2006_Development of a balanced scorecard An Integrated approach of Interpretive Structural Modeling

Relationship between outcome measures and the

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relationship between outcome measures and the performance drivers of those outcomes Step 3: Procurement of performance management plan Step 4: Evolve with experience Following down the strategic planning process, more and more refined performance measures are utilized. This plan can be the document that provides the specific link to the strategic and performance plans It takes time to establish measures, but it is also important to recognize that they might not be perfect the first time The foundation of the procurement performance measurement plan stems from the goals, objectives and measures of strategic and performance plans Performance management is an evolutionary process that requires adjustment as experience is gained in the use of performance measures Table III. Steps involved in the development of BSC Development of a balanced scorecard 31
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principle. They have questioned the practicality of the BSC as a method on the premise that no cause and effect relationship exists between measurement areas. Nørreklit (2000) questions the reliability of BSC by arguing: (1) that there should be a time dimension in the BSC in order to be able to talk about causality; (2) that there is no cause-and effect relationship between some of the suggested areas of measurement in the BSC; and (3) that the four dimensions are not independent. Further, Kennerley and Neely (2000) consider: . the absence of a competitiveness dimension; . failure to recognize the importance of aspects such as human resources, supplier performance; and . no specification of the dimensions of performance that determine success as the few shortcomings of balanced scorecard. Pfeffer and Sutton (2000) in their book “The knowing-doing gap: how smart companies turn knowledge into action” finds poorly designed, or unnecessarily complex, measurement system amongst the biggest barriers to turning knowledge into action. Measures focus attention on what is measured. Because, what is measured is presumed to be important, measures affect what people do, as well as what they notice and ignore. As a consequence, what gets measured gets done, and what is not measured tends to be ignored. In summary, an evaluative review of the literature uncovers the following research gaps (RG): RG1 : Brown (2000) in his book “winning strategy” criticizes the development process of BSC adopted by many companies on few dimensions like: . Ignoring the interrelationships among variables. . Non separation of vision and mission related measures. . Inability to predict the impact of leading indicators on lagging indicators. Further, in interviews with Finnish firms in 1998 about their use of BSC, Malmi (2001) found that although most interviewees stated that they have derived their measures from strategy, based on cause-and-effect reasoning, the claimed link between strategy and measures appeared weak in most companies. Also, it appeared from the interviews, that the initial idea of linking measures, was often not well understood. An attempt is made by Van Aken and Garry (2002) on a structured process to define end-result and driver metrics. In general, literature reports only few attempts on
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  • Spring '11
  • aaa
  • Management, performance measurement, Neely

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