| Summary: | Since 1990s, the business environment has changed toward information era. In information era, the role of intangible asset has become more important compare to industrial age. In 1992, Kaplan and Norton introduced Balanced Scorecard to overcome issues resulted from business environment change, however research proved that 70% of Balanced Scorecard adopters were failed to implement it.
Therefore, this research paper analyzes the factors that enhance Balanced Scorecard effectiveness in banking industry. Thus can reduce the failure level of Balanced Scorecard adoption. The factors such as top management involvement, interdepartmental communication, choosing accurate measures, minimizing formalization, and use benchmarking principle are able to enhance the Balanced Scorecard effectiveness.
Based on the analysis on the factors that affecting the Balanced Scorecard effectiveness, this thesis produce recommendation on how to enhance Balanced Scorecard effectiveness. First is top management involvement that will contribute to commitment creation and organization support for innovation and changes. Second is interdepartmental communication that will create trust between department, easier to inform and adopt changes in all departments, and willingness to deal with member of other departments. Third is choosing accurate measures that should follow four factors to choose accurate measures, which are balanced between internal and external measures, integrated measures into management system, update measures, and not overload the measures. Four is minimizing formalization, because formalization tends to hinder change and innovation. Finally, use benchmarking principle to always control and supervise the improvement of organization. Hence manager will know the best and the most effective strategy to be applied in their organization.
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