It is imperative to mention that the role of organizational performance measurement has been rapidly increasing over the last few years. A broad range of strategies and techniques have been developed, and each of them has its uses. Identification of areas that are the most problematic is crucial most of the time. Furthermore, an understanding of which approach needs to be utilized depending on the situation in a firm is critical, and can affect overall performance.
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Strengths and weaknesses of each tool should be assessed before the implementation. The advantage of the application of Return on Capital Employed (RoCE) concept is that the management team devoted enormous attention to the maximization of profits, and helps to identify limitations. The disadvantage is that it may lead to decisions that are not efficient in the long-term. On the other hand, Balanced Scorecard may improve the overall environment in the organization.
First of all, it is reasonable to link it to compensation. Employees can be provided with rewards if the productivity is higher than expected, and it would make them much more motivated (Niven 246). Complications and emergencies can be avoided because managers have better control over most of the operations. However, the tool’s weaknesses also should be taken into account. The lack of focus on the needs of employees is an issue, and the tool may lead to invalid assumptions.
Optimization may also be difficult, and could cause enormous losses (McWatters and Zimmerman 183). Nevertheless, it is the most appropriate instrument that can be used in a small management organization. The performance needs to be summarized into several areas such as finances, internal processes, customer relationships, and employee productivity. Growth should be viewed as one of the strategic options that should be considered by the company. It is necessary to understand that they are closely connected with measured outcomes because it is possible to determine if the strategy is reasonable. Success criteria should be considered during the process of evaluation.
The first one is sustainability, and it is focused on the effectiveness of operations. Moreover, it can be linked to Balanced Scorecard, and it I possible to keep track of all the changes and the progress. The second criterion is feasibility, and it determines if the implementation of a particular strategy is justified or not. The biggest advantage of this method is that it is incredibly flexible, and can be modified if it is necessary. Therefore, any complications are not expected. The third aspect that needs to be considered is acceptability. Opinions of both internal and external stakeholders are of utmost importance, and it is necessary to provide them with all the information regarding the usefulness of a strategy.
In summary, it is possible to state that Balanced Scorecard is a tool that has proven its effectiveness and needs to be used in this case. Such factors as return and risk are critical in such situations, and it is reasonable to develop a detailed plan that would highlight the advantages of implementation.
McWatters, Cheryl S., and Jerold L. Zimmerman. Management Accounting in a Dynamic Environment, New York, NY: Routledge, 2015. Print.
Niven, Paul R. Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results. 2nd ed. 2010. New York, NY: John Wiley and Sons. Print.