The Effect of the Balanced Scorecard on Organizational Performance in the Public Sector in Kenya: A Case of Kenya Bureau of Standards

Abstract

The study was carried out at Kenya Bureau of Standards (KEBS), which is a state corporation situated in the Southern part of Nairobi County on Popo road off Mombasa road in South C. The study used a cross sectional descriptive design. From a total population of 700, a sample of 250 250 was the sample selected using proportionate stratified random sampling method. Data collection was done using a self-administered questionnaire. Informed consent was sought before the questionnaire was administered. The questionnaire was first pre-tested in another government organization, the Kenya power Company where a sample of 20 was used to validate the questionnaire. Data analysis was done using the IBM SPSS® version 23. Presentation of the results from the analysis was done using tables and bar charts. Bi-variate analysis and Pearson’s product-moment correlation co-efficient (r) were used to establish the relationship between dependent variable, performance and the independent variables. Each employee was assigned an employee motivation score generated based on their responses to the questionnaire. The findings of this study indicated that the four factors under study namely; finance, internal business perspective, innovation and customer perspective; do have an effect on the performance of the organization and on the overall there was good organizational performance at KEBs despite the lack of profitability. On the financial perspective, the study revealed that there was good use of financial resources which promotes organizational performance. This was noted by the fact that there was very good system of financial reporting. Good use of financial resources (β = 0.45, p = 0.04) significantly predicted higher employee perception of organizational performance as shown in the multivariate analysis. However, the organization was found not to be making any profits. The correlation of between good use of resources and profitability was -0.019 showing that it did not affect the company profitability. The reason for lack of profitability was due to a non-effective cost minimization strategy. The company was not able to meet its financial obligations and this kept it constantly seeking other avenues of revenue. From the study of the internal perspective, it is noted that KEBS provided high quality services to clients not only locally but worldwide and this had promoted organizational performance. Being able to provide good quality services (β = 0.36, p = 0.02) significantly predicted higher employee perception of organizational. On the aspect of employee and innovation and learning perspective, the study revealed that, the organization accorded employees opportunities for professional development, and the management took the initiative to encourage employees to pursue further studies. Opportunities for professional development (β = 0.43, p = 0.001) and better remuneration than similar organizations (β = 0.29, p = 0.01) significantly predicted higher employee perception of organizational performance. The study revealed on the customer perspective that none of the customer perspective variables were related to organizational performance at KEBS. However, the organization was well aware of its customers that included, the employees, the shareholders, external customers covering clients and prospective customers and there was the general public and the government. In conclusion, good financial reporting; good use of finances leads to shareholder satisfaction and it also impacts positively on the employee perception of the organization; which promotes organizational performance on the overall. Lack of profit is not an impediment to an organization’s performance, as long as the organization seeks new ways to raise revenue through innovation that will enable it to meet its financial obligations. Further, a strong strategic plan is imperative to businesses as it gives guidance and needed focus. A learning organization is a performing organization. This is due to the fact that in learning, skills and new competences are acquired that enhance the performance of employees. Key to this aspect however, was the fact that, despite employees being willing to go acquire more skills, top management have to believe in it and support it.