Balanced score card as a performance measurement tool in the Insurance Firms in Kenya

Abstract

The concept of the Balance Scorecard is premised on the need for lagging and leading indicators that enable a holistic measurement of performance of the organization. The Insurance Industry is currently experiencing disruptive change driven by regulation and competition. Although there are many studies on the Balance Scorecard in Kenya, there is a gap in the study of the Kenyan insurance industry. The objective of this study was to determine the use and effectiveness of the Balance Scorecard as a performance measurement tool for Insurance companies in Kenya. This study was designed as a cross-sectional survey of the Kenyan insurance industry. The population was 50 insurance firms in Kenya from which all were included in the sample but only 40 took part in the survey. Primary data was collected using questionnaires which were administered to supervisors and managers in the firms. Data was analysed using descriptive analysis and presented in tables and charts.The study found that the current performance measurement tool was comprehensive and effective in measuring performance. The study also found that the customer perspective element of balance scorecard adequately measured customer satisfaction in their firms. It was found that the business process element of balance scorecard adequately measured the performance of internal process in their firms. The study also revealed that the innovation and learning element of balance scorecard adequately measures the ability of your firm to innovate and adopt the environment. The study found that the financial performance measure of the balance scorecard adequately measures the success of the operations in meeting the strategic objects.The study concludes that the balance scorecard is widely used and is an effective tool for measuring performance in the organizations. The study recommends that insurance firms that seek to measure their performance should adopt the use of balance scorecard as it is a very effective tool in measuring performance in organisations.