Essay --

CAT Question: Do balanced scorecards increase performance in organizations? †¢ Management challenge and research question The research question is when an organization has implemented a balanced scorecard does performance improve within an organization? Many organizations have balanced scorecards that contain metrics that do not necessarily contribute to increased performance. They may also try to measure areas that are not easy or impossible to measure like values or engagement. In addition, organizations may focus more on meeting milestones or deadlines of activities rather than achieving the desired outcomes of the initiative. Another issue is that organizations may focus solely on the measures on the balanced scorecard while ignoring other important operational initiatives. Lastly, balanced scorecards may increase organization performance due to the Hawthorne effect or the observer-expectancy effect that claims individuals will modify their behavior when it is being measured as a response to the fact that they know they are being studied. Studies have also shown that high performance may be reflected through the balanced scorecard, but this is more of a reflection of the manager’s relationship with a certain employee than it is of the outcome of a particular initiative. †¢ Results / evidence summary (including limitations of research found, if any) Study in the Journal of Management Accounting Research (Ittner & Larcker, 1998) surveyed the effectiveness of the balanced scorecard versus performance measurement methods used in the past. The results showed that only 5% of respondents thought the balanced scorecard approach was significantly higher in its effectiveness. In the International Journal of Business Administration, a ... ...mance. There are several factors that play a role in this observation, many of which have to do with the nature of the balanced scorecard model. First, balanced scorecards create an atmosphere where performance is being looked at and often when an individual’s performance is being monitored, they are more susceptible to the observer-expectancy effect that means these individuals try harder. Second, balanced scorecards increase the accountability of managers. These contribute to managers â€Å"walking the talk† so that their staff and others view them â€Å"living’ the balances scorecard. Third, when putting measures, objectives and initiatives on the balanced scorecard this highlights their importance. This in turn brings more attention to achieving the proper outcome and increases performance, but only when the proper objectives, initiatives and measures have been selected.