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The Relationship between Balanced Scorecard Characteristics and Managers' Job Satisfaction

2010; Pittsburg State University; Volume: 22; Issue: 2 Linguagem: Inglês

1045-3695

Laurie L. Burney, Nancy J. Swanson,

Financial Reporting and Valuation Research

A primary tenet of principal-agency theory is that firms must delegate decisionmaking to managers. However, the manager's actions are seldom directly observable by the firm. Therefore, firms develop performance measurement (PM) systems to not only evaluate performance, but to help align managerial actions with the goals of the firm. Traditionally, however, these systems have extensively relied on financial measures, which provide incentives for managers to make decisions that focus on short-run performance (Butler et al., 1997; Kaplan and Norton, 1996). This short-run emphasis has been an ongoing concern in the management accounting literature (for example, Eldenburg and Wolcott, 2005). To help mitigate this short-term focus, Kaplan and Norton (KN) (1992, 1996) proposed an alternative PM system, the Balanced Scorecard (BSC). Successful implementations of the BSC have been reported by management accounting practitioners (for example, Bitchard, 1996; Lyons and Gumbus, 2004; Nankervis, 2006). Several preliminary empirical studies have addressed BSC issues. For example, Lipe and Salterio (2000) find that managers rely more on common (i.e., measures that are the same across different divisions) versus unique performance measures (i.e., measures distinctive to a particular division). Then, Libby, Salterio and Webb (2004) show that accountability mitigates this focus on common measures. Lipe and Salterio (2002) establish that the use of the BSC results in different evaluations of performance than when relying on alternative systems. Other studies have demonstrated that managers fail to understand the cause and effect relationships inherent in the BSC concept (i.e., Banker et al., 2004; Malina and Selto, 2001). Burney and Matherly (2007) provide evidence that the comprehensiveness of the PM system is associated with employee outcomes through the availability of job-relevant information. Job-relevant information and role stress are found to mediate the relation between the extent to which the PM system is linked to organizational strategy and employee performance (Burney and Widener, 2007). It is generally recognized that a primary goal of PM systems is to promote goal congruence and influence managers' behavior (Otley, 1999). Thus, understanding the impact that PM systems such as the BSC have on managers' action choices is integral to the development of systems that will effectively attain organizational goals. Given the importance of PM systems' influence on managers' behaviors, additional research about BSC issues is needed. This study, based on survey data collected from accounting managers in BSC firms, focuses on the BSC's effect on an individual manager's job satisfaction and increases understanding of the BSC's effectiveness within firms. Specifically, this study extends the BSC research by investigating whether two BSC characteristics--the perspective framework and the strategy link--influence managers' behavior. First, results from this study show a strong, positive relation between job satisfaction and managers' perceptions of the strength of the linkage between performance measures and organizational strategy. Perhaps managers who use a BSC that establishes a strong connection with strategy are better informed about the actions desired by the organization and thus face less ambiguity at work. As a result, the managers would experience higher levels of job satisfaction. Second, this study finds that the inclusion of non-financial measures in some BSC categories is positively related to managers' job satisfaction and, therefore, may encourage a long-term decision-making focus. Another contribution of this study is the development of a decision rule to be used when applying survey methodology that allows the researcher to identify organizations that use a BSC. The next section describes the BSC characteristics in this study and reviews the relevant literature. Then, job satisfaction is described and the formal hypotheses are presented. …