Faculty of Business and Design
Master of Human Resource Management
The Relationship of Organisational Culture to Balanced Scorecard Effectiveness in the Sarawak Public Sector
The Balanced Scorecard (BSC), perceived globally as a performance-measurement system, has changed into a strategic planning system vital to an organisation’s planning process. Its method suggests that senior management interprets the organisation’s vision and strategy into four performance perspectives: ‘Financial, Customer, Internal Business, and Learning and Growth’. It is also used to align the organisation’s business activities to its vision and strategy as well as monitor its performance against strategic goals.
Nowadays it has also been implemented in the public sector even though it tends to reflect its private sector origins. Kaplan and Norton claim that public sector organisations need to adapt the BSC by ‘rearranging the scorecard to place customers or constituents at the top of the hierarchy’. Another approach is to have ‘a mission perspective at the top of the scorecard, then the customer perspective, followed by the other three original perspectives’.
As cited in Deem (2009, p. 2), organisational culture is proposed as one of the factors that contributes to the success or failure in BSC implementations. Moreover, if BSC is successfully implemented, it is due to organisational learning from the BSC process. Kaplan and Norton (2004, p. 56) found that companies that had implemented BSC successfully ‘had a culture in which people were deeply aware of and internalized the mission, vision, and core values needed to execute the company’s strategy.’ Another important relationship is organisational learning. In Kaplan and Norton (2001), ‘learning’ is the basis for improvement in all the other perspectives in BSC. In summary, the implementation of BSC results in better performance in an appropriate organisational culture.
Although it is proposed that there is an apparent relationship between organisational culture and BSC effectiveness, there has been little research done in this area, especially in the Sarawak public sector. Thus, objective of this research is to investigate the relationship between organisational culture and BSC effectiveness in the Sarawak public sector, in particular the State Human Resource Unit (SHRU) in the Chief Minister’s Department. If there exist a relationship, this research is also to study the nature of that relationship.
Through statistical analysis via the SPSS and Smart PLS software, this research has identified the relationship between organisational culture and BSC effectiveness, specifically the Adaptability trait to the Internal Process perspective. These discoveries will offer management with the much-needed information for successful implementation of the BSC in their organisations. It also supports the idea that with organisational culture as the intermediator, organisational learning has a significant role in influencing the success rate of implementing the BSC system in the Sarawak Civil Service.
Nevertheless, this study is not without any limitations. First, the study was implemented in a single, agency in the Sarawak Civil Service. The study methodology should be extended to different organisations to evaluate if there is a significant difference in the results. Second, the survey only evaluates the relationship of the Adaptability trait in the OCSI to the effectiveness of the BSC, specifically the Internal Process perspective. Future research should also look at the relationships of the other traits in the OCSI and perspectives in the BSC. It is possible that some of the other indexes in the other traits of the OCSI have a greater effect on the trait relationships identified than others. Future research should investigate the relationships of the other trait indexes to BSC effectiveness, especially the other perspectives.
Author: Norliza Eileen Binti Ibrahim
Publication year: 2018
