Challenges of the Balanced Scorecard as a Strategy Implementation Tool in Large Commercial Banks in Kenya

Abstract

Successful organizations recognize the importance of strategy as a tool in management and realize that their survival is dependent on how well they adopt new strategies or enhance existing strategies in an attempt to respond to the changes brought by the environment. While the quality of strategy is important, we canner omit the importance of effectively executing it. As the organization faces the challenge of successful strategy implementation, tools to aid this important task cannot be overlooked. The use of balance scorecard as a tool for strategy implementation appears to be increasingly important in determining the success of implementation of strategies.

Many organisations have in one way or another adopted balanced scorecard in strategy implementation. This study, using strategy implementation as the theoretical background, sought to contribute to a greater understanding, the challenges of the balanced scorecard as strategy implementation tool. The data was collected by the use of questionnaires filled by respondents from the 6 largest banks in Kenya. The survey data results were analysed and statistics such as the proportion of respondents in favour of a position was reported. The study results indicate large banks have adopted the Balanced Scorecard in strategy management and it has improved business output. Most of perspectives of the balanced scorecard have been applied to a large extent in strategy management.

Majority of the respondents felt that it is generally difficult to apply the tool in tasks of strategy implementation. The study results indicate that the main challenges in its application for strategy implementation include; using it for compensation only, having too many strategy indicators, making a quantitative link between non financial leading indicators and expected financial results and the fact that staff has not fully understood and embraced the tool. The study recommends further research on the topic of challenges of the application of balanced scorecard and the recommends that it should be implemented with care in order to reap the intended benefits. Proper implementation of Balance Scorecard can ensure the development of competencies within an organization which help it to develop a competitive advantage without which it cannot expect to outperform its rivals.