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Article
Publication date: 1 July 2019

Hemantha S.B. Herath, Wayne G. Bremser and Jacob G. Birnberg

The purpose of this paper is to relate the balanced scorecard (BSC) to strategy and teams.

Abstract

Purpose

The purpose of this paper is to relate the balanced scorecard (BSC) to strategy and teams.

Design/methodology/approach

This paper proposes deriving performance targets and weights using a multiparty collaborative decision model that can be integrated into team-based bonus formulas.

Findings

Cross-functional division managers face a more complex problem in setting goals for individual managers. The proposed approach is intended to develop such goals and link them for team-based incentives. An example illustrates the application of the proposed BSC model and the team-based pay formula.

Practical implications

The model can be used to determine group bonus.

Originality/value

The paper has two objectives: to relate the BSC to the team setting with a participative flavor rather than with imposed targets and weights, and to develop a better way of relating behaviors and outcomes to the team’s and/or the organization’s goals. Integrating the strategies of various units adds a new dimension that differs from rationalizing the superior’s and the subordinate’s goals. The proposed model considers input from all value chain functional managers involved in implementing an organizational strategy. A methodology is provided to operationalize (Hope and Fraser, 2003) beyond the budgeting model principles.

Details

Accounting Research Journal, vol. 32 no. 2
Type: Research Article
ISSN: 1030-9616

Keywords

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Book part
Publication date: 23 September 2014

Hemantha S. B. Herath, Wayne G. Bremser and Jacob G. Birnberg

Empirical evidence indicates that effective management of resources to implement strategy in a balanced scorecard (BSC) system is essential. We present a mathematical…

Abstract

Purpose

Empirical evidence indicates that effective management of resources to implement strategy in a balanced scorecard (BSC) system is essential. We present a mathematical model for allocating limited resources in the BSC strategy implementation process.

Methodology/approach

The proposed facilitated negotiation model provides a systematic approach to prioritizing strategic initiatives in the design and implementation of a BSC.

Findings

Our joint decision model prioritizes strategic initiatives and concurrently calculates the optimal (or approximately optimal) set of BSC targets and weights, given multiyear resource restrictions.

Practical Implications

The model assumes full, open, and truthful exchange of information between the parties; an assumption that may exclude many organizations.

Social Implications

We address an important gap in the BSC literature on how organizations can effectively link strategy to the potential constraint of resource budgets.

Originality/value

Quantitative models are being used in practice for allocating resources, but we are not aware of their use by organizations for allocating resources in a BSC application.

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Book part
Publication date: 10 February 2010

Hemantha S.B. Herath, Wayne G. Bremser and Jacob G. Birnberg

The balanced scorecard (BSC) allows firms to place importance on both financial and nonfinancial performance measures in four perspectives for developing and implementing…

Abstract

The balanced scorecard (BSC) allows firms to place importance on both financial and nonfinancial performance measures in four perspectives for developing and implementing corporate strategy and performance evaluation. The BSC literature however provides minimal insight on how to set targets, how to weigh measures when evaluating managers and the firm, and how to resolve conflicts that arise in the BSC process. Researchers have attempted to fill these gaps using two contending approaches. In particular, Datar et al. (2001) uses an agency model to select the optimal set of weights and more recently Herath et al. (2009) develop a mathematical programming–based collaborative decision model to find the optimal (or approximately optimal) set of target and weights considering inputs from two parties. In this article, we apply the Herath et al. (2009) model to a detailed BSC example. We demonstrate how the collaborative BSC model can be implemented in Microsoft Excel by practitioners to minimize BSC conflicts. Finally, we discuss how the model facilitates alignment and a culture of open reporting (information sharing) around the BSC that is necessary for its effective implementation.

Details

Advances in Management Accounting
Type: Book
ISBN: 978-1-84950-755-4

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Article
Publication date: 1 December 2003

P. L. Joshi, Jawahar Al‐Mudhaki and Wayne G. Bremser

Examines budget planning; implementation and performance evaluation practices by utilizing a questionnaire survey of 54 medium and large sized companies located in…

Abstract

Examines budget planning; implementation and performance evaluation practices by utilizing a questionnaire survey of 54 medium and large sized companies located in Bahrain. Most of the companies prepare long‐range plans and operating budgets, and they follow a definite budget procedure and implementation methodology. Uses budget variances to measure a manager’s ability, for timely recognition of problems, and to improve the next period’s budget. While both the listed and non‐listed companies have reported many similar budget practices, the main differences were specific purposes served by budgets, degree of budget participation, periodicity of variance reporting, and purposes and authority to evaluate budget variance reports. In certain cases, firm size influences budgeting practices. Contributes toward filling a gap in the literature on the use of budgets as a planning and control tool in developing countries. Most prior studies were mainly confined to advanced countries. The study findings suggest the need for research on attitudes held by the budgetees towards the use of budget variances in the context of advanced management accounting techniques.

Details

Managerial Auditing Journal, vol. 18 no. 9
Type: Research Article
ISSN: 0268-6902

Keywords

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Article
Publication date: 1 January 2005

Hemantha S.B. Herath and Wayne G. Bremser

Aims to promote an integrated performance measurement system.

Abstract

Purpose

Aims to promote an integrated performance measurement system.

Design/methodology/approach

The literature on R&D performance measurement identifies the need for an integrated performance measurement system for strategy implementation. Develops a theoretical framework for R&D performance measures, incorporating real options to define strategic net present value, which values the plan to make R&D investments.

Findings

Real options techniques can be used to value managers' options to shelter investments from adverse effects and exploit upside potential. The shift in valuation paradigms from a naïve net present value model to active risk management implicit in real options requires performance measures that reflect real option value and defines strategic value created (SVC), which is based on residual income concepts. Since residual income is known to be superior to ROI in motivating goal congruence, infers that SVC has similar advantages.

Originality/value

Illustrates how SVC would be used as a performance measure for a new drug in the commercialization stage, considers several relevant questions and discusses how SVC could be used in a firm's balanced scorecard.

Details

Managerial Auditing Journal, vol. 20 no. 1
Type: Research Article
ISSN: 0268-6902

Keywords

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Article
Publication date: 1 February 1999

Noah P. Barsky and Wayne G. Bremser

Considers the implications for budgeting and performance measurement of the emphasis on strategic management of human and information resources to obtain global…

Abstract

Considers the implications for budgeting and performance measurement of the emphasis on strategic management of human and information resources to obtain global competitive advantage. Summarizes relevant research, noting increasing use of economic value added, non‐financial measures and the balanced scorecard; and explaining Simons’ (1995) “levers of control” framework. Illustrates how this can be applied to the budgeting process, stressing the importance of interactive control systems which capture an integrated set of critical performance measures, and uses Skandia (insurance, Sweden) as an example. Lists the ten non‐financial performance metrics identified by Ernst & Young (1997) as important to investors and discusses the ten differences between budgeting in a traditional as opposed to a balanced scorecard environment put forward by Govindarajan and Shank (1992). Concludes that the need for multinationals to be flexible means that control and measurement systems must be aligned with strategic goals, taking account of national cultures, investors’ expectations and demands for employee empowerment.

Details

Managerial Finance, vol. 25 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

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Book part
Publication date: 23 September 2014

Abstract

Details

Advances in Management Accounting
Type: Book
ISBN: 978-1-78441-166-4

Content available
Article
Publication date: 1 March 2004

Abstract

Details

Measuring Business Excellence, vol. 8 no. 1
Type: Research Article
ISSN: 1368-3047

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Book part
Publication date: 20 December 2000

Abstract

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-84950-055-5

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Book part
Publication date: 10 February 2010

Abstract

Details

Advances in Management Accounting
Type: Book
ISBN: 978-1-84950-755-4

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