Implementation of the Balanced Scorecard

. Implementation of the Balanced Scorecard

WMBA 6050: Improving Business Performance

Global Oil

In 1993, M&R reorganized from a centralized functional organization was slow to react to changing market conditions and the special customer needs that differed across the Country. Thus, they designed a new decentralized organizational structure that would focus on their customer. They also created a new market strategy that were geared towards the local market, by giving the local manager more decision-making power (Zimmerman, 2014).

With this change of strategy, they needed to find a different metrics for measuring the performance of the now-decentralized organizational structure. Thus, the idea of using a balanced scorecard (BSC) to show the performance of the new decentralized organization and the link the firm’s business strategy to one particular performance measurement (Zimmerman, 2014). The BSC performance measurement had both strengths and weaknesses. The strengths are as following:

• It Links business strategy to performance measurement to the compensation plans.

• It presented the new strategy M&R adopted to become a destination stop.

• It trained the managers to function as general managers

• It helped to Focuses managers more externally.

• It allowed the merger of the own unit and divisional performance to reduce problems with divisional performance measures.

Just as BSC offered many strengths it also came with several weaknesses which include:

By basing compensation on Global’s performance and M&R’s performance, it creates problems for lower-level employees whose individual performance was not noticeable in the new Global’s and M&R’s performance.

• The system contained too many measures, and was overly complicated, and increases the data collection costs. With multiple measures, conflict can result in the managers to ignore one measure over others.

• It is not clear that tying compensation to all 32 BSC...