The Current Status of the Balanced Scorecard As a Performance Measurement and a Strategic Management Tool in NZ Local Government Organisations

Taulapapa, Ma'amora
Northcott, Deryl
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Master of Business
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Auckland University of Technology

In the early 1980s, a general dissatisfaction developed with traditional accountingbased performance measurement in the New Zealand public sector. The not-forprofit nature of public sector organisations had led to a perceived lack of transparency and accountability in their managerial styles. A change in management philosophy in the 1980s due to pressures from stakeholders, for example the government, and competition as well as rising costs (Local Government Forum, 1999) prompted public sector management to search for effective contemporary management tools to navigate towards public goals and expectations.

The Balanced Scorecard (BSC), a performance measurement and a strategic management system, has been implemented in business organisations with success and is gaining acceptance in not-for-profit and public sector organisations. Despite potential benefits to public sector organisations, there are challenges and problems for implementers of the BSC (Griffiths, 2003). The research reported here examined NZ local government managers' experiences of implementing and using the BSC in local government organisations and their perceptions of its usefulness as a performance measurement and strategic management tool. It also sought to identify the factors that drive local government managers to undertake a BSC initiative, and the potential causes of BSC programme failure in the NZ local government context. The aim of this research was to provide an answer to the following question: "What is the current status of the use of the Balanced Scorecard as a performance measurement and a strategic management tool in local government organisations in NZ?"

The research addressed the following questions: • Has the BSC been accepted as a performance measurement and/or a strategic management tool by local government organisations in NZ? • How do local government managers perceive the BSC as a management tool? • What factors are perceived to contribute to the successful implementation of the BSC? • What factors are perceived to contribute to partial and/or non implementation of the BSC?

The findings indicated that the BSC is not widely used by NZ local government organisations. This is due to a variety of reasons. With regards to the research questions, the eight respondents who are current BSC users perceived the concept as; • a very useful management tool overall • a highly valid performance management tool • a highly valid strategic management tool

The findings of this study suggest that the majority of NZ local government organisations are encountering problems with their BSC implementations and, at the same time, are learning as they go.

Some interesting lessons for successful BSC implementation to emerge from this study include the need to ensure: • a full and participative pre-implementation decision process; • benchmarking best practice; • continuous learning and training; • adequate resources; • management support; • appropriate post-implementation review.

Although this study reveals that reported BSC usage is currently low, applying these lessons may help to improve the perceived and actual usefulness of the BSC for measuring and managing the performance of NZ local government organisations.

Local government , New Zealand , Performance , Measurement
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