Evaluation of the balanced scorecard system within a steel organisation in South Africa
De Jager, Nicolaas Fourie
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Performance management has become vital in any organisation in order to ensure a competitive advantage for organisations in the ever changing environment. The Balanced Scorecard (BSC) system, used as a performance management and a performance measurement tool, will ensure that organisational goals and strategic targets are achieved if it is implemented and applied effectively. The BSC system is a management tool that can be used to transform strategy into action. The use of the BSC system was seen as a problem as used within ArcelorMittal South Africa (AMSA). This paper includes a literature study on the BSC system as well as an empirical study regarding the application of the BSC system in a steel organisation. Literature on the BSC advises that the objectives, measurements and targets should be aligned with the organisation's strategy and vision to ensure improved long-term performance. In order to ensure alignment to all levels in the organisation the top level scorecard needs to be cascaded to lower levels to ensure that the right strategic goals are followed. The BSC system has a high number of benefits when implemented and applied effectively. An empirical study done at ArcelorMittal's Rolling department on people in different divisions, people on different job levels, people in different age groups and people with different years of service, indicated more or less the same average responses on specific BSC related issues. In general, it was concluded that the BSC is not effectively applied with in Rolling, mainly because of communication issues, a forced distribution approach by senior management, and compensation linked to performance discrepancies. Although the average ratings on BSC related questions came out on fairly average ratings, the majority of people indicated, that the BSC system is not transparent enough, nor is it applied effectively. Various specific conclusions and recommendations were made in order to identify and improve the progression of the BSC system at Rolling going forward.