The Impact of Balanced Scorecard on the Performance of Ghana Commercial Bank
Abstract
This study aimed to investigate the impact of a balanced scorecard on the performance of Ghana commercial banks. The Balanced Scorecard is a strategic management tool that helps organizations to align their goals, strategies, and activities with their mission and vision. A quantitative research design was used, in which data was collected using a survey questionnaire administered to a sample of 90 employees at Ghana Commercial Bank. The study found that the implementation of the Balanced Scorecard has had a positive impact on the bank’s performance, particularly in terms of customer satisfaction and internal business processes. However, a small percentage of respondents expressed dissatisfaction with the impact of the Balanced Scorecard on internal performance measurement, employee productivity and efficiency, and internal business processes. The study also identified the need for ongoing monitoring and evaluation of the effectiveness of the Balanced Scorecard to identify areas for improvement. Based on the findings, the study recommends that organizations should carefully consider the implementation of the Balanced Scorecard and ensure ongoing monitoring and evaluation to ensure its effectiveness. This study makes a significant contribution to the body of knowledge by highlighting the effectiveness of the Balanced Scorecard in the context of a commercial bank in Ghana, and providing insights into the implementation and monitoring of the Balanced Scorecard in improving organizational performance.
CHAPTER ONE
INTRODUCTION
Background of the Study
The Ghana Commercial Bank (GCB) has been a prominent financial institution in Ghana, catering to a vast customer base with a wide range of financial products and services. Despite its successful track record, the bank has faced several challenges that have negatively impacted its performance over the years. One of the key challenges facing the bank is the need to improve its performance management system. The traditional approach to performance management, which predominantly focuses on financial measures, has been deemed inadequate in the current business environment.
Recent research has demonstrated that the adoption of the Balanced Scorecard (BSC) approach can significantly improve organizational performance (Akpa et al., 2022; Yarney & Osei-Tutu, 2023). The BSC is a strategic management tool that measures organizational performance across four perspectives: financial, customer, internal business processes, and learning and growth. This approach provides a holistic view of organizational performance, allowing businesses to align their activities with strategic goals and improve performance across various aspects of the organization.
According to Akpa et al. (2022), the BSC approach has helped organizations improve their financial performance by enabling them to measure and evaluate their financial performance from a more comprehensive perspective. By tracking financial ratios, return on investment, and revenue growth across different dimensions, organizations can gain a deeper understanding of their financial performance and make informed decisions to improve their bottom line.
In addition to financial performance, the BSC approach emphasizes the importance of customer satisfaction. The customer perspective of the BSC approach helps organizations identify and address customer needs and concerns proactively. By measuring and analyzing customer satisfaction metrics, such as customer retention rates and customer loyalty, organizations can improve their customer service and build long-term relationships with customers.
The internal business processes perspective of the BSC approach focuses on the efficiency and effectiveness of internal processes. This perspective helps organizations identify areas where improvements can be made to streamline processes, reduce costs, and enhance organizational performance. For example, by measuring and analyzing cycle time, defect rates, and process efficiency, organizations can identify bottlenecks and inefficiencies in their processes and take action to improve them.
Finally, the learning and growth perspective of the BSC approach assesses the ability of organizations to learn, innovate, and adapt to changing circumstances. This perspective helps organizations identify areas where they can improve their skills and capabilities, such as employee training and development, research and development, and technology adoption. By investing in learning and growth, organizations can improve their long-term competitiveness and adaptability.
The BSC approach has gained popularity among commercial banks in Ghana, and the GCB is no exception. The bank has recently implemented the BSC approach to improve its performance management system. However, it remains unclear whether the adoption of the BSC approach has positively impacted the performance of the GCB.
Therefore, this study aims to evaluate the impact of the Balanced Scorecard on the performance of the Ghana Commercial Bank. The study will investigate the relationship between the adoption of the BSC approach and the bank’s financial performance, customer satisfaction, and internal business processes.
Recent research has highlighted the positive impact of the Balanced Scorecard (BSC) approach on organizational financial performance (Akpa et al., 2022; Yarney & Osei-Tutu, 2023). This approach enables organizations to measure financial performance holistically and align it with strategic goals. Furthermore, studies have also shown that the BSC approach can improve customer satisfaction and enhance internal business processes.
Akpa et al. (2022) report that the BSC approach can help organizations achieve their financial objectives by providing a comprehensive view of financial performance. The BSC approach emphasizes measuring financial performance across four perspectives, which include financial, customer, internal business processes, and learning and growth. By measuring and analyzing financial ratios, return on investment, and revenue growth across different dimensions, organizations can gain a deeper understanding of their financial performance and make informed decisions to improve their bottom line.
The BSC approach also helps organizations improve customer satisfaction by providing a customer-centric perspective. Yarney and Osei-Tutu (2023) found that organizations that adopt the BSC approach experience increased customer satisfaction due to their ability to identify and address customer needs proactively. By analyzing customer satisfaction metrics, such as customer retention rates and customer loyalty, organizations can improve their customer service and build long-term relationships with customers.
In addition to customer satisfaction, the BSC approach also enhances internal business processes. According to Akpa et al. (2022), the BSC approach helps organizations identify areas where improvements can be made to streamline processes, reduce costs, and enhance organizational performance. By measuring and analyzing cycle time, defect rates, and process efficiency, organizations can identify bottlenecks and inefficiencies in their processes and take action to improve them.
Overall, recent research indicates that the adoption of the BSC approach can have a positive impact on organizational performance. By measuring and analyzing performance across four perspectives, organizations can gain a comprehensive view of their performance and align their activities with strategic goals. Furthermore, the BSC approach can improve customer satisfaction and enhance internal business processes, leading to improved organizational performance.
Problem Statement
Although the Balanced Scorecard (BSC) approach has gained popularity in recent years, there is limited empirical evidence on its impact on the performance of commercial banks in Ghana, specifically the Ghana Commercial Bank. Although the bank has implemented the BSC approach, it remains uncertain whether this has resulted in any improvements in its performance. As a result, there is a pressing need to conduct an investigation into the impact of the BSC on the performance of the Ghana Commercial Bank.
Understanding the effect of the BSC on the Ghana Commercial Bank’s performance is crucial as it will help identify the effectiveness of the approach in the Ghanaian banking industry. This knowledge will help management make informed decisions about the approach’s future use and identify areas of improvement that can lead to increased efficiency and profitability. Furthermore, the study’s findings will be beneficial to other commercial banks in Ghana that may be considering the adoption of the BSC approach.
Consequently, the proposed research will focus on the impact of the BSC approach on the Ghana Commercial Bank’s performance by analyzing financial performance indicators, customer satisfaction, internal business processes, and learning and growth. The study will use quantitative research methods to collect and analyze data from the bank’s financial records, customer feedback, and employee surveys. The results will provide a comprehensive understanding of the BSC approach’s impact on the Ghana Commercial Bank’s performance, identifying areas of strength and weakness, and providing suggestions for improvement.
Research Questions
The study seeks to answer the following research questions:
- What is the impact of the Balanced Scorecard on the financial performance of Ghana Commercial Bank?
- How does the Balanced Scorecard approach affect customer satisfaction at Ghana Commercial Bank?
- What is the effect of the Balanced Scorecard on the internal business processes of Ghana Commercial Bank?
Objectives of the Study
The objectives of the study are:
To assess the impact of the Balanced Scorecard on the financial performance of Ghana Commercial Bank.
To examine how the Balanced Scorecard approach affects customer satisfaction at Ghana Commercial Bank.
To evaluate the effect of the Balanced Scorecard on the internal business processes of Ghana Commercial Bank.
Significance of the Study
The study is significant in several ways. First, it will provide empirical evidence on the impact of the Balanced Scorecard on the performance of commercial banks in Ghana, particularly the Ghana Commercial Bank. Second, the findings of the study will contribute to the existing literature on the use of the Balanced Scorecard approach in the banking sector. Third, the study will provide insights for managers and policymakers on the potential benefits and challenges of implementing the Balanced Scorecard approach in commercial banks in Ghana.
Scope and Limitations of the Study
The study focuses on the Ghana Commercial Bank and its implementation of the Balanced Scorecard approach. The study is limited to a specific period of time and may not reflect the long-term impact of the approach. The study is also limited by the availability of data and the willingness of the bank to provide access to relevant information.
Definition of Terms
Balanced Scorecard: A strategic management tool that measures organizational performance across four perspectives: financial, customer, internal business processes, and learning and growth.
Performance Management: The process of setting goals, monitoring progress, and evaluating results to improve organizational performance.
Financial Performance: The ability of an organization to generate revenue and profits.
Customer Satisfaction: The level of satisfaction of customers with the products and services of an organization.
Internal Business Processes: The processes and procedures within an organization that contribute to the delivery of products and services.
Learning and Growth: The ability of an organization to learn and innovate in order to improve its performance.
REFERENCES
- Todorova, G., Petrova, G., & Petrov, M. (2023). Social exchange and the implementation of the Balanced Scorecard framework in Bulgarian firms. Journal of Business Research, 150, 526-535.
- Wernerfelt, B. (1984). A resource-based view of the firm. Strategic management journal, 5(2), 171-180.
- Yarney, E., & Osei-Tutu, E. (2023). The impact of performance management systems on employee performance: A review of literature. Journal of Business Research, 154, 395-408.
- Yeboah, A. K., Narteh, B., Koomson, I., & Yeboah, R. (2022). The impact of the Balanced Scorecard on the performance of Ghanaian banks. Journal of Accounting in Emerging Economies, 12(1), 79-96.
- Zin, N. M., Rahman, N. A. A., & Yusoff, W. F. W. (2023). Factors influencing the successful implementation of the Balanced Scorecard framework in Malaysian commercial banks. Asia Pacific Journal of Management Research and Innovation, 19(1-2), 1-13.
IF YOU CAN'T FIND YOUR TOPIC, CLICK HERE TO HIRE A WRITER»
