Application of balanced score card and the performance of multinational corporations listed on the Nairobi securities exchange

Abstract

The BSC tool is important in measuring performance of a firm and has been used to remedy the inadequacies of current performance measurement systems which have given more weight to financial measures while others have given more weight to the customer perspective. Indeed, the BSC tool assigns equal weight to all the four perspectives of financial, customer, internal and learning perspectives. This means that the BSC assists managers in ensuring that the performance outcomes as well as key enablers or drivers of future performance like the capacity of human resources, financial resources, technological resources, brand positioning and customer perception are identified to create a complete picture of the strategy. The research objective was application of balance score card and the performance of multinational corporations listed on the Nairobi Securities Exchange. The study adopted a descriptive survey design. The target population for this study consisted of the 60 companies listed on the Nairobi Securities Exchange. The researcher collected both primary and secondary data. The study adopted the purposive random sampling technique in which six major MNCs selected were Nation Media Group, CMC Holdings, Barclays Bank, Jubilee Holdings, East African Breweries and KenolKobil. The findings of the study were that balance score card is used in order to assist in financial measures, customer focus, internal business processes and organizational learning and growth. MNCs have been using balance score card for financial perspective and this results in increased gross profit growth as well as the net income has as a result of measuring the employee performance, increased revenue growth of the firm, increased annual sales growth as a result performance evaluation has been undertaken, decreased operating cost of the firm when employees cost to revenue generated is evaluated, organization selling expense to sales ratio has been reducing after performance evaluation has been undertaken and that stock prices growth in the firm has been achieved. The effect of organizational learning and growth was found to be continuous employment of new manufacturing technologies, increased hours per employee, increased annual training and development budget per employee, under development of new manufacturing processes and enhanced employee education and skills. The study further established that the firms have been focusing on their customers and it results in improved customer retention rate and the number of repeat customers, customer satisfaction with customers handling, satisfactory speed of services delivery, customers perception of order taking is convenient and accurate, customer satisfaction with the cost of goods and products and increased market share in different geographic locations.