The balanced scorecard (BSC) implications on the increase of public companies performance

Abstract

Economic considerations of the present require that various entities, public or private, adopt a strategic management that is able to ensure the achievement of performance. In achieving the targets, due to the dynamic and complex environment of action, the implementation of management control systems becomes essential. Selecting and applying the most effective of these systems facilitate the entry of public companies on an efficiency path. They are also able to provide clarification in relation to organizational goals and targets, to propose the most appropriate methods necessary to achieve, and also, to explain the link between the processes of defining strategies and ongoing operational activities. Obviously, these control systems must be able to evaluate performance, not only quantitatively but also qualitatively, both ex-ante and ex-post. In this context, approaching the balanced scorecard (BSC) and key performance indicators (KIPs) as nonfinancial tools to measure performance, may acquire a special importance. Currently, when bringing into question the public sector, things speak for themselves: central and local state government still hold many companies in Romania (several hundred): national companies, autonomous administration, commercial companies. We consider the large-scale economic entities, in ministries (corporate/ national companies), public and local public companies, which provide utilities related to heating, water, sewage or sanitation. Assuming that on short term, as a result of the restructuring/ privatization, there will not be a significant decrease in the sector in question, we believe that a widespread use of non-financial instruments for measuring the performance of public companies is more than necessary. This is particularly so since the international monetary fund (IMF), as a creditor of the Romanian state, closely monitors the performance of that sector, aiming to reduce budget deficits. That is why we try to offer an overview of the issue of performance evaluation and management control system, presenting an innovative tool of strategic management, as BSC, with the intention to highlight and understand the reasons why an entity should implement this method, illustrating how its process of construction can create changes and produce results. Key words: Public entities, state sector, balanced scorecard (BSC), key performance indicators (KPI), managerial control, efficient method.