Balanced Scorecard and Ethical Issues Assignment

Balanced Scorecard and Ethical Issues - Assignment Example It has been observed that majority of the firms utilize BSC in order to evaluate the ‘balance’ existing between its compensation plan and the performance measures over a certain period of time which further assists the organization to design effective strategies (Ittner, Larcker, & Meyer, 1997). Performance measurement facilitates managers to evaluate the outcomes of the overall organization as well as employees’ operational activities. Performance measurement also depicts the effectiveness of resources and the possibilities through which the activities and the resources satisfy organizational missions and objectives in a rational manner. Recent researches have often regarded BSC as a management tool which can deliver successful and well-documented outcomes (US Department of Energy, 2013). However, when measuring the attributes considered in the BSC framework, various ethical issues can also be observed to disrupt its validity as well as the reliability of the ove rall evaluation process outcomes. As stated by Bieker & Waxenberger (2002), the BSC approach lacks in considering the wide group of stakeholders including the community members who can also impose significant influences on the organizational performances. Thus, by ignoring the organizational responsibilities and its performances towards the stakeholders, business incorporations may have to witness significant ethical concerns when applying the mechanism of BSC. Unethical Behavior As A Result of Wrong Performance Measures Majority of the companies in today’s contemporary era, evaluate performance indicators in order to improve the overall performance of the organization and directly tie with the compensation system which comprise various aspects such as customer satisfaction, cost of the products and quality of the services offered along with providing job satisfaction among the employees. It is in this context that as the BSC framework focuses on a multidimensional approach t o performance measurement, in majority companies, managers attempt to use this particular framework extensively (Lichiello & Turnock, 2006). With due consideration towards the critical viewpoint obtainable through the application of BSC approach, it can be regarded as an appropriate measurement tool through which Sparkling-Automotive Company (SAC) can tie its the compensation system with performance and thus enhance efficiency in its overall business process. However, SAC should also focus on recognizing the limitations of applying the BSC framework prior to its implementation for the purpose of its performance management. As stated by Butler, Henderson & Raiborn (2011), although the framework inculcates a multidimensional approach towards measuring performances of an organization, incorporation of sustainable issues, such as environmental concerns and stakeholders interests make the evaluation process quite complex. Owing to this particular limitation, managers often have to face o bstructions in detailing appropriate and almost accurate information relating to the performance measures. Furthermore, as explained by Rillo (2004), when measuring the cause-effect relationship between the implemented strategies and obtained outcomes through organizational pe