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Title: Managing a corporate performance measurement system : an empirical study of balanced scorecard in a Saudi oil company
Authors: Al-Sumairi, Mohammed M.
Issue Date: 2009
Publisher: Newcastle University
Abstract: Today's oil and gas industry faces a number of challenges, carrying with them both great risks and opportunities. Thus, it is vital to identify effective methods of improving corporate performance. A key challenge in management accounting is improving an organisation's bottom line by measuring performance and fine-tuning it to align its work with its strategy. The Balanced Scorecard (BSC) is a strategic management system which, unlike traditional management systems, links a company's long-term strategy with its short-term actions. Consequently, much academic literature has been produced on the BSC, presenting it as a major development in performance measurement frameworks which combines financial and non-financial measurements to provide reliable feedback for management control and performance evaluation. Empirical studies have found the BSC concept to have been adopted by many large western organisations, but methods of implementation are still developing with experience and there has been a dearth of research on BSC issues in Saudi Arabia. This study examines the implementation and use of BSC in a state-owned enterprise, Saudi Aramco, the world's largest oil producer. Its main objectives are to assess the BSC as a tool for improving and measuring company performance, to investigate how well Saudi Aramco's managers understand the concepts of the BSC and to determine the extent to which Saudi Aramco has managed its adoption from initiation to final implementation. From the literature, 23 critical success factors (CSFs) were identified. For triangulation purposes, the case study employed three phases of data collection: semi-structured interviews, an online questionnaire and scrutiny of corporate documents, providing information on how the organisation fared on the 23 CSFs. The main finding is that the top management and the middle managers surveyed in this study all clearly understood the concept of the BSC, but its implementation had limited success, for three main reasons. First, despite conscious efforts by top management to involve the middle managers at the very early stages and a very well managed planning phase of BSC development, middle managers still had the perception that the introduction process was governed by a top-down approach, which would have had a negative impact on the contributions made by middle managers. This raises issues of the application of policy by Saudi Aramco. Second, the integration of the BSC with existing systems such as the SAP ERP system and the excessive data input data demands of the BSC (both crucial element of implementation) left many managers dissatisfied, to the extent that some departments such as Finance hardly used the BSC. Third, the managers felt that the BSC's key performance indicators (KPIs) were not updated regularly enough to meet the challenges of a dynamic business environment. Research implications that are discussed include the need for Saud Aramco to consider issues such as evaluating the CSFs, including integration with existing systems, the need to examine the reasons behind the 'top-down' perceptions and the importance of the continuous evaluation of performance measures. Finally, a model that Saudi Aramco can use in adapting and improving the current BSC is presented.
Description: PhD Thesis
Appears in Collections:Newcastle University Business School

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