Foundations of Management, Vol.

11 (2019)
eISSN 2300-5661, pISSN 2080-7279, DOI: 10.2478/fman-2019-0004 43

THE DETERMINATION OF PERFORMANCE MEASURES BY USING

A BALANCED SCORECARD FRAMEWORK
Irem KEFE
Osmaniye Korkut Ata University, Osmaniye, TURKEY
e-mail: iremkefe@osmaniye.edu.tr

Abstract: The aim of this study was to determine the contributions of the balanced scorecard (BSC)
methods to identify the relationship between the objectives and activities and examine how the BSC
should be formed in a manufacturing company. The BSC framework was examined via a case study
in a yarn manufacturing company. The activities to be carried out by the company to achieve its objec-
tives and how the appropriate measures are determined in evaluating the contribution of the activities
to the achievement of objectives are explained under the BSC approach. The BSC implementation and
adaptation have facilitated in a family owned company because of its fast decision-making process. Ob-
jectives are made clear in accordance with the company’s strategy and causal relationship between ob-
jectives and activities are linked by the strategy map. The BSC implementation shows that financial
measures are not enough to evaluate the effects of all the activities on the objectives in a company.
The cooperation between departments in the company and the efficiency of corporation meetings in-
creases. The meetings have become more result-oriented due to clarifying objectives and responsibility
of individual levels.
Keywords: balanced scorecard, performance measures, strategy maps, strategic planning, manufactur-
ing.
JEL: M10, M4.

1 Introduction of today's companies (Kaplan and Norton, 1992).

Businesses face several failures in implementing
Performance management is described as a system their strategies. Hence, companies should use finan-
to ensure improving the performance of the enter- cial and non-financial measures and balance long-
prise as a whole by improving individual or depart- short term objectives based on their mission and
mental performances (Chriyha, Beidouri, and vision to assess the achievement of the performance
Bouksour, 2012). The performance management of management (Karabay and Kurumer, 2012).
a business is carried out depending on its vision and Lately, industrial organizations not only use financial
strategies. The definition of success for each organi- performance indicators but social and environmental
zation and corresponding performance management factors as well (Chriyha, Beidouri and Bouksour,
vary by reason of vision and strategies differ from 2012). A more comprehensive perspective that in-
business to business (Kopia, et al., 2017). cludes financial indicators, as well as non-financial
Numerous performance management frameworks indicators, is for the first time introduced by Drs.
focus on monetary measurements to evaluate Robert Kaplan and David Norton in order to assess
the performance of a company. Examples of basic the performance of the organization (Narayanamm
financial measures used in performance evaluation and Lalitha, 2016).
are net and gross profit, debt to equity ratio, revenue The balanced scorecard (BSC) is a strategic perfor-
growth rate, earnings before tax (EBT), return mance management framework that includes
on investment (ROI), and return on equity (ROE) measures of strategies of a company on how to reach
(Kopia, et al., 2017). In the industrial age, while its objectives (Kaplan and Norton, 1993). The intan-
conventional financial indicators are sufficient gible assets are as important as tangible assets and
for performance measurement, they are not sufficient the basic question is how to measure them (Kopia,
to evaluate the competitiveness and capabilities et. al., 2017). Understandable mission, vision, and
44 Irem Kefe

objectives for every department of the enterprise 2 The Perspectives of the Balanced Scorecard
create a comprehensiveness in the enterprise (Costa
Oliveira, 2014). Changed accounting conditions infer an important
The literature review shows that researchers have emphasis on control, recording, communicating and
created the BSC framework in different industries measuring financial and organizational information
and companies such as environmental education, fuel (Carlström, 2012). Kaplan and Norton conducted
distribution industry, cooperatives, small businesses a research in several firms and found that one meas-
(e.g., de Andrade Guerra, et al., 2018; Evangelista de ure cannot be sufficient to link between strategic
Barros and Wanderley, 2016; Dhamayantie, 2018; targets and cannot be an important function of a
Malagueño, Lopez-Valeiras, and Gomez-Conde, company. So, they introduced a new performance
2017). Aurelia, et al. (2018) have demonstrated that management system, which includes both financial
Italian network of small and medium enterprises and non-financial measures to link between targets
(SME) has benefited by the BSC to develop the net- and functional areas of a company (Kaplan and Nor-
work strategy formulation for the implementation of ton, 1992; Coe and Letza, 2014).
the performance measurement system. Gupta and The BSC is a strategic management tool that gener-
Salter (2018) have developed a model of the rela- ates a relationship between objectives and measures
tionship between organizational culture and the use in accordance with the organizational viewpoints
of the BSC. Quesado, Guzmán and Rodrigues (2018) (Chriyha, Beidouri and Bouksour, 2012). The BSC
have found that BSC is an effective strategic man- consists of four perspectives: Financial perspective,
agement tool to translate the mission and strategies customer perspective, internal business perspective,
and to improve communication, strategic alignment and learning and growth perspective (Lueg and Vu,
and organizational learning. Yancy (2017) has repre- 2015). Fig. 1 shows the BSC framework.
sented that identifying the effects of firm characteris-  Financial Perspective
tics on the propensity of adopting BSC.
The fundamental purpose in the financial perspective
According to the literature review, no study has been is to increase the shareholder value (Miloloza, 2018).
found that explains the adaption of BSC for a small Conventional financial measures are supported
and medium-sized textile company. For this purpose, by three different points that clients, internal opera-
the study aims to fill the gap in the literature. There- tion process, and employees in a framework of the
fore, this study focuses on examining whether BSC (Kaplan and Norton, 2007). The financial
a cause and effect relationship exists between objec- measures depend on long-term strategic targets
tives and current activities of the company by using (Kaplan and Norton, 1996a). The financial measures
strategy maps, for which measures and targets could consist of three aspects: business growth, value crea-
be determined to evaluate the performance of the tion, and profitability. Business growth is measured
company in the four perspectives of the BSC and by revenue to assets ratio, increase in revenue
how should the BSC be structured as a strategic and assets, revenue from new products and services.
management system in a medium-size yarn manufac- The value creation is measured by economic value
turing company. added (EVA), market value added (MVA), stock
The study is detailed as follows. The current section price and dividends. The profitability is measured by
represents the introduction. Section 2 represents profit margin, ROE, ROA, ROI, ROCE, and so on,
the perspectives of the BSC and section 3 determines in the financial perspective (Miloloza, 2018).
the research design. Section 4 represents the applica-  Costumer Perspective
tion of the case study. Section 5 discusses the results BSC translates the mission of a company into certain
and section 6 concludes the paper with findings,
measures in customer perspectives like lead time,
practical and managerial implications.
quality, performance, cost, and service. Internal
business perspective is in a positive relationship with
customer perspective.
 The Determination of Performance Measures by Using Balanced Scorecard Framework 45

Financial
How should Objectives Measures Targets Initiatives
we appear to
our share-
holders to
succeed
financially?

Customer Internal Business Process

How Objectives Measures Targets Initiatives Which Objectives Measures Targets Initiatives
should we business
appear to Vision and processes
customers Strategy must we
to achieve excel at to
our vision? satisfy our
shareholders
and custom-
ers?

Learning and Growth

How can we Objectives Measures Targets Initiatives
sustain our
ability to
change and
improve to
achieve our
vision?

Figure 1. The Balanced Scorecard Framework

(Source: Adapted from Kaplan and Norton, 2007; Kaplan and Norton, 1996b)

Because while the quality of products and services, them through consistent observation. The value
lead time, productivity, and efficiency are made bet- of intellectual capital increases and sustains by
ter, customer satisfaction indicators become better spending resources on the training of personnel
(Kaplan and Norton, 1992). and by encouraging and motivating the employees
 Internal Business Perspective through reward systems. The main objective in the
learning and growth perspective involves the devel-
According to the traditional performance measure,
opment and reshaping of the skills of the workforce
internal process evaluation depends on financial
to achieve the vision and mission of the organization.
indicators and time-based and quality measures that
Learning and growth perspective includes not only
are little different from the financial perspectives.
educated and more skilled employees, but also con-
On the other hand, the BSC is used not only to fol-
siders the expectations and thoughts of the employee
low up and enhance the system, but also to introduce
about the organization to ensure employee engage-
new approaches and procedures to meet customer
ment (Narayanamma and Lalitha, 2016).
expectations and organization's financial expecta-
tions (Kaplan and Norton, 1996a). Measures and initiatives ensure an objective assess-
ment, comparability and measurement between four
 Learning and Growth Perspective perspectives (Costa Oliveira, 2014). For example,
The perspective requires to elucidate meeting cus- the internal business perspective is in a positive rela-
tomers' expectations, enhancing business process and tionship with customer perspective. As while the
reaching financial targets for the whole organization. quality of products and services, lead time, produc-
The learning and growth perspective of the BSC tivity and efficiency are made better, customer satis-
focuses on enhancement and transference of knowl- faction indicators become better (Kaplan and Norton,
edge of the organization, beginning from the hiring 1992). Improving the satisfaction of employee re-
process of a worker, training, drawing and holding sults in an increase in customer service quality, re-
46 Irem Kefe

sponsiveness, productivity, and efficiency (Naraya- indicators. In terms of the whole organization, the
namma and Lalitha, 2016). BSC clarifies that how vision should be made recognizable and explicit to
senior management balances performance measure- form an understandable organizational culture.
ments to accomplish their strategic objectives. BSC  Stage 2 - Communicating and linking
is a guide for steering resources, clarifying and
The strategy and its objectives are clear for all de-
transmission of objectives of an organization for its
partmental and individual levels of an organization.
managers, employees, investors, and customers
A successful communication system in an organiza-
(Kaplan and Norton, 1993).
tion allows sharing of learning, abilities, and infor-
BSC ensures collaboration and good communication mation between all the levels of an organization.
between employees as well as detailed assessment
 Stage 3 - Business planning
of the four perspectives of the whole organization
(Narayanamma and Lalitha, 2016). BSC is a method In this stage, organizations put together business
for strategic implementation; thus, it deals with four strategies and financial plans. So, individual and
perspectives and their measures and assessment. departmental objectives are identified with regard to
If results are either positive or negative in an unex- this collaboration. Individual objectives show the
pected sort of way, the BSC should consider and contributions from individuals to achieve the strate-
check the activities under the control of the perfor- gic objectives of the whole organization.
mance of the organization (Costa Oliveira, 2014).  Stage 4 - Feedback and learning
Implementation of the BSC consists of four stages Companies become aware of the strategic learning at
(Kaplan and Norton, 2007; Costa Oliveira, 2014), as this stage. The progress is continuous. The gathering
mentioned below: of information in the whole company should be iden-
 Stage 1 - Convert the vision to the strategy tified on the basis of certain rules that depend on
of the business performance measures and targets belonging to each
Vision is converted to a strategy. Then, the strategy perspective.
should be expressed into measurable targets with

(+) return on
capital
Financial accounts employed
receivable
operating (-)
expense

(-)
customer
Customer satisfaction
(+)

Internal (+)
rework (-)
Business
Process

employee’s
Learning & morale
Growth employee’s
suggestions
(+)

Figure 2. The Cause-Effect Relationship Known as The Strategy Map

(Source: Kaplan and Norton, 2007)
 The Determination of Performance Measures by Using Balanced Scorecard Framework 47

A strategy map is defined as a strategic management sion and events, but they cannot guide on how per-
system, which includes a cause and effect relation- spectives can be improved in the organization. From
ship between the performance measures (Kopia, et. this point of view, the BSC allows an organization to
al., 2017). The strategy map generates theorized focus on both present and expected situations. Fur-
causal relationships between strategic objectives in thermore, opposite to traditional measures, the in-
order to create value in the long term (Humphreys, formation obtained from the four perspectives
Gary and Trotman, 2016). The performance ensures a harmony between external scopes such as
measures are shown up in a cause and effect rela- operating income and internal scope such as novel
tionship in the strategy map (Costa Oliveira, 2014). production process (Kaplan and Norton, 1993).
Strategy maps plan to build instructions on causal Managers can understand a development in one
connections and their statements (Barnabe and business area whether it depends on the reduction in
Busco, 2012). Fig. 2 shows the strategy maps includ- another business area in the BSC framework (Kaplan
ing the four perspectives. and Norton, 1992). Thanks to the BSC, the four per-
BSC has an important advantage as compared to the spectives are both independently and mutually re-
other performance management frameworks that it sponsible for the contribution to the relationship
ensures an overall view of four perspectives through between business long-term strategic targets and
building a causality relationship between these per- short-term activities (Kaplan and Norton, 2007).
spectives in the strategy maps (Karabay and Ku- The BSC makes mission and vision measurable.
rumer, 2012; Costa Oliveira, 2014). The strategy Strategic targets are more understandable for all the
maps let the more excellent understanding and inves- levels of organization. Achieving common objectives
tigation of cause-effect relationship between perfor- creates unity and cooperation in an organization.
mance indicators and outcomes (Barnabe and Busco, Lastly, BSC creates a strong communication network
2012). from lower level employees to senior management.
The cause-effect relationship between the four per- BSC is a useful strategic performance management
spectives is exemplified through return on capital instrument for these reasons (Quesado, Guzman and
employed (ROCE) as a performance measure in Rodrigues, 2018). The scorecard as a strategic tool
financial perspective as it depends upon increasing enables to assess how well the strategies are being
sales that are provided from the existing customers executed (Kaplan and Norton, 1996b). Managers
who have high loyalty. In this regard, customer loy- realize which areas have to be improved and meas-
alty that has an effect on ROCE becomes a perfor- ured by BSC, as well as it ensures a system of per-
mance measure in customer perspective. formance management (Narayanamma and Lalitha,
The next point is related to how does an organization 2016).
enhances customer loyalty. Accordingly, researches
on customer preferences have shown that customers 3 Research Design
attach importance to on-time delivery (OTD). Con-
sequently, the more OTD is improved, it is more Case studies are usually used for the explanation
likely that customer loyalty increases, thus, financial of contemporary research subjects and give a limited
performance measures get better (Kaplan and Nor- control over the case to the researcher. Case study
ton, 1996a). approach is useful if a research focuses on the hows
In contrast to BSC, organizations have many random and the whys in real-life events (Yin, 1994).
operational and physical measures in the traditional The case study was preferred in this study as a re-
approach. Performance measures of BSC differenti- search method since it provided detailed analysis for
ate into a few points from traditional performance a single phenomenon. The data were collected based
measures. The measures of BSC based on an organi- on interviews with managers and employees and
zation's strategic vision and objectives are deter- production and financial documents were examined.
mined in the presence of four perspectives. The diagram of the research design is shown in
Traditional measures show the results of past deci- Fig. 3.
48 Irem Kefe

Analysis of the situation of the company (mission and vision)

Determination of the links between strategic objectives

and activities by the strategy map

Design the BSC model of the company

Figure 3. The Flow of the Research Design

(Source: Author’s own research)

A descriptive case study was implemented to under- - the target amount of sales 1.250.000 ₺ in a
stand the current state of the enterprise. Data were year,
collected to show detailed internal state of the organ- - the target amount of production is 5.000 tons
ization by means of the case study research. The case in a year.
study research allowed an interview with the em-
The company has adopted a revenue growth strategy
ployees, to make observations and measurements in
within the scope of its aims. The strategy is convert-
the organization. The case study methodology was
ed into targets and measures in the four perspectives
preferred to ensure detailed information about organ-
of the BSC. The strategy map is formed concerning
izational processes.
these objectives and measures in the four perspec-
tives of the BSC. All the factors that achieve the
4 An Application in A Textile Manufacturing desired results are related to the perception of the
Company company’s customers and productivity in the produc-
tion and the employees. The strategy map gives de-
The company is a family owned business and it has tails on the linkages of cause and effect relationships
operated for 20 years. The scope of the company is between strategic objectives to show objectives
the textile manufacturing sector. The company man- in each perspective on how to support the company’s
ufactures different types of woven yarn and it sells strategy. The strategy map of the textile company is
various types of woven yarn to domestic businesses shown in the Fig. 4. The expected results that depend
producing fabrics. The mission and vision of the on causal relationship are explained below:
company guide for the BSC implementation:
 Employee loyalty is expected to increase due
 The mission of the company goes beyond world to reduction in employees’ quitting their jobs de-
standard by combining the latest technology and pending on the training of employees and consid-
qualified personnel to achieve the quality of wo- eration of the employee recommendation.
ven yarn. An increase in employee loyalty and qualification
 The vision of the company meets the expectations of employees through trainings are expected
of customers with quality production. The goals to positively affect labor performance.
of the company are divided into two sections:  More skilled staff on the technical level can make
better quality raw material purchases by better
 The Determination of Performance Measures by Using Balanced Scorecard Framework 49

valuation of quality factors in raw material pur- summarized as: if the company ensures training
chases. In addition, improvements in the mainte- for its employees, more qualified employees provide
nance process of production machinery are higher performance of labor, shorter and more quali-
expected with technically better trained person- ty maintenance duration. By means of training
nel. Decreases in the number of defective prod- the personnel, the expected improvements in internal
ucts and product delivery time are the results processes result in decreasing the number of defected
of improvements in the maintenance of the pro- products, customer complaints, delivery time, and
duction machinery, labor performance, and quali- increasing customer satisfaction and customer num-
ty of raw material. bers in the customer perspective.
 Reducing defective production as a result of im- Finally, improvements of customer perspective such
proving labor performance and quality of raw ma- as increasing customer numbers, customer satisfac-
terials positively affects the production costs and tion creates a positive result in financial perspective
the number of returning products. Improvements due to the increase in sales and profitability. All ob-
in production costs have positive effects on the jectives of all perspectives support the mission and
increase in revenue per product and profitability vision of the company. Briefly, the improvements
of sales. of product quality, customer numbers, production,
 Improvement in production quality contributes and sales amount is required for achieving the mis-
to customer satisfaction and increases the dura- sion and vision of the company.
tion of business connection with the same cus- Initiatives show whether the company reaches its
tomers. The long term business relationship with targets within the BSC strategy. Furthermore, initia-
the same customers restricts the type of yarn be- tives enable to determine the proper course of action,
ing sold and produced. Because each customer objectives for four perspectives of a company in any
of the enterprise continuously works with the sector (Costa Oliveira, 2014). In Table 1, the BSC is
same type of yarn, therefore, customers' orders found compatible with the aims of the strategy map
do not change. Thus, reducing the frequency in Fig. 4.
of adjusting of the production machines accord-
Improving the objectives of each perspective has
ing to the demanded type of yarn avoids interrup-
a positive effect on other perspectives. Fig. 4 is
tions in production.
summarized as: if the company ensures training
 Reductions in delivery times and increasing the for its employees, more qualified employees provide
duration of business connection with customers higher performance of labor, shorter and more quali-
have a positive impact on customer satisfaction. ty maintenance duration. By means of training
The development of customer satisfaction are the personnel, the expected improvements in internal
provided by decrease in complaints and leads processes result in decreasing the number of defected
to an increase in the number of customers. products, customer complaints, delivery time, and
 The increase in the number of customers contrib- increasing customer satisfaction and customer num-
utes positive effects on the sales amount. In this bers in the customer perspective.
case, the profitability of sales increases and the Finally, improvements of customer perspective such
overall profitability of the company increases. as increasing customer numbers, customer satisfac-
As a result, the increase in profitability positively tion creates a positive result in financial perspective
affects the growth and sustainability of the com- due to the increase in sales and profitability. All ob-
pany. jectives of all perspectives support the mission and
All these relations are shown in Fig. 4 through the vision of the company. Briefly, the improvements
strategy map as follows. of product quality, customer numbers, production,
Improving the objectives of each perspective has and sales amount is required for achieving the mis-
a positive effect on other perspectives. Fig. 4 is sion and vision of the company.
50 Irem Kefe

Sustainability (+) (+)

The growth
of company Profitability
CIAL

(+)

(+)
Profitability on sales
Sales amount
(+)
(+)

The number (+)

of customers
(-)
(+)
The number of
(+) The customer
customer complaints
CUSTOMER

satisfaction Delivery time

(-)
(+)
(+)

The number of
returning products
Revenue per
products
The duration of (-)
(+)
business connection (-)

The number (-)

(-) of defective (-)
INTERNAL BUSINESS PROCESS

The frequency products Manufacturing

of changing yarn (-) costs
(+)
(-)
(-)

The performance
(+)
of labour

(+)
The quality of
The maintenance raw material
(+)
quality and duration

(-)

Employee
loyalty
L&G

(+) Employee
Training (+)
suggestion
employee

Figure 4. The Strategic Map of the Textile Company

(Source: Author’s own research)
 The Determination of Performance Measures by Using Balanced Scorecard Framework 51

Initiatives show whether the company reaches its sector (Costa Oliveira, 2014). In Table 1, the BSC is
targets within the BSC strategy. Furthermore, initia- found compatible with the aims of the strategy map
tives enable to determine the proper course of action, in Fig. 4.
objectives for four perspectives of a company in any

Table 1. The Textile Company Balanced Scorecard

(Source: Author’s own research)

THE BALANCED SCORECARD OF THE TEXTILE COMPANY

OBJECTIVES MEASURES TARGET INITIATIVES

Profitability Net profitability / Sales >4

410 tonne
The percentage of increase
Sustainability yarn sales
FINANCIAL

in sales
in a month Financial
Cost of goods Indicators
Inventory Turnover Rate sold/Average inventory last 7 > ITR > 4
2 months
Current assets/Short term
Liquidity <2
liabilities
Returning products/Total
Reduce in Returned Products <%2
sales
Increase in Duration
Period of offered service The amount
CUSTOMER

of Business Connection with > 5 years

to customers of sales based
the Customers
on customers,
Increase in Customer Numbers Total customers > 35 products,
and location
Customer Complaints Number of complaints <5
∑(Delivery date - order
Delivery Period < 20 days
date)/(Total order)
Reduce Percentage Defective units/Total pro- Defective
of Defective Products duction units < %0.5
Average maintenance time Number of
Frequency of Maintenance
INTERNAL BUSINESS PROCESS

(day) orders + 5
Total time of interruption
Reduce Interruption
in production/Total produc- < % 6.3
of Production
tion
Ability to keep
Duration of break- production
The Period of Maintenance <%1 at 97% capacity
downs/Total work hours

Increase in Production Ratio of capacity utiliza-

> % 95
Capacity tion

Labor Costs Labor costs/Total unit costs <%2

Material costs/Total unit

Cost of Raw Material < % 90
cots
52 Irem Kefe

Table 1. The Textile Company Balanced Scorecard (cont.)

(Source: Author’s own research)

THE BALANCED SCORECARD OF THE TEXTILE COMPANY

OBJECTIVES MEASURES TARGET INITIATIVES

Increase in Training Time

Time spent 5 hr/month
for White Collar Worker
LEARNING & GROWTH

Increase in Training Time

Time spent 5 hr/month Training all staff
for Blue Collar Worker
about BSC
Absent hours/Total work- and creating a
Reduce in Absenteeism < % 0.4
ing hours harmony between
finance, market-
The number of work acci-
Reduce in Work Accident 0 ing, and produc-
dents
tion
Number of workers quit-
Reduce in Labor Turnover
ting their jobs/Total work- <%5
Rate
ers

The measures contained in the BSC refer to the val- to achieve objectives of the internal process.
ues that these activities should meet in order to For this reason, the amount of defective produc-
achieve their objectives consistently with the mission tion should keep below 0.005% of the total pro-
and vision of the enterprise. Table 1 is explained as duction. The frequency of regular maintenance
follows: should be carried out every five days in which
 The financial performance measures in the BSC added the number of orders. Interruptions in the
are based on financial ratios. The profitability, production period should not exceed 6% of the
stock turnover rate and liquidity values are de- total production. The maintenance time should be
termined according to the averages of real sector less than 1% of the total operating time. The ca-
statistics of the National Central Bank. The pacity utilization rate should be above 95%.
amount of sales growth target is related to the The proportion of raw material and labor costs
amount of increase in the production target of the within the unit product costs should be moni-
company. tored.
 Customer performance measures are determined  In terms of learning and development perspective,
based on the customer, region and product variety white-collar employees should be trained on fi-
of the sales volume. The possibility of achieving nancial analysis, financial statements and report-
of goals increases, as long as the company pro- ing in average 5 hours per month, while blue-
vides a product returns rate that is less than 2%, collar workers are trained on the work plan,
the total number of customers is over 35, the total maintenance, repair, and other technical issues
number of customer complaints are under 5 and in the same period. In terms of improving labor
the period of product delivery is below 20 days. productivity and employee loyalty, the organiza-
 The internal processes perspective includes tion should ensure that avoiding work accidents,
low of absenteeism and labor turnover rates are
measures for improving the production process.
important issues to achieve strategic goals.
The production capacity should be 97% in order
 The Determination of Performance Measures by Using Balanced Scorecard Framework 53

5 Results and Discussion creasing the defects in the production in the internal
processes perspective, the increase in labor produc-
This study has revealed how to determine the proper tivity, the increase in the quality of raw materials and
measures to be taken in order to reach the objectives the improvements in the production costs are target-
of the company in line with its mission and vision ed.
and to evaluate the contribution of these activities 4) The Learning and Growth Perspective: Employ-
to the objectives. The effects of activities on the ob- ees whose suggestions and ideas are regarded and
jectives are as follows in the four perspectives of the who can improve themselves through the given train-
BSC: ing increase their loyalty to their jobs. By increasing
1) The Financial Perspective: Increasing sales and employee loyalty, the company aims to reduce
subsequently increasing profitability are the primary workplace accidents by reducing absenteeism and
determinants. It is expected that the number of sales training.
increases by new customer acquisitions and with the These inferences are based on the strategy map.
increase in the duration of business connection with In addition, the effects of the BSC-based perfor-
the current customers. The rise in sales affect mance management on employees and management
the inventory turnover rate positively and the in- has been observed in the study. As a result of the
creased liquidity positively contributes to solvency. BSC application, these results were achieved in the
This situation contributes to the overall profitability textile company as follows: It created a common
of the business and enables the company to continue awareness among production, marketing, human
its growth and sustainability. resources, finance and management departments and
2) The Customer Perspective: It is possible to sum increases coordination within the organization.
up the expected improvements within the framework The BSC enabled organizations to measure its strat-
of objectives and measures of learning and growth egies. It enabled the total performance of depart-
perspective, as well as the effects of developments ments and the complete organization to be evaluated
in this perspectives on internal processes, customers in a short time. It enabled all employees to take re-
and financial perspectives as follows: improvements sponsibility for determining the current situation
in raw materials and production processes are ex- of the processes and achieving the goals. The effi-
pected to reduce the number of defective products ciency of the meetings increased by ensuring that the
and decrease the number of customer complaints. corporate meetings were more effective and result
The decrease in the number of rework, lead time and oriented.
production interruptions are expected thanks to high-
quality raw materials and more skilled labor. It is 6 Conclusion
aimed to increase the duration of business connec-
tion with the current customers and acquire new Unlike the traditional performance and strategic
customers with the expectations that these improve- management systems, the scorecard is used as a
ments affect customer satisfaction positively. communication, information, and learning system by
3) The Internal Business Process Perspective: managers. Thus, the BSC is a useful approach for
Trained blue collar workers existing in the produc- gaining competitive advantages to ensure under-
tion process provide results that increase labor per- standable long-term strategic targets (Kaplan and
formance and result in a decrease in defective Norton, 1996a). BSC is an effective way to adopt
production. Appropriate raw material selection in- the organizational culture, create a communication
creases the quality of raw materials. Waste of time link between strategic objectives and individual and
due to low-quality materials, maintenance, rework departmental targets in a company. It is essential
in the production process are eliminated as a result to form a management framework that enables
of training of employees. As a result of having to incorporate a variety of departments and functions
trained staff, the machine maintenance process and of an organization, advantages in the gathering
quality are expected to improve. As a result, by de-
54 Irem Kefe

of timely and relevant information, generating and to measure the impact of these activities on the
collecting data (Costa Oliveira, 2014). achievement of the objectives. In this context,
In this study, a performance improvement strategy the BSC approach has enabled the use of non-
in the BSC framework is determined. It provides financial indicators as well as the use of financial
the following findings: indicators as a measure of reaching the objectives
of the enterprise. The reported findings were evalu-
 Firstly, the strategy map was used to establish the
ated at monthly meetings and a decision was made
relationship between the company’s objectives
on whether or not to change the objectives. Due to
and activities. The strategy map has enabled the
the nature of family companies, the fast and easy
establishment of cause-effect relationship be-
decision-making process has increased the coordina-
tween the company's objectives and activities.
tion within the organization and accordingly facili-
In order to reach the objectives based on the mis-
tated the implementation and adaptation of the BSC.
sion and vision of the company, the strategy map
has determined the concerted activities in the four The study has some managerial and practical impli-
perspectives and how to develop these activities cations. These managerial implications are as fol-
in line with the objectives. In this respect, it has lows: Before the application of the BSC, the
made an inference that strategy maps are an ef- managers of the company focused on financial ob-
fective approach in determining the relation of ac- jectives and financial performance. The application
tivities with targets and their contribution to the was noticed that inefficiency areas related to opera-
objectives in the context of cause and effect rela- tional processes and employees. Then non-financial
tions before determining financial and non- measures were included in performance evaluation.
financial indicators. The non-financial measures give an idea about how
to evaluate the efficiency of top management, em-
 Secondly, it was examined how measures were
ployees, and operational activities. The coordination
determined in the BSC approach. The mission
of departments was improved. In addition, the corpo-
and vision of the company helped to determine
rate meetings were more efficient since discussions
the priorities and targets. These targets and priori-
depended on causes and effects of the measurement
ties enabled the determination of what should be
values. The strategic communication between top
done in each perspective. So, the targets were ex-
managers and employees became more facilitated
pressed with measures to contribute to achieving
and effective.
the mission and vision in the four perspectives
of the BSC. The practical implications of the study are as fol-
lows: This study examines the criteria of selecting
The financial measures were determined with refer-
measures for performance measurement in the BSC
ence to the reel sector average of National Central
framework. The BSC consists of four perspectives
Bank based on textile products. Customer measures
with twenty-one measures. Quality of products, qual-
were determined by the target sales amount based on
ified labor and technological improvements in opera-
the customer, product, and region. Internal process
tion processes are emphasized based on the mission
measures were based on the targeted production
and vision of the enterprise. Hence, activities and
capacity.
measures were revised as per strategic objectives
The learning and growth measures were aimed at depending on the mission and vision of the company.
improving the quality of workforce and improvement The situations making the labor inefficient were
of other perspectives by aiming to increase the skills determined as absenteeism, high labor turnover rate
and loyalty of employees. Lastly, it was examined and low qualified employees. The situations making
how the BSC was structured to achieve strategic operations inefficient were determined as negative
goals in a medium-size yarn manufacturing compa- impact on the profitability of higher raw material and
ny. Following the identification of the activities to be labor costs, long maintenance and repair duration,
carried out to achieve the objectives, financial indi- defective production and interruption of production.
cators and non-financial indicators were determined Focusing on these areas and observing the criteria
 The Determination of Performance Measures by Using Balanced Scorecard Framework 55

carefully contributed to the improvement of sales vista Contabilidade & Finanças, 27(72), pp.320-
by supporting customer expectations, and thus, con- 333.
tributed positively to the profitability of the compa- [3] Barnabè, F., Busco, C., 2012. The Causal Rela-
ny. tionships between Performance Drivers and Out-
The BSC enables organizations to understand what comes: Reinforcing Balanced Scorecards'
their priorities are within the framework of their Implementation through System Dynamics
visions and missions and enable them to form Models. Journal of Accounting & Organization-
a strategy in this way. In this respect, the BSC differs al Change, 8(4), pp.528-538.
from traditional financial performance measurement [4] Carlström, E.D., 2012. Strategies for Change:
systems. In this aspect the BSC has two advantages Adaptation to new Accounting Conditions.
in organizations: Journal of Accounting & Organizational
Change, 8(1), pp. 41-61.
 Firstly, the BSC helps all the levels of the organi-
zation to understand the mission and vision of the [5] Chriyha, A., Beidouri, Z., Bouksour, O., 2012.
enterprise and focus all efforts on this conscious- Proposal of a Performance Model Based on the
ness. Balanced Scorecard for the Moroccan Textile
Industry. International Journal of Computer Sci-
 Secondly, the BSC seeks assessment to what
ence Issues (IJCSI), 9(5), pp.410-417
extent the use of resources of organization fulfill
the mission of the enterprise and approximate its [6] Coe, N., Letza, S., 2014. Two Decades of the
Balanced Scorecard: A Review of Develop-
vision that expresses the goals it wants to achieve
ments. The Poznan University of Economics Re-
in the future. The BSC is an approach guiding
view, 14(1), pp.63-75
the managers to assess the effectiveness of the
strategy. [7] Costa Oliveira, H.M., 2014. The Balanced
Scorecard Operating as A Risk Management
The BSC is not only limited to measurements based Tool. Review of Economic Studies & Research
on financial objectives but also emphasizes the im- Virgil Madgearu, 7(2), pp.41-57
portance of identifying non-financial values and
[8] de Andrade Guerra, J.B.S.O., Garcia, J., de An-
development of human factors. The contribution
drade Lima, M., Barbosa, S.B., Heerdt, M.L.,
of this research is to offer a proposal on how to form
Berchin, I.I., 2018. A Proposal of a Balanced
a strategy map and implement the BSC for the com-
Scorecard for an Environmental Education Pro-
pany operating in the textile industry. In addition, the gram at Universities. Journal of Cleaner Pro-
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offer practical and managerial implications for re-
[9] Dhamayantie, E. 2018. Designing A Balanced
searchers and practitioners in the textile industry.
Scorecard for Cooperatives. International Jour-
Consequently, this study would be a guide for design
nal of Organizational Innovation (Online),
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11(2), pp.220-227.
um-size businesses in the textile industry.
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