Defining The Balanced Scorecard Accounting Essay



Now you may ask yourself, what in the world does this picture have to do with anything? Well, there is a meaning behind the picture. Most companies no matter where, they all have a similar problem…there is a lack of direction when it comes to the strategy and the management process. In fact "95% of employees do not understand their company's strategy. (How are they supposed to execute a plan it if they don't understand it?)" [1] . This was no different from what I had experienced during my internship at RÃ-SLE GmbH in Marktoberdorf located in southern Germany. The company consists of 200 employees and exports to 34 different countries all over the world. My official job title at RÃ-SLE was Export Assistant my job included being an agent for the countries I was "taking" care of, while under supervision of an Area Sales Manager. There is a clear division within a company and management is having difficulty balancing out priorities and responsibilities that could help in understanding and organizing the overall strategy of the company.

Literature Review

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In order to acknowledge implementing a balanced scorecard to management at RÃ-SLE GmbH, we first have to define the terms `balanced scorecard´ and `management.

2.1 Defining the Balanced Scorecard (BSC)

According to Robert Kaplan and David Norton the "founders" of the balanced scorecard, there is a balance between the external and internal measures which, are broken down in the following four types of sectors of the framework; financial, customer, internal business process, learning and growth which are the drives of a company. [2] 

The Scorecard itself balances the frameworks outcomes of the above drivers to link together the vision and the strategy using a plan, setting targets, communicating and clarifying any measures of objectives.

Together the balanced scorecard is a "strategic performance management framework that allows organisations to manage and measure the delivery of their strategy." [3] 

2.2 Defining Management

Management according to Sir Thomas More is the intermingling of an organization's resources and corporate policy that create, organize, plan, control and direct in order to achieve objectives. [4] A manager is a person or group of people who personally implements the company's corporate culture and policy that have been laid out.

2.3 The Balanced Scorecard Model in Action

In order to implement the BSC into RÃ-SLE GmbH management the company will need to look at the entire BSC model. We have already discussed in 2.1 and 2.2 what both a balanced scorecard and management is defined as. With this knowledge we can oversee the model created by Robert Kaplan and David Norton from the Harvard Business School Press. The focus of the BSC is to execute the below mentioned management processes and the drivers appropriately.

Diagram 1: The Balanced Scorecard as a Strategic Framework for Action [5] 

Additional to the model above the drives of the company depend on the following:

Financial: "to succeed financially, how should we appear to our shareholders?"

Customer: "to achieve our vision, how should we appear to our customers?"

Internal Business Process: "to satisfy our shareholders and customers, what business processes must we excel at?"

Learning and Growth: "to achieve our vision, how will we sustain our ability to change and improve?" [6] 

The BSC is beneficial to companies based on their needs relating to measures that both managers and employees can help to improve e.g. organizational objectives for effectiveness, transforms strategy into performance measurements or targets, reviews turn overs and isolates the different functions and departments. [7] 

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2.4 Designing a Management Sytem

Management as mentioned before in 2.2 explains the importance of a company's resources to achive objectives. Most companies already have a plan or a measurement for performance in place to create, plan and contol the main objectives. The type of management strategy that can be implemented to accompany the BSC:

The top-down approach: refers to the process that accustomed performance measures, starting with identification and formalisation of company's vision and missions:

(1) to develop consensus over the mission and future vision of the company

(2) to set up strategic objectives to be able to translate the company's vision into operations for each of the BSC's perspective. [8] 

Management can also use a so called differential approach which focuses purely on the success factors of the company or future success; however most companies initiate the BSC to operate for individual parts of the managing process as shown in Diagram 2 below:


Diagram 2: Management Process

The diagram above relates purely to the evaluation and improvising of the measurement system, each section mentioned above is part of the overall broad goal to organize the company using the strategy implemented. This tool can help managers to communicate their strategy for change, especially since specifying objectives can help employees to further facilitate the same vision. [10] 


As mentioned previously 2.3 and 2.4 the BSC is a framework for measuring strategy using drivers of value that determine the financial performance, perspectives of customers, learning and growth and internal and external business of management systems to balance out information gained. From my experience at RÃ-SLE, I realized that there seems to a sense of uncertainty when it comes to the overall strategy and lack of management. There was no structure which led to a lot of confusion between employees, making the work atmosphere unpleasant for all. The improper management of the company is not only affecting the employees but also the customers, the lack of strategy is preventing RÃ-SLE from working efficiently and rather time-consuming.

Discussion of Results

4.1 Un-organization in Management

As mentioned in the previous section, I observed a lack of organization in management at RÃ-SLE. I can speak for the export department in this case. Upon my arrival in February 2012, there was an export manager, he reported back to the managing director. However within the department we the assistants were responsible for certain duties pertaining to our countries, those countries were then also divided between two area sales managers who were responsible for the contracts and marketing budgets or special requests. In May 2012, the whole export department went south when the export manager retired, since no replacement had been appointed the department as a whole had to report on a weekly basis to the managing director, who after two weeks was overwhelmed. This led to major chaos within the department and overall company. As an intern I was given a lot of power to make appropriate decisions regarding my countries. At this point I realized that if I make any mistakes it could be detrimental to the company or export department. There was no support, no recommendations and absolutely no order. From my experience any decisions I made at RÃ-SLE did not necessarily purely exist in the Export department, but also the marketing, accounting, B2B, and the purchasing department.

4.2 Implementation of the BSC and Management Strategy

The BSC is an easily designed framework that would fit to RÃ-SLE GmbH. The balanced scorecard may be implemented for many different reasons; a company may do so for an individual department within a company or for the company as a whole. In this case as mentioned before RÃ-SLE lacked management everywhere, so it would be logical to implement the top-down approach so that the company from top to bottom is affected. The diagram below illustrates the complexity and scope of the management system. There are in total 10 steps [11] :

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Step 1: To clarify and define the vision of the company.




MonthsStep 2: Communicating and linking managers and CEO's to implement a strategy and develop in to a scorecard.

Step 3: Develop and precede with a change programs in order to eliminate ineffective investments.

Step 4: Reexamine the company's parts in order to shape a business orientated strategy

Step 5: Improve the vision by examining the sector and corporate scorecards

Step 6: Explain the scorecard with the rest of the company


regularlyStep 7: Upgrade a long-term plan and budget (usually 5 years)

Step 8: Manage reviews of sector scorecards (usually monthly or quarterly)

Step 9: Carry out a Strategy review in order to update the strategy scorecard (Annually)

Step 10: Balance performance of the employees with the scorecard as an incentive.

Diagram 3: Using the Management System to Orchestrate Change [12] 


My recommendation is that RÃ-LSE GmbH should as mentioned throughout the paper use a more structured management strategy, my personal recommendation is to implement the management system mentioned in Diagram 2 since the main ideas of the balanced scorecard are being used over a reasonable period of time and that the steps 7-10 can be done repeatedly to improve the management process. The balanced scorecard builds pressure in the management system so that targets of the company's vision, mission, budgeting, incentives and personal goals can be organized and management accordingly. In my situation having previous measures or a structure to look back on after the export manager left would have helped in making the appropriate decisions that would have benefited the company more than those decisions I had to make at the time due to the lack of organization and support from corporate. Had RÃ-SLE already developed a strategic framework, then there would have been clarity, consistency, achieved goals, developed leadership, organization and met targets or even a feedback system to refine.


In conclusion, as mentioned in detail throughout the paper the balanced scorecard founded by Robert Kaplan and David Norton is one of the most used types of management strategy. Management at RÃ-SLE could benefit greatly from the organizational strategy and scorecard.


Business Dictionary, "Management", (accessed November 11, 2012)

Hayes, John. "Developing Tools to Help with Implementation." The Theory and Practice of Change Management. 2nd ed. Basingstoke [England: Palgrave Macmillan, 2007. 353-54. Print.

Biazzo, Stefano, and Patrizia Garengo. "The Balanced Scorecard for SMEs:." Performance Measurement with the Balanced Scorecard: A Practical Approach to Implementation within SMEs. Heidelberg: Springer, 2012. 23-31.

Chatterjee, Amitava. "Views from My World." Weblog post. The Voice of a Confused Engineer! N.p., 17 Feb. 2011. Web. 11 Nov. 2012.

Marr, Bernard. "What Is a Balanced Scorecard?" Advanced Performance Institute. N.p., n.d. Web. 11 Nov. 2012. <>.

No Author, "Idea Balanced Scorecard". The Economist (Dec.26th 2009)

Kaplan Robert S. and David P. Norton, "Using the Balanced Scorecard as a Strategic Management System," Harvard Business Review (January-February 1996): 77. Reprinted with permission

Kaplan, Robert S. and David P. Norton. "Using the Balanced Scorecard as a Strategic Management System," Harvard Business Review (January-February 1996): 78-79. Reprinted with permission

Kaplan, Robert S., and David P. Norton. The Balanced Scorecard: Translating Strategy into Action. Boston, MA: Harvard Business School, 1996. Print.

Richmeyer. "The Disconnect between Strategy and Execution." New Media and Marketing. N.p., 10 Feb. 2012. Web. 11 Nov. 2012. <>.