Using Balanced Scorecard for Managing Performance in Selected Ghanaian Banks

Benjamin Agyeman,James Bonn,Collins Osei

doi:10.5539/ijbm.v12n12p204

Abstract

Prior to 1992, Kaplan and Norton posited that organizations solely rely on financial measures to manage their performance. It has become possible for organizations to incorporate in addition to financial measures non- financial measures to manage their performance. It is in this light that balanced scorecard is one of the tools used to manage performance. However, managing the overall performance of organizations using balanced scorecard is limited in literature in Ghanaian banks. This study explores the extent of use of the four perspectives of balanced scorecard as a tool to for managing performance in selected Ghanaian banks. Survey research method was employed. In relation to the extent of used of balanced scorecard perspectives by selected Ghanaian banks to manage performance, it was found that financial perspective was used followed by customer perspective, learning and growth perspective, and internal business process. The ANOVA test showed that the mean scores of the four perspectives of the balanced scorecard was statistically and significantly different from each other. The research concludes that, Ghanaian banks relied heavily on financial perspective to measure performance.

Highlights

The effect of non-financial variables on the financial performance of banks in Ghana can become significant
This means that the majority of the respondents of the sampled banks opted for strong agreement and agreement with the statements on financial, customer and learning and growth perspectives of Balanced Scorecard
There is low inclination toward internal business process perspective. It could be deduced from the table that the respondents place a major weight on the use of performance measures under financial perspective, followed by customer perspective, learning and growth perspective and internal business perspective. This means that on average, the sampled banks focus more on financial perspective followed by customer perspective and learning and growth perspective, but less emphasis was placed on internal business process perspective of balanced scorecard

Summary

Introduction

The effect of non-financial variables on the financial performance of banks in Ghana can become significant. The extent to which customer satisfaction, internal business processes, organizational learning and growth influences financial performance indicators is of great importance in assessing performance of banks in Ghana (Yahaya, 2009). Conventional performance measurement systems have been seen as inadequate and insufficient for appropriately and pertinently measuring firm’s performance in the current environment (Ridwan, Harun, & Fahmid, 2013). Traditional financial accounting measures like return on investment (ROI) and earnings per share (EPS) can give misleading signals for such activities. The traditional financial performance measures work well for manufacturing industries, but are not adequate for the skills and competencies that companies are trying to master for the contemporary business environment

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Conclusion