The Balanced Scorecard versus quality award models as strategic frameworks

Abstract

During the 1980s and 1990s, increasing criticism was mounted against the use of performance measures based on traditional financial management. Consequently, strategic frameworks were developed for managing organisational performance, among them the Malcolm Baldrige National Quality Award (MBNQA), the European Foundation for Quality Management (EFQM) and the Balanced Scorecard. This work compares the strategic framework of the Balanced Scorecard method to that of the quality award models. The comparison indicates that of the three frameworks, the Balanced Scorecard has important advantages, among them sequential objectives, capability of directing long-term programs, possibility of selecting relevant performance measures, measurement based on actual data and two levels of feedback. Nevertheless, the Balanced Scorecard has some limitations. This paper deals with two of these limitations: (1) no basic guidelines for selecting performance measures, and (2) complex feedback from the financial perspective to the customer and process perspectives. This paper proposes a structured methodological approach based on the Quality Function Deployment (QFD) to improve implementation of the Balanced Scorecard method in an individual organisation. A QFD Balanced Scorecard construction map shows the linkages among five QFD matrices. The map ensures that every financial performance defined by the enterprise strategy is linked to a set of performances measures in the relevant domains that may eventually influence future results.