994 )


Encourages strategic feedback, uninterrupted betterment and acquisition and development throughout the organisation

Salterio & A ; Webb ( 2003 ) ; Frigo et Al. ( 2000 )

It is seen that all the above positive effects are merely mentioned in theory and may differ in different types of organisations. Kocakulah and Austill ( 2007 ) saw that as entities and industries differ, scorecards may differ. In world in an organisation like HSBC in Vietnam these good points need to be authenticated through acquiring feedback from every bit many employees as possible to guarantee truth and suitableness. Consequently, the research is to look into whether the benefits of implementing BSC at HSBC Vietnam are in line with those statements indicated by other writers. Those listed in the tabular array are used as standards to measure the effectivity of BSC in HSBC in Vietnam. Harmonizing, the undermentioned hypothesis is proposed.

H2: There are comparatively positive impacts of BSC in HSBC.

In sing point figure 7 in the tabular array above, there is a relationship between employees holding a good apprehension of the organisation ‘s strategic aims with a well-performing organisation. Harmonizing to Stewart ( 1999 ) , a well-performing organisation should hold at least 67 % employees holding a good apprehension of overall organisation ends.

This research will so carry on a study amongst HSBC ‘s employees to analyze if they know and understand its aims and if HSBC is considered good executing in conformity with Steward ‘s ( 1999 ) point of position. Another hypothesis is given below:

H3: There is a positive relationship between a good executing organisation and its employees ‘ apprehension of its aims.

2.3.4 Negative impacts of BSC

While there are a big figure of advantages of the BSC indicated in old surveies, few possible negative facets of its usage have been discussed. Harmonizing to Bourne et Al. ( 2000 ) and Neely et Al. ( 2000 ) , much work has been carried out on the design and deployment of measurement systems, but comparatively small on their impact.

Lack of communicating

Harmonizing to Kocakulah and Austillm ( 2007 ) , there is a deficiency of communicating within the organisation about the usage and intent of the BSC. This deficiency of communicating can hold serious deductions on the BSC ‘s effectivity, and it is one of the chief ways in which jobs occur when the BSC is non utilised decently. Rousseau and Rousseau ( 2000 ) qualify this job as the “ executive plaything syndrome. ” Balanced scorecards that fail to affect every employee ‘s apprehension and committedness are destined to neglect. As such, it is necessary to acquire to cognize if BSC ‘s intents are efficaciously communicated and if employees good understand the organisational ends and aims through the executing of BSC.

Imbalance between the four positions

If the BSC is non decently built, intending one of the four positions is non having due attending and focal point, the impacts can be negative and non mensurable. Todinov ( 2006 ) gave an illustration that failures in internal processing system may do high losingss, for case in operational loss, client loss, repute loss, low quality, low productiveness, etc. On the other manus, Smith and Kim ( 2005 ) figured out that deficient focal point on acquisition, invention and growing consequences in negative impacts on other positions and the concern ends finally. They said, the ground why acquisition and growing is the 1 that concerns tend to overlook the most amongst the four positions is because the links between invention, acquisition, and growing are non visibly tied to bottom-line consequences in short term. Meanwhile, larning and growing are pointed out by Martinsons ( 2002 ) as a motive factor to employees, straight impacting employees ‘ satisfaction and keeping. Yet for many old ages, as Kaplan ( 2010 ) described it, the acquisition and growing position was “ the black hole of the Balanced Scorecard. ” As such, it is necessary to look into the instance of HSBC to see if this sort of issue is existing and how to get the better of it.

Adaptability to scheme alterations

Kocakulah and Austill ( 2007 ) raised their concern about the adaptability of BSC to scheme alterations. Harmonizing to Niven ( 2002 ) , in some alterations, aims, steps and marks might stay in topographic point unmodified, whereas in some other alterations, there might be the demand to be replaced with new 1s consistent with the updated scheme. In pattern, in many organisations, BSC may non be decently updated in line with the alterations in scheme. It can be due to the ground that altering a BSC can be really time-consuming ( Weng, 2011 ) , including working on a list of relevant aims and steps that reflect the alterations, so pass oning the alterations down to all degrees across the organisation, apportioning resources, measuring and feedback and accommodation. It can besides be due to the losing of direction ‘s due attending to the function and significance of the BSC to the accomplishment of organisational ends. This issue will be taken into consideration when making the research on the instance survey of HSBC in Vietnam.

By and big, although there are non many negative impacts found in recent surveies, all the above mentioned issues will be authenticated in the undermentioned Chapter. In add-on, there remain a batch of issues to be identified and addressed from the instance of BSC execution of HSBC in Vietnam. It is believed that the survey will churn out some interesting facts and findings to back up the undermentioned hypotheses.

H4: There are comparatively negative impacts of BSC in HSBC.

H5: Of the four positions of HSBC ‘s BSC, larning and growing is the weakest point.

2.3.5 An ideal BSC theoretical account

The below theoretical account was mentioned by Norton ( 2000 ) as cited in Johnson ( 2007 ) , jointing the demand for equilibrating the figure of steps in all four positions, with greater accent on procedure steps, because the procedure position is the primary sphere through which organisational scheme is implemented.

This theoretical account can be considered ‘ideal ‘ to many organisations, with a typical allotment across the four positions ( Kaplan and Norton, 2000 ) :

fiscal – 22 %

client – 22 %

internal – 34 %

acquisition and growing – 22 %

Best Practices LLC ( 1999 ) analyzed the scorecards of 22 organisations that had successfully implemented and found merely about the same distribution of steps ( Punniyamoorthy and Murali, 2008 ) . However, Johnson ( 2007 ) believed that the figure of prosodies could change due to the size of the company. Kocakulah and Austill ( 2007 ) besides highlighted that organisations could orient their BSCs to their ain demands. The writer agrees that weight of each position can depend on the organisational ends and departmental ends. For illustration, to a gross revenues squad, fiscal and client positions can outweigh the other two and necessitate to be more focussed, whereas, to a service squad, client and internal procedure positions can outweigh. The consequence is to be authenticated after the study is conducted in following chapters. Then the below hypothesis is born and pending for a verification.

H6: The executing of BSC in a specific organisation in pattern is different with an ideal BSC.

2.4 Strategy map and possible relationships

2.4.1 Definition of scheme map

The scheme map is created from the causal linkages between BSC aims and steps ( Kaplan & A ; Norton, 2000, 2001 ) . It is the focal point of a new strategic measuring system ( Kocakulah and Austillm, 2007 ) and called a “ value driver map ” by Ittner and Larcker ( 2003 ) . By specifying scheme in such a manner, organisations can set up an apprehensible way for all their units and employees. Figure 2.5 ( Kaplan & A ; Norton, 2004a ) shows the current construction for a scheme map in which intangible assets and critical procedures are linked to the value proposition and client and fiscal results. It helps transform intangible assets into touchable client and fiscal results.

With the BSC, Kaplan and Norton have created a generic scheme map for different concerns, giving directors a starting topographic point for depicting scheme and bettering the executing of procedures to implement the results. The house will hold a dependable foundation for the design of a direction system to make a scheme focused organisation ( Kaplan and Norton, 2001 ) .

2.4.2 Relationship between the four positions of BSC

Kaplan and Norton ( 1996a, 1996b ) introduced three rules that link an organisation ‘s BSC to its scheme: ( 1 ) cause and consequence relationships, ( 2 ) public presentation drivers, and ( 3 ) linkage to fiscal ends. The ironss of cause-and-effect connect all the factors ( i.e. , public presentation indexs ) through the four positions of BSC, which reflect dynamically the alteration of schemes and bespeak how an organisation creates its value ( Kaplan & A ; Norton, 2004a, 2004b ) .

Based on the BSC, the cause and consequence relationships between the four positions have been created ( Wong-On-Wing et al. , 2007 ; Paul, 1998 ) . Evans ( 2002 ) pointed out that non merely does the BSC transform how the strategic program is expressed, but it besides pulls everything together, and antagonize each other finally ( De Haas and Kleingeld, 1999 ) . This is the alleged “ cause and consequence ” relationship or linking of all elements together. For illustration, if you want strong fiscal consequences, you must hold great client service. If you want great client service, you must hold first-class procedures in topographic point ( such as Customer Relations Management ) . If you want great procedures, you must hold the right people, cognition, and systems ( rational capital ) . Kaplan and Norton ( 1996 ) one time said, BSC tells an organisation the cognition, accomplishments and systems that its employees will necessitate ( larning and growing ) to introduce and construct the right strategic capablenesss and efficiencies ( internal procedures ) that deliver specific value to the market ( client ) which will finally take to higher stockholder value ( fiscal ) .

Kaplan and Norton ( 2001 ) shared the same position. For illustration, investings in larning will take to a better internal concern procedure, which, in bend, is likely to better a client ‘s satisfaction and trueness, and hence consequence in a higher return on investings, which would fulfill stockholders.

Harmonizing to Smith and Kim ( 2005 ) , as these four countries of strategic public presentation are based on cause-and-effect relationships, hence, they can interact to function as benchmarks for competitory success. The interaction of these countries besides encourages all employees to see the impact of their determinations on the fiscal public presentation of the company. As analyzed by Heskett, Sasser and Schlesinger ( 1997 ) , larning and development thrust public presentation and make client profitableness. Investings in employee preparation lead to betterments in service quality, better service quality leads to higher client satisfaction, higher client satisfaction leads to increased client trueness, increased client trueness generates increased grosss and borders.

However, harmonizing to Sanayei et Al. ( 2011 ) , the relationships between Kaplan and Norton ‘s ( 1996 ) positions are non cause and consequence. Meanwhile, Norreklit ( 2003 ) thought that they are simply logic. Malmi ( 2001 ) besides studied that employees ‘ dissatisfaction was caused by deficiency of such causal relationships. Still, the research worker believes that there are cause and consequence relationships between those constituents and will carry on on analyzing on this hypothesis.

H7: There are causal relationships between 4 positions of BSC in HSBC.

2.5 Chapter Summary

Chapter 2 has presented a sum-up of the theories related to BSC and its positions with different thoughts of many writers. Accordingly, some research issues were introduced and it is necessary to carry on an empirical survey to analyse farther the executing of BSC and its impacts in pattern at a peculiar organisation, in this research viz. HSBC ( Vietnam ) Ltd. The hypotheses are proposed as follows:

H1: BSC acts as an effectual public presentation measuring tool.

H2: There are comparatively positive impacts of BSC in HSBC.

H3: There is a positive relationship between a good executing organisation and its employees ‘ apprehension of its aims.

H4: There are comparatively negative impacts of BSC in HSBC.

H5: Of the four positions of HSBC ‘s BSC, larning and growing is the weakest point.

H6: The executing of BSC in a specific organisation in pattern is different with an ideal BSC.

H7: There are causal relationships between 4 positions of BSC in HSBC.

Once a set of research hypotheses has been developed, it is following to see what methods traveling to use in the research, what theoretical position lies behind the methodological analysis ( Afroze, 2010 ) and chapter 3 will go on with this.

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