Balanced Scorecard implementation, success factors and challenges in Ethiopian financial sector. The case of Ethiopian Insurance Corporation and Commercial Bank of Ethiopia

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The purpose of the study was to assess the implementation of Balanced Scorecard (BSC) in Ethiopian Financial sector the case of Ethiopian Insurance Corporation (EIC) and Commercial Bank of Ethiopia (CBE) and thereby to see the adequacy of the procedure followed to implement BSC, identify successes and challenges and then provide recommendation. To attain these objectives, the study employed Descriptive research design. Accordingly, survey questionnaire and interview questions were administered to a sample of 351 respondents from total population of 2890, 98 (28%) from EIC and 251 (72%) from CBE. From 351 questionnaires distributed 322 of them were properly filled and returned. The questionnaires were analyzed quantitatively and qualitatively using frequency distribution, mean scores and mode with the help of Statistical Package for Social Science (SPSS). The major findings of this study indicate that the readiness for BSC design and implementation made by the sector was satisfactory. The designing phase was done properly in terms of BSC assessment, Strategic plan, Strategic objectives, Strategic map, Performance measures, and Strategic initiatives. With regard to BSC implementation phases such as automation, cascading and evaluation the sector was in poor state. The following success stories were registered: BSC Make the strategic direction clear, it helped rewarding practice to be objective, It improve Communication of strategic objective, encourage learning and continuous improvement, The strategic map makes clear the cause and effect relationship among the four perspective. Change resistance, lack of knowledge on the use and importance of BSC, insufficient participation in the process of the implementation, lack of automating and cascading BSC to individual level, Poor linking of the Performance appraisal result with reward system and recognition, lack of readiness in terms of mentality, skill and competence and negative perception toward BSC implementation were challenges during BSc implementation. It is recommended that the sector have to increase employee participation s, revise the cascaded objectives, automate the implementation process and organize discussion as well as awareness creation program. All together the organizations should allocate the necessary amount of financial and human resource to fully implement BSC throughout the sector.


A research paper submitted to Addis Ababa University, College of Business & Economics, in partial fulfillment of the requirements for the degree of Masters of Business Administration


Balanced Scorecard, Commercial Bank of Ethiopia success and challenge, Ethiopian Insurance Corporation