First developed by Robert Kaplan and David Norton at Harvard University, the Balanced Scorecard BSC approach has become a major method for corporations to improve their performance, with studies indicating that more than 66% of the companies that implemented the approach realized a significant increase in profitability (Kaplan & Norton, 2011).
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In addition, a number of local governments, military and national civil organizations have been using a BSC approach to improve their performances. In the UAE, Emirates National Oil Company (ENOC) is one of the best examples of corporations that are applying the BSC to set its goals and achieve the desired objectives.
The company has rolled out several programs to apply BSC in line with its goals and objectives with an aim of promoting human capital development by focusing on the young UAE nationals with their careers for the better future. The company started adopting the concept of BSC in 2009 on a number of levels, with about 35 scorecards implemented in all business units.
According to analysts, the company has attained some impressive milestones with BSC. For instance, customer satisfaction, enhancing efficiency in operations and promoting Emiratization is some of the significant outcomes of the approach.
Nevertheless, a comprehensive understanding of the outcomes of using BSC need be studied every year to determine the progress. There is a need for additional studies show how the company has achieved the desired goals using the BSC.
The results of the study are applicable not only in academics, but also in management and policy making in order to provide analysts, policy makers and corporate leaders utilize the information to enhance the quality of their professional decisions.
Aims and objectives
The purpose of this study is to develop a comprehensive analysis of BSC application and use at ENOC. The research uses a qualitative approach to describe the level of outcomes of BSC at the company since the approach was adopted in 2009. The research aims to interview some professionals and executive individuals at the company in order to determine the level of BSC as well as the outcomes of the approach.
Key Research questions
- What strategies has ENOC employed in applying and using BSC?
- What are the corporate expectations of using the BSC
- At what levels are BSC approach applied at ENOC?
- What are the outcomes of using ENOC in terms of corporate performance?
Review of literature
Although it is a recent approach, balanced scorecard has become popular with most organizational leaders in the modern context. By definition, the BSC is a methodological tool composed of a set of both financial and non-financial measures regarding to the success factors of a given company or organization (Kaplan & Norton, 2011). It reflects that need for strong and effective organizational activities used to create value.
Since its development, BSC has widely been studied from a practical perspective where case studies are used to examine its effectiveness as well as differences in corporate performance between the organizations that adopt and those that fail to adopt the concepts of BSC (Akkermans & von Oorschot, 2002).
In addition, it has been studied by examining the differences in performance or outcomes between the departments that adopt and those that fail to adopt the concepts. From these studies, a number of observations have been made, most of which provide a clear indication that BSC is an important tool in measuring and enhancing performance in organizations.
According to Ashurst and Doherty (2013), it has been shown that BSC ensures that strategic initiatives that follow best practices are cascaded throughout the entire organization, which helps in increasing creativity and other ideas that are not expected prior to the adoption of the concept.
The author further indicates that BSC helps organizational leaders to overcome three foundational problems that cause challenges in the work of management- performance measurement, strategic implementation and rise of intangible assets.
According to Kaplan and Norton (2010), the traditional methods of measuring financial performance fail to reflect critical aspects of the modern business environment and fails to encourage thinking on a long-term basis.
Thus, BSC is set to deal with this problem. Secondly, it has been shown that intangible assets have the capacity to create more than 75% of the value that organizations achieve per given time (Kaplan & Norton, 2010). With the traditional methods, it was not possible to measure and use these assets.
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On the other hand, the concept of BSC is effective in providing the metrics required to measure and use these assets effectively (Abushaia & Zainuddin, 2012).
Moreover, BSC deals with the problem of successfully implementing strategies by working with vision, people and management of resources and barriers to development. In this context, BSC helps in measuring the strategy and the process of executing the strategy. It describes the strategy in s consistent manner throughout the company (Kaplan, Norton & Horvбth, 2006).
According to Inamdar, Kaplan and Bower (2012), BSC articulates how an organization creates value for its owners or shareholders by displaying the key priorities as well as relationships between the outcomes and the factors that enable performance. In other words, it displays the relationships between cause and effects in an organization in order to measure performance and create value for the shareholders (Frost, 2012).
A qualitative study was developed to examine the effects of balanced scorecard BSC at ENOC. In this case, ENOC was used as a case study in order to examine how organizations adopt the concept of BSC and the benefits that come along with the idea.
The idea was to interview leading corporate managers and leaders at the company in order to draw information from their experiences with the company and the concept of BSC used therein.
The study focused on interviewing two managers at ENOC. The managers were chosen because they have been involved in the implementation and maintenance of the BSC concept since it was adopted in 2009.
Secondly, six employees were interviewed to determine their perceptions and experience with the idea of BSC at their workplace. The idea is to determine the outcomes of the BSC concept at the workplaces. The inclusion criterion was to interview individuals who had been at the company for at least 5 years since 2009.
Interviews were used to collect information from the target corporate leaders and employees. Each interview took a maximum period of 15 minutes. Structured interview questions were used, with the interviewers playing the role of directing the mood of the discussion.
Saeed Khoory, the CEO of ENOC, said that the company used the BSC to help it uphold the highest values across all the aspects of the organization.
In addition, the CEO said that using BSC was aimed at promoting excellence across all the entities by focusing on continuous improvement and adopting BSC as one of the best international tools for management. He further notes that the tool is a gold standard against which benchmarking of the company’s growth goals id done.
Salah Galadari, the director of business planning and performance management at the company, reported that adopting the BSC concept was aimed at streamlining the company’s strategic growth.
The six employees reported that they were satisfied with the new methodology because it encouraged them to work for the good of the organization as well as personal development as an employee. It provides them with an opportunity to be part of the organization process.
From the interview, it was found that ENOC uses several initiatives to implement BSC. The idea of Emiratisation program is developed and implemented through five levels that are supported by BSC- Mahaweb, Tadreeb, Ajyaa, Imtiaz and Tatweer. They focus on developing behavioral, managerial, professional and leadership skills for the national workforce.
The results indicate that BSC has huge benefits for the organization because it aids in aligning people, processes and resources towards enhancing production and performance. BSC has helped the company integrate employees, processes and customers in the vital focus on development and growth. Therefore, the company has attained some impressive milestones with BSC.
For instance, customer satisfaction, enhancing efficiency in operations and promoting Emiratization is some of the significant outcomes of the approach. The company uses balanced scorecard to articulate how it creates value for the government and the public by displaying some key priorities as well as relationships between the outcomes and the factors that enable performance.
Abushaia, J. A., & Zainuddin, I. (2012). Performance measurement system design, competitive capability, and performance consequences – A conceptual like. International Journal of Business and Social Sciences, 3(11), 184-193.
Akkermans, H., & von Oorschot, K. (2002). Developing a Balanced Scorecard with System Dynamics. Journal of the Operational Research Society, 12(2), 349-352.
Ashurst, C., & Doherty, N. F. (2013). Towards the formulation of “a best practice” framework for benefits realization in IT projects. Electronic Journal of Information Systems Evaluation, 6(3), 1-10
Frost, B. (2012). Measuring performance: Seven good reasons to use a scorecard. Performance perspective series, 3(2), 214-251.
Inamdar, N., Kaplan, R. S., & Bower, M. (2012). Applying the balanced scorecard in healthcare provider organizations. Journal of healthcare management/American College of Healthcare Executives, 47(3), 179-95.
Kaplan, R. S., & Norton, D. P. (2010). The balanced scorecard: translating strategy into action. Boston, MA: Harvard Business Press.
Kaplan, R. S., & Norton, D. P. (2011). Transforming the balanced scorecard from performance measurement to strategic management. Accounting horizons, 15(1), 87-104.
Kaplan, R. S., Norton, D. P., & Horvбth, P. (2006). The balanced scorecard. Boston, MA: Harvard Business School Press.