Balanced Scorecard the Global Environment Continues to Essay

Balanced Scorecard

The global environment continues to be very contentious as organizations compete for market share around the world. As business continues to become more integrated, it is necessary to have standardized rules and processes. This standardization however must be adapted to fit local constituency within a given market. The balance scorecard is no different in this regard. A balanced scorecard allows businesses to better ascertain their particular strengths within a given capital project. As mentioned early, businesses are now more global in nature. As such, businesses have a larger array of opportunities to employ their financial capital. A balance scorecard helps to ensure that capital is utilized properly while also ensuring a proper response to the changing macroeconomic environments.

The balanced scorecard, as evidenced by the British Airport Authority case study, can be altered depending on the assignment. The balanced scorecard is unique in that it is broad enough to encompass varying financial and qualitative metrics, will also being specific enough to hold stakeholders accountable. This essay is designed to outline the use of the balanced scorecard with a general context. Subsequent paragraphs will provide practical application of the balanced scorecard as it relates to the British Airport Authority. This paragraph will discuss the use of private contractors within a public infrastructure project. This section will also outline how the both the private and public sector collaborated, using the balanced scorecard to implement a successful project. Following this section, the document will explain the unique applications of the balanced scorecard as it relates to the British Airport Authority. This section will also compare and contrast how the scorecard was adapted to the specific requirements of the British Airport Authority. The document will conclude of a review of the information given.

Balanced Scorecard Use in Business Organizations

To begin, there is significant evidence that suggests that the Balanced Scorecard approach is amenable to most organizations.The balanced scorecard tries to improve internal and external communications and monitors organizational performance against strategic goals. The balanced scorecard is a management system that allows companies to simplify their vision and strategy and translate them into action. It provides feedback on both internal and external business processes. A survey of IMA members in management positions indicates that 88% of regular users of the balanced scorecard believe it has led to improved operating performance. Conversely, a KPMG management consultant survey stated that over 70% of companies implementing the balance scorecard saw an increase in working productivity (Robert, 2001). The survey however, also implied that it is a very proposition to link performance targets to compensation. As mentioned earlier 88% of the organizations regularly using the BSC reported improvements in operating performance. Of those 88%, 66% of them also reported an increase in profits. Correspondingly, those who have not experienced an increase in operating performance generally have not noticed an increase in profits due to implementing the BSC. This is evidence of the cause-and-effect linkage between the BSC perspectives. According to KPMG survey, 61% of companies reported improvements in bottom-line financial results. The numbers indicate that using the balanced scorecard can be beneficial. The surveys have indicated that there may be an upward bias as those who have not experienced success with the BSC may have chosen not to participate in the survey (Robert, 2006)

Sixty percent of regular users of the BSC provided financial incentives to employees for meeting or exceeding targets that were congruent with BSC measures, according to the KPMG survey. At the top level, CEOs are given stock options to provide an incentive to increase share prices. Business unit managers, middle managers, and front-line supervisors can have their bonuses and salary increases linked to their meeting or exceeding targets. This has proven to help companies overall delivery on financial metics. However, it has also given way to significant fraud and accounting manipulation as managers, from these financial pressures attempt…