The balanced scorecard is a management tool that was that was advocated by Kaplan and Norton in 1992 with the objective of improving organizational performance. This was to be achieved by the providing four different perspectives on how to review organizational performance (Woodley, 2006). The perspectives included financial, internal, customer, and innovation perspective. Over the years, the balanced scorecard has been seen as a tool of great significance for organizations. However, it has also been criticized and thus its relevance to organizations is subject to implementation and the results.
British aerospace acquired Macron Electronic systems (MES) in 1999 to become BAE systems and also the second largest defense contractor worldwide. The company had enjoyed continuous profitability over the years, but the changing business conditions such as increased competition meant that the company had re-evaluate itself to come up with strategic goals (Murby, 2005). In re-evaluation, the company carried out an analysis of its strengths and weaknesses in order to identify its competitive advantage and also the areas to improve. Its strengths were based on a good reputation in the aero spacing, a large base of skilled employees, use of advanced technology, continuous profitability, a good reputation with its employees and enhanced outreach to its export market.
On the other hand, the weaknesses included dearth of cost regulation in its product design stage, lack of proper strategies in the marketing of products in new markets, and lack or poor response to dynamic customers. In addition, there was stiff competition from over productivity in European capacities and also from the United States. After identifying its main areas of strengths and weaknesses, the company came up with a change program that was to be implemented (Murby, 2005). The change program involved eroding the conglomerate that had existed since 1979 and in its place put an interlocking business that would give the enterprise a competitive edge. Moreover, the change program would ensure that there was minimal reliance on the managerial directives and other organizational rules and procedures.
Most of the stage that were to be followed by the company rotated around the employees. This is because, from a theoretical perspective, people are resistant to change and, therefore, for any change to take place, it must be handled carefully. As such, the company, in a bid to ensure employees are receptive to change, came up with the 130 group. This was aggregation of key and senior employees in the company such as the line managers who were to be heavily involved in the implementation of the project. The group came up with a common vision on how to organize the change project and the path that the company needed to move on (Woodley, 2006).
Furthermore, as the change theory advocates, communication is key for any change to be fully implemented and be successful. This did not go unnoticed by the 130 group and, therefore, the group came up with the basic areas that were pivotal in ensuring acceptance of the company’s vision. These areas included people as the company’s greatest strength, partnerships as the company’s future, performance as the basic key to success, customers as the greatest priority and innovation and technological advancement for competitive advantage.
Moreover, value teams were created within the company. These were teams whose leadership were the managing director of fundamental business units and had a coach from the 130 group. The 130 group and the value teams had to draft a report on the discussions of the first meeting and also on any issue that was related to cultural change. All these efforts were put forth to overcome resistance to change (Murby, 2005).
The balanced scorecard went a long way in improving the efficiency of the BAE Company. This is because, the company had to follow its objective and thus it ensured that all the aspects of the change program were clearly communicated to the employees. Information was, therefore, easily shared by the employees in the company. In addition, the employees were able to access important information about their efforts and performance. They were able to assess how their efforts contributed to the performance results and their contribution to the business units and the whole organization (Murby, 2005). Furthermore, the scorecard allowed the company to increase its performance measures rapidly overtime, and hence facilitated setting up of objectives across diverse departments in the whole organization.
Murby, L., Gould, S., (2005). Effective Performance Management with the Balanced Scorecard: Technical Report. Chartered Institute of Management Accountants. Retrieved from: http://www.cimaglobal.com/Documents/Imported Documents/Tech_rept_Effective_Performance_ Mgt_with_Balanced_Scd_July_2005.pdf
MacKay, A., (2004) A practitioners guide to the balanced scorecard: A practitioners’ report based on: Shareholder and stakeholder approaches to strategic performance measurement using the balanced scorecard. Chartered Institute of Management Accountants. Retrieved from: http://www.cimaglobal.com/Documents/Thought_ leadership_docs/tech_resrep_a_practitioners_ guide_to_the_balanced_scorecard_2005.pdf
Braam, G.J.M. (2012). Balanced Scorecard's interpretative variability and organizational change. In C.-H. Quah & O.L. Dar (Eds.), Business Dynamics in the 21st Century (pp. 99-112).
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