Reviewing the balanced scorecard approach

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Reference no: EM132089

Organizations need to keep both eyes on financial and non-financial measures. Getting the balance right is critical to seeing value being generated by firms aspiring for TQM. In the Unilever HPCE case study, Oakland (2003) seen that the first two years achieved a cultural change and not one linked to business objectives of which strong financial performance is paramount. Is there a relationship between the early years and firms that have stuck with the quality path for years? Several authors, Oakland (2003), Nabitz and Walburg (2000) have stressed the importance of leadership and commitment to establishing TQM as a lifestyle while Wilkinson and Yong (2002) stressed the importance of sticking to the quality strategy for the long haul. For those organizations that see little benefit from TQM, Barrier (1994) citing the economist (1992) observed that a primary reason for failure was the reliance on traditional performance measurement systems. The shift to having a historical perspective with financial numbers and a futures look using non-financial numbers is vital to seeing positive TQM results. Non-financial numbers also aid in relating to a dynamic market for which most industries can find themselves; shorter lead-times, rapidly changing technology, disruptive technologies or new sectors, popular culture and so on. Financial numbers will not give a company an idea of what is to come.

In reviewing the balanced scorecard approach, Youngblood and Collins (2003) stated that company objectives tend to conflict and the metrics used to drive these different objectives will be weighted incorrectly to the detriment of the overall business. To meet this challenge, they propose applying the multi-attribute utility theory (MAUT) to the balanced scorecard to help firms search the right balance/ trade offs between metrics and objectives. This is done through stages of scorecard development, metric quantification, model evaluation and model development. The role of MAUT is to aid in communication among decision makers.

While TQM as a strategy will fail in an organization, If implemented well, the results will be positive. Longevity is key if a firm is to continuous improve and learn.

Reference no: EM132089

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