The Balanced Scorecard And Performance Of Public Sector Organizations In The Ministry Of Energy And Petroleum In Kenya

Abstract

The objectives that are stated by the BSC are more than just a collection of financial and non-financial measures; it is a holistic process of identifying the individual parts, needs and goals of the organization and recognizing that each arm is intimately connected to the success and health of the firm as a whole. If organizations are to survive and succeed in the information age of exceptional competition, it is vital that they derive strategies and implement measurement capabilities. “The BSC retains financial measurement as a critical summary of managerial business performance, but it highlights a more general and integrated set of measurements that link current customer, internal process, employee, and system performance for long-term financial success”( Kaplan & Norton, 1996, pg. 25). Implementing these four perspectives an organization is able to form a more complete picture of the needs of its individual business units, and therefore a more concise view on how to measure them (Kaplan & Norton, 1996). The study aimed at finding out the application of the balanced score card in the public sector organizations in Kenya. The objectives of the study included a deeper insight of the four BSC perspectives that is the financial, customer, internal business process and innovation and learning on organizational performance. The study took a descriptive research survey by selecting the ten parastatals 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 researcher used one instrument of research that is the questionnaire which was designated for the Heads of Departments and for the officers in charge of performance contract exercise too. Data collected was thoroughly analyzed using (SPSS). Themes were presented as they emerged in the data analysis. The findings revealed that holding Financial; Internal Business Process; Innovation and learning; and Customer Focus perspectives of the BSC to a constant zero, performance of the Business Organizations in public sector in Kenya would be at 3.938 and a unit increase in business performance would be due to a change in financial factors by 0.205; Internal Business Process by 0.771, Innovation and learning factors by 0.344 and Customer Focus factors by a 1.024. This clearly shows that there is a strong positive relationship between Innovation and learning perspective and performance of the business organizations in public sector in Kenya.