USING THE BALANCED SCORECARD FOR KNOWLEDGE MANAGEMENT

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6 Νοε 2013 (πριν από 3 χρόνια και 8 μήνες)

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http://www.handels.gu.se/epc/archive/00001973/01/Andreasson%5F1999%5F7.pdf

USING THE BALANCED SCORECARD FOR KNOWLEDGE

MANAGEMENT


In this section, we aim to show so
me common bases that knowledge management

and the Balanced Scorecard have. The Balanced Scorecard tool

spokesmen and the knowledge management theorists sometimes use the

same vocabulary, which indicate how the two concepts could be linked to

each other. We

will discuss these aspects and also highlight potential

problems. To increase the understanding of this discussion, the Balanced

Scorecard tool will be thoroughly described in the next section of this

chapter.

As mentioned earlier, knowledge management sh
ould be a strategic issue,

since it, to a larger degree than most activities, affects a company’s future

capabilities, potentials, and direction. It is important to ascertain that the

knowledge management work is in line with and provides strong support of

the enterprise’s mission and plans (Wiig, 1995). With a traditional management

control system, focused on budgets and historic figures, this is not

always the case. Strategy is seldom communicated to the whole organisation,

but stays at the management lev
el (Kaplan & Norton 1996, Wiig,

1995). This affects the scope of what the company management monitor.

The company goals, originating from demands by owners, are broken down

into subparts and divisions and departments and employees are evaluated

on the fina
ncial performance. Employees will see the financial goals as the

primary goals, and they will work to fulfil them to the best possible effect.

This might create some adverse effects, since the employees then have little

or no possibility of understanding o
ther strategic objectives or the longterm

goal of company operations. Non
-
financial goals, among which we

find goals for knowledge management work (e.g. “increasing the annual

hours of training and education per capita”), then risk getting rated as

seconda
ry goals, since performance evaluation is done according to the

financial goals. This, in turn, will probably result in less effort being made

in the non
-
financial areas, no matter how ambitious projects and plans they

might contain.

In a company that uses

a Balanced Scorecard, there might be better chances

for knowledge management work to succeed. Since the Balanced Scorecard

tool aims at communicating the strategy to the entire company (Kaplan &

Norton, 1996), all employees in a company using this tool sh
ould know

where they are heading. They will then have the possibility to judge their

own actions in the light of the company’s complete strategies. Since

knowledge management is supposed to be a strategic issue (e. g. Wiig,

1995; Zack, 1999; Edvinsson & Ma
lone, 1997), the knowledge management

strategy then is to be communicated to the whole organisation if a

Balanced Scorecard is used. With a Balanced Scorecard, the employees’

performance is evaluated not only in relation to the financial goals, but also

in

respect of the whole set of balanced measures that the scorecard consists

of (Kaplan & Norton, 1996). Thereby, knowledge management will have

the opportunity to be judged equally to other strategic issues, which will

certainly facilitate the outcome of th
e knowledge management work.

Thereby, we reach another aspect that we see both in the knowledge

management ideas and in the aim of the Balanced Scorecard tool, namely

the future orientation. In the past, with traditional management control

systems, many co
mpared managing a company to rowing a boat


you are

looking backwards, to see where you are heading (Wennberg, 1998). The

Balanced Scorecard tool is an attempt to change that by introducing futureoriented

perspectives. Again, employees that are presented
with the

strategy and future direction of the company will have the possibility to

evaluate their actions and results in the light of this. With a balanced set of

measures, the employees will also see that financial goals alone will not

help them reach the
ir strategic objectives. It will be clear that also other,

more future
-
oriented goals, e.g. in the knowledge management area, are

equally important for the long
-
term survival of the company. As mentioned

earlier, knowledge management has become a strategic

issue since the

future success of a company depends on how well it develops and takes

care of the knowledge it possesses today.

Another aspect of the Balanced Scorecard, which indicates that it could be

a good tool for knowledge management work, is that i
t implies a review of

the company’s internal processes, and thereby helps to create a more

efficient organisation. Making the organisation more efficient is also one of

the purposes of knowledge management work, for example by sharing

knowledge throughout
the organisation in order to enhance the company

knowledge and avoid making the same mistake twice. The Balanced

Scorecard could therefore be useful for knowledge management work too,

by initiating a review of e.g. knowledge sharing processes and making

th
em more efficient.

The Balanced Scorecard tool also puts a focus on the importance of

enhancing the employee
-

and information
-
system capabilities as well as

increasing the employee motivation. This is truly close to the aim with

knowledge management work.
In the Balanced Scorecard these aspects are

usually measured in the learning and growth perspective.

When reviewing the common grounds for the Balanced Scorecard and

ideas about knowledge management, we see that the Balanced Scorecard is

one of the first m
anagement control tools that can be used for incorporating

both financial and non
-
financial objectives. Additionally, the Balanced

Scorecard both endorses knowledge management activities and serves as a

tool for measuring the performance. Depending on how
a company brings

the Balanced Scorecard tool into play, it can be used both for internal

management control
-

for implementing strategy and managing the company’s resources


and/or as a more externally oriented system, designed to

create disclosure for ow
ners and other interest parties.

The aspects previously mentioned all indicate why there is a possibility that

the Balanced Scorecard could be an accurate tool to facilitate knowledge

management in a company. However, there are threats to the success of th
e

implementation of a Balanced Scorecard that could affect knowledge

management work as well. One of the disadvantages with using the Balanced

Scorecard as a tool for knowledge management work is that, if the

implementation of the Balanced Scorecard falls
short, the knowledge

management work carried through by means of the scorecard risks getting

washed out along with it, as the baby with the bath
-
water.