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BALANCE SCORECARD KEY PERFOMANCE INDICATORS AS A PERFOMANCE MEASUREMENT TOOL A CASE STUDY OF ZENITH BANK PLC

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ABSTRACT

In every business enterprise, the need for effective management of organizational policies and procedures is very important and can never be over-emphasized. To achieve this goal, there is need to adequately measure the input / performance of employees and to what extent it aligns to the overall aim of the organization. This work is designed to expose and equip managers with the necessary tools needed to effectively measure their employee performance on the job. In generating the data needed to achieve the objectives of this study, cross sectional survey was used. Questionnaires were also used as a major instrument for primary data collection. To broaden the researcher’s depth of knowledge in the study area, the researcher  embarked  on  review  of  the  very  minimal  related literature with data drawn from secondary sources. Data generated in the study was presented on frequency tables and analyzed using simple percentage while the hypothesis was tested with chi-square. It was discovered from the research that most organizations could not measure the performance of their employee because of poor performance measurement tools, and in some cases, none at all. From the findings, it is clear that the existence of policies and procedures is one thing, while the measurement of compliance to these policies is another. There is therefore the need for effective management  of   the   performance  measurement  tools   of   the organization in order for the organization to execute its aims and objectives.

CHAPTER ONE. INTRODUCTION.

1.1  BACKGROUND OF THE STUDY.

From the beginning, it is important to understand why measuring an organization’s performance is both necessary and vital.    An    organization    operating    without    a    performance measurement system is like an airplane flying without a compass or a  CEO  operating  without  a  strategic  plan.  The  purpose  of measuring performance is not only to know how a business is performing but also to enable it to perform better. The ultimate aim of implementing a performance measurement system is to improve the performance of an organization so that it may better serve its customers, employees, owners, and stakeholders. A performance measurement system enables an enterprise to plan, measure, and control its performance according to a pre-defined strategy.

Managers at all levels in an organization can track key performance indicators to assess how well their groups are meeting their  business  objectives,  whether  performance is  improving  or declining, and how their group’s performance compares with that of

other   units   or   groups   within   the   company   and   in   rival organizations.

Consider these examples:

     A CEO examines return on investment (ROI) by division, or her company’s cash flow, by month and quarter, and compares

the results to those of competitors.

      A  customer  service  manager  tracks  customer  service  quality using surveys.   If the surveys suggest that service quality is dropping, he might need to add more account representatives to improve service levels.

The Balanced Scorecard (BSC) is a strategic performance management  tool  for  measuring  whether  the  smaller-scale operational activities of a company are aligned with its larger- scale objectives in terms of vision and strategy. By focusing not only on financial outcomes but also on the operational, marketing and developmental inputs to these, the Balanced Scorecard  helps  provide  a  more  comprehensive  view  of  a business, which in turn helps organizations act in their best long-term interests. Organizations are encouraged to measure,

in addition to financial outputs, those factors which influenced the financial outputs. For example, process performance, market share  /  penetration, long  term  learning and  skills development,  and  so  on.  The  underlying  rationale  is  that organizations cannot directly influence financial outcomes, as these  are  “lag”  measures,  and  that  the  use  of  financial measures alone to inform the strategic control of the firm is unwise. Organizations should instead also measure those

areas where direct management intervention is possible. Implementing  Balanced  Scorecards  typically  includes  four

processes:

1. Translating the vision into operational goals;

2.  Communicating  the  vision  and  link  it  to  individual performance;

3. Business planning; index setting

4.   Feedback   and   learning,   and   adjusting   the   strategy accordingly.

The Balanced Scorecard provides managers with the instrumentation they need to navigate to future competitive success.

1.2  STATEMENT OF THE PROBLEM.

This  boils  down  to  what  constitutes the  problems  on  the study.   Present day organizations are complex. As one of the key activities of organizations, performance measurement is difficult. Organizations   are   faced   with   the   problem   of   measuring performance, and it is not easy dealing with these problems. Hence, this research is aimed at understanding how key performance indicators are used in measuring  performance among employees. Key performance indicators would be examined and to select one. Since human beings are the media through which organizations get their objectives accomplished, it follows that their input into the actualization of these objectives should be properly measured.

1.3  PURPOSE OF THE STUDY.

Following the statement of the problem, we formulate our objectives as follows.

a. To  examine  the  challenges  of  performance  management  to organizations.

b. To identify these challenges.

c. To analyze how the organization respond to these challenges. d. To make recommendations that would help organizations to

achieve results.

1.4    THE SIGNIFICANCE OF THE STUDY.

This research work would be of great importance to organizations. For the fact that mission statements of an organization  tells  the  direction  of  that  organization,  the  whole efforts  of  the  management and  its  entire  workforce are  geared towards achieving these objectives. This research therefore, seeks to help identify how organizations measure the performance of their employees.

The management of any organization would benefit from this research as it will help them in formulating a veritable performance management  tool.  The  society  in  general  will  benefit  from  the project  by  applying  the  principles  therein  in  choosing  their performance measurement tools. The researcher will benefit from the research work, as the research has enlightened the researcher

in the various tools of performance management. The researcher could be consulted on related matters for advice.

This research work could be important to future researchers, as it might serve as a guideline in furtherance of related problems. Future   researchers  would   include  this   research  among   the literature to review during report writing.

1.5  SCOPE OF THE STUDY.

The research work covers the areas that are related to the measurement of performance in an organization. And this research was carried out in Awka, where the organization under research was. Zenith Bank Plc is a very big bank with a staff strength of over

5000,  ranging  from  the  top  management,  through  the  middle management, to the junior staff.

1.6  LIMITATION OF THE STUDY.

There were so many limitations encountered in the course of this research, such as time wasted, in this case, the field work covered a period of two months. The first day was used to submit the  introductory letter  at  the  regional  office  through  the  zonal

human resource representative. The approval came up two weeks later, largely due to the researcher’s consistency of visit to the company. Lack of finance was another limitation, considering the expense incurred during the field work and this tended to mar the purpose of the research.

Transportation was a limitation as the cost to and fro was much due to the high cost of fuel within the metropolis. At some times, there were no vehicles available which led to the researcher visiting the company most times behind schedule.

Within the company itself, the researcher encountered some of the respondent’s nonchalant attitude. Reasons given by the workers range from being busy with work, to having no time to read the questionnaire. However, after much persuasion and explanations on the relevance of the research to them, some of them cooperated with the researcher which helped in achieving the objectives of the research.

1.7  DEFINITION OF TERMS.

KPI: Is an acronym for Key Performance Indicators. These are quantifiable measurements, agreed to beforehand, that reflect the critical success factors of an organization. It helps an organization define and measure progress toward organizational goals. PERFORMANCE: This is a final outcome of a task. It is also the result derived from the expected outcome over the actual outcome. QUALITY: Delivering the products and services in a high standard and of general excellence.

ORGANISATION: This is a system of consciously coordinated activities of two or more persons. It is also described as planned units deliberately structured for the purpose of attaining specific goals.

MANAGEMENT: A body or group of people who controls a business or enterprise. It is also a group of people who are engaged in the decision  making  and   organisation  of   people,   processes  and materials in a business.QUALITY:  Delivering products and services in a high standard and of general excellence


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BALANCE SCORECARD KEY PERFOMANCE INDICATORS AS A PERFOMANCE MEASUREMENT TOOL A CASE STUDY OF ZENITH BANK PLC

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