The Influence of the Balanced Score Card on Performance of Public Sector Organizations in Kenya

Abstract

The Balanced Score Card model has proved to be an efficient strategic management tool over the years since its development in the early 90s. More and more private sector organizations have adopted its use though public sector pace of its adoption in measuring performance has been slow. The model has been presented on the support of four dimensions that offer a holistic approach for the implementation of organizational strategies so as to balance the concerns of diverse stakeholders to firm performance. The study was therefore designed to establish the extent to which these dimensions have been implemented in some selected public sector organizations in Kenya and how they are likely to explain variation in the performance of the organizations. The study identified four objectives and relevant hypotheses relating each dimension of the BSC with performance of the public sector organizations. The study adopted a descriptive research survey design and drew its population from all state owned corporations in the Ministry of Energy and Petroleum. The respondents were classified into two categories namely officers in charge of performance contracting and heads of departments namely; ICT, Human Resource Management, Finance and Customer service. The researchers used a questionnaire which was designated for the Heads of Departments and for the officers in charge of performance contract exercise too. The descriptive results indicated that Financial, Internal Business Process and Customer Focus were rated relatively high (mean = 1.892, s.d.= 0.7047; mean= 2.088, s.d.= 0.728; mean=2.022, 0.6821 respectively). Innovation and learning, however was rated low (mean= 2.892, 0.8422) and Organizational performance was rated at the level of moderate (mean= 3.32, s.d.= 1.0961). The four dimensions explain 71.5% variation of the performance. The four dimensions significantly predict the performance of the public sector organizations in Kenya. The results indicated a strong relationship between the dependent and independent variables where R2 was 71.5%. The study concluded that the balanced scorecard is not only a measurement system, but also a management tool for use by organizations to clarify their vision and strategy and their translation into goals and actions. The study called on the organizations sampled to carry out thorough capacity building on the application of BSC so that more stakeholders understand and internalize the concept in order to enhance its adoption.