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Strategic Management Accounting Assignment: Developing Performance Measurement System for Westpac Bank of Australia


Task: Introduction
Strategic Performance Measurement Systems (SPMSs) have long been recognized as a crucial element for improving business performance. Maxims such as “What Gets Measured Gets Done” reflect the view that implementing appropriate SPMSs ensures that actions are aligned to strategies and objectives.

The heavy focus on traditional accounting measures within the financial services industry has been identified as the possible cause of many problems within the industry, from the cause of the Global Financial Crisis of 2007-2008 to other recent failures within the financial services sector. Poorly designed performance measurement systems that focus solely on short-term financial performance result in managers emphasizing short-term financial performance metrics, in the interest of current profitability, to the detriment of endeavors that can result in long-term benefits, including new product development, process improvement, human resource development, information technology and customer and market development. Attempting to resolve the problem by supplementing standard financial practices with additional indicators that can help a firm evaluate its long-term performance, Kaplan and Norton introduce the balanced scorecard to integrate these factors into the business performance assessment of a company.

Research Activity
The Purpose

To undertake a search of the relevant literature to determine what are the major issues related to the implementation of Strategic Performance Measurement Systems (SPMSs), such as the Balanced Scorecard (BSC), in the Financial Services Sector.

Strategic Management Accounting AssignmentTask Outline
Choose one of the major banks in Australia, discuss their current1 Balanced Scorecard and provide comprehensive analysis on:

• the benefits of BSC in reaching strategic objectives of that bank
• the issues related to implementation of the BSC in that bank
• common barriers to successful scorecard implementation in the

Financial Services sector in general. Your report should be written in fluent grammatical English. It should include a bibliography of referenced sources. Internet resources used should be acknowledged and fully referenced. All references and sources must be properly acknowledged.


As per the research on strategic management accounting assignment, the development of a strategic performance measurement system is essential in order to enhance the long-term performance of a business enterprise. Balanced Scorecard is an important approach in the strategic planning development process as it focuses on financial and non-financial performance measurement process. The current study has discussed the application of the BSC concept for developing a strategic performance measurement system of an organization. The analysis is made based on Westpac Bank of Australia, which is one of the major banks of that country. The entire study has been made in three parts including the benefits of a balanced scorecard in case of Westpac bank, issues in case of implementing the BSC approach within the organization, and barriers to the application of balanced scorecard strategy in the financial sector. Major three key barriers are discussed that have created a problem in the case of applying the BSC approach successfully in the financial service sector.

Benefits of Balanced Scorecard in case of reaching strategic objectives of Westpac Bank
Based on the financial report analysis of Westpac Bank Australia, it has been identified that service leadership and digital transformation both are key strategic objectives of the organization. The Westpac Banking Corporation wants to focus on the enhancement of customer relationship by providing high-quality personalized service. As mentioned by Mudaet al.,(2018, p.1), balanced scorecard approach is essential in case of a business entity for developingstrategic performance management system in terms of both financial and non-financial perspective. This is because strategic issues that are faced by a company can be easily evaluated based on implementing the approach of Balanced Scorecard. In case of Westpac Banking Corporation, it has been identified that the company has linked financial and non-financial measurements with strategic priorities including service leadership and developing customer relationship and it is an important benefit regarding the performance development of the company. Furthermore, it can be stated that five values of the banking organization are integrity, courage, service, one team, and achievement and these can be easily coordinated based on balanced scorecard approach. The bank has enhanced its values to the customers throughout the globe based on strategic performance development and it has benefited the organization (annual report, 2019, p.52). The balanced scorecard strategy has helped the company to enhance its communication strategy and it has increased quality of performance. According to the view of Huet al.,(2017, p.670), based on balanced scorecard approach, a company can enhance alignment between organizational structure and strategic objectives. In case of Westpac Bank, it is found that the management has focused on the identification of cause and effect relationship among various strategic objectives.

Benefits of Westpac Bank from Balanced Scorecard Approach

Figure 1: Benefits of Westpac Bank from Balanced Scorecard Approach
(Source: Developed by Author)

As mentioned by Mudaet al.,(2018, p.1332), long term financial planning is essential to a banking organization in order to ensure sustainable growth. The Financial crisis during the year 2007-2008 was the biggest failure of US banking organizations as they could not focus on the long strategic planning (Kalender and Vayvay, 2016, p.81). The approach of the balanced scorecard has helped to the Westpac Bank to achieve long-term strategic goals effectively and it has provided benefits to the organization in terms of maintaining stability in the organizational performance (annual report, 2019, p.61). Based on the consideration of balanced scorecard approach, the Westpac Banking Corporation has focused on the fulfilment of shareholders' objectives and it has enhanced the stakeholder management process of the entity. Hence, the Westpac banking organization has developed its long-term growth based on the application of balanced scorecard approach. The long-term strategic objectives are fulfilled by the bank based on two areas including focus area and modifier. The focus area has dealt with the overall financial and non-financial performance of the corporation based on standards in operating activities of banking institutions. Subsequently, the second step modifier has helped identify issues to make proper adjustments (annual report, 2019, p.61). For instance, based on overall performance evaluation, the bank has focused on the remuneration adjustment work considering institutional norms. Hence, it is clear from the analysis that a balanced scorecard approach has been implemented by the corporation systematically for overcoming issues successfully. The company has successfully maintained integrity in its financial activities by considering different factors including stakeholder management, enhancing competition level and so on.

One of the most important benefits that have been availed by Westpac Banking Corporation by applying Balanced Scorecard is the enhancement of the risk management process. The organization now focuses on short term and long term both risk management procedures for enhancing its values to the customers. The effective risk management technique has helped the management to enhance the profit position of the company in the comprehensive business world (annual report, 2019, p.48). Both financial and non-financial risk management of the corporation has helped the organization to ensure that sustainability is maintained. Based on the view of Senet al.,(2017, p. 102), it has been identified that risk management is crucial and comprehensive work for financial organizations as it enhances return to the investors. Considering the Balanced Scorecard Strategy, Westpac banking corporation has enhanced its performance as competitive environment has been properly evaluated. Hence, it is clear from the overall discussion, it is completely clear that the Westpac Banking Corporation has enhanced its banking integrity and customer value successfully considering the BSC approach. Actually, the Balanced Scorecard policy has helped the company to ensure that the strategic performance measurement system of the organization has been developed.

Issues related to the implementation of Balanced Scorecard in Westpac Bank
As mentioned by Georgiev,(2017, p.51), identification of key performance indicators is a major challenge in case of implementing the approach of balanced scorecard successfully. The reason is balanced scorecard cannot enhance strategic performance if standards are not properly identified. KPIs are standards based on which key issues in organizational performance have been detected. In case of Westpac Banking Corporation, it has been identified that the management has faced an issue with respect to the identification of key performance indicators including ratios, changes in equity, and so on. As the financial reports of the corporation are too much complicated, the management has faced the problem of identifying actual standards. The organization has developed its strategic planning based on dealing with outstanding issues and structural cost reduction process. Considering appropriate key performance indicators, an organization can easily focus on strategic priorities.

The second major issue that has been faced by the Westpac Bank is focusing on risk management planning.As KPI’s are not properly identified at the initial stage, it has hampered financial and non-financial risk management plan. As asserted by Martini and Suardana,(2019, p.11), long term risk management planning is essential to a business enterprise for ensuring that strategic management performance has been enhanced. Continuing along the same line, Marimon and Malbasic, (2019, p.39), have stated that long-term risk evaluation is the important factor for developing operating performance quality of a business entity. The corporation has faced a comprehensive situation, as the intensity of risks is not properly recognized. The reason is proper comparisons of actual performance with standards are not properly made at the preliminary stage. Financial experts have focused on the different evidence based analysis and it has helped the management to make a long term risk management planning.

Benefits of Westpac Bank from Balanced Scorecard Approach

Figure 2: Issues faced by Westpac Bank in case of implementing Balanced Scorecard
(Source: Developed by Author)

The third and last major issue that has been identified in case of Westpac Bank is management could not review the financial planning properly and this is why at the beginning stage the application of balanced scorecard could not provide success to the entity. As mentioned by Sánchez-Márquezet al.,(2018, p.171), the balanced scorecard approach is needed to be implemented based on proper review and if the review cannot identify key areas or any fault in then planning, the strategy can never provide success. Hence, it can be clearly stated that the approach of balanced scorecard can be effectively implemented if management can make proper planning. After facing this problem, the management team has considered two steps including focused area and modified areas for ensuring that organisation performance is evaluated and properly controlled. As given by Pradhan and Murari, (2019, p.53), the application of balanced scorecard is a comprehensive process and it cannot provide success if proper planning has not been made. Considering this opinion, it can be said that the top-level management has tried to review the planning properly but lack of understanding of complicated overview of the plan has created the problem in terms of review process. Hence, proper knowledge is essential for reviewing a plan effectively as it helps to identify whether the planning is needed to be developed further or not. The Westpac Bank is one of four major banks in Australia and the organization has enough resources. Based on effective human resource utilization the proper review of the plan has been done by the management.

Among the three issues that are faced by the management of Westpac Banking Corporation to implement the balanced scorecard successfully, the first issue is most important. The reason is the identification of key performance indicators is the primary objective of balanced scorecard approach. This is because considering KPIs; the actual situation of an organization has been properly evaluated (Quesado et al., 2018, p.191). The main issue has been found in KPI selection in terms of financial and growth perspective. Identification of proper evidence regarding performing and non-performing assets of the Bank has created a complicated situation and management has faced a problem. The Westpac bank has group operations including banking and other financial services, which have created complicacy in the identification of KPIs. The complicated loan areas are reviewed properly for identifying the repayment capacity of customers. Hence, it has been identified that the banking operation of the Westpac group is comprehensive due to a huge customer base and it has created problem in the strategic performance-management-system development process.

Common barriers in case of successful scorecard implementation in the financial service Sector
According to the view of Oghuvwu and Omoye, (2016, p.69), focusing on financial performance analysis is the right step in the age of industrialization but in order to evaluate overall organizational competitiveness, it is important to focus on the non-financial performance evaluation process also. The customer perspective and internal process perspectives are vital areas in balanced scorecard and these can be effectively evaluated considering both financial and non-financial analysis. However, in case of the financial service sector some barriers have been identified in case of successful implementation of balanced scorecard strategy.

Limited understanding of different financial assets
According to the view of Malagueñet al.,(2018, p.241), it has been identified that financial assets are having different varieties including certificate of deposit, bond, stocks and derivatives. These assets are used in different purposes in financial sectors and hence, proper knowledge of understanding is essential to evaluate the performance of different financial assets. A company needs to recruit financial experts for identifying assets properly and it is a difficult process. In major cases, key performance indicators cannot be implemented properly as employees have a lack of proper knowledge to evaluate asset performance. Furthermore, it has been identified that identification of KPIs in case of tangible assets is easy but in case of intangible assets, KPI indicator identification is a comprehensive process. This is because, in case of intangible assets, performance evaluation is needed to be made properly based on an appropriate concept (Reilly and Schweihs, 2016, p.4). For instance, goodwill is an intangible fixed asset but there are several techniques of the valuation of goodwill. It is essential to identify the approach that has been adopted by a company appropriately. Proper knowledge is essential for identifying the asset valuation techniques accurately but lack of this knowledge balanced scorecard strategy cannot be successfully implemented in financial service industry. In case of Westpac Banking Corporation, it is identified that management focuses on the recruitment of specialized experts for ensuring quality of performance evaluation. This problem can be considered as a key barrier in case of implementing balanced scorecard approach.

Lack of support from executive lave due to high cost
As opined by Khaled and Bani-Ahmad, (2019, p.21), the top-level management needs to focus on the appropriate initiative in order to implement balanced scorecard approach successfully. The financial service sector operates based on risk management techniques and this is why the financial performance of this sector is always fluctuating. In major cases, it has been identified that except multinational and large organizations, other financial service organisations do not want to focus on the additional cost, and implementation of balanced scorecard method needs a proper budget. Hence, in order to control cost small and medium-sized organizations in financial service sector do not want to emphasize the application of the balanced scorecard technique. As mentioned by Martini and Suardana, (2019, p.11), a balanced scorecard helps to ensure that an organization focuses on the sustainable development process but the budget is essential to implement the strategy successfully. From this view, it is completely clear that financial assistance and fund management both are essential to the institutions of financial service industry. In case of Westpac banking organizations, it has been identified that the management focuses on the budget for implementing balanced scorecard approach successfully. The high cost does not matter as balanced scorecard strategy helps to enhance the strategic performance development of a business enterprise in the competitive world. Hence, high cost of implementing the strategy is another major barrier regarding implementing BSC in the financial service sector.

Complicacy in the asset performance measurement process
According to the view of Georgiev, (2017, p.35), organizations in the financial service sector faces problems in case of asset valuation process. Furthermore, proper tally can be made between assets and liabilities. For instance, in case of loan providing process, the liquidity performance measurement is an important aspect but for evaluating the liquidity, it is essential to gather proper knowledge in respective field. Based on the view of Woodhouse, (2019, p.105), financial asset evaluation process has different techniques, and hence, it is essential to identify an appropriate technique considering the existing situation of the organization. For instance, there are different techniques of share valuation and hence, the right approach consideration is essential for ensuring the appropriate valuation. These valuations are considered in the application of the balanced scorecard approach. Hence, complicated areas of financial asset valuation are important to identify properly as it helps to enhance the strategic performance of an organization. Based on the analysis of asset performance areas, the measurement can be made considering KPIs. In this context, it can be stated that Westpac Banking Corporation considers financial asset valuation properly considering an appropriate method for comparing the asset valuation with KPIs and the actual value can be identified with respect to the current market situation. Hence, in order to implement balanced scorecard appropriately in financial service sector, asset-valuation knowledge is important.

Based on the above discussion, it has been identified that the management of Westpac bank has adopted effective planning for implementing the balanced scorecard approach successfully within the organization. The BSC strategy has helped to enhance the quality of performance of Westpac bank but the organization has faced barriers in case of implementing the strategy successfully at the beginning stage. Asset valuation problem, high cost, and lack of financial evaluation knowledge are basic three barriers in case of applying the approach of the balanced scorecard in the financial sector.

annual report, 2019. Available at: [Accessed 24 April 2020].

Georgiev, M., 2017. The Role of the Balanced Scorecard as a tool of strategic management and control. Journal of Innovations and Sustainability, 3(2), pp.31-63.

Hu, B., Leopold-Wildburger, U. and Strohhecker, J., 2017. Strategy map concepts in a balanced scorecard cockpit improve performance. European Journal of Operational Research, 258(2), pp.664-676.

Kalender, Z.T. and Vayvay, Ö., 2016. The fifth pillar of the balanced scorecard: sustainability. Procedia-Social and Behavioral Sciences, 235, pp.76-83.

Khaled, S.B. and Bani-Ahmad, A., 2019. The Role of the Balanced Scorecard on Performance: Case Study of the Housing Bank for Trade and Finance. International Journal of Economics and Finance, 11(2), pp.17-26.

Malagueño, R., Lopez-Valeiras, E. and Gomez-Conde, J., 2018. Balanced scorecard in SMEs: effects on innovation and financial performance. Small Business Economics, 51(1), pp.221-244.

Marimon, F. and Malbasic, I., 2019. A Simplified Balanced ‘Balanced Scorecard’. Strategic management accounting assignment European Accounting and Management Review, 5(2), pp.38-60.

Martini, L.K.B. and Suardana, I.B.R., 2019. Company performance measurement applying balanced scorecard approach. International journal of social sciences and humanities, 3(1), pp.7-13. Muda, I., Erlina, I.Y. and AA, N., 2018. Performance Audit and Balanced Scorecard Perspective. International Journal of Civil Engineering and Technology, 9(5), pp.1321-1333.

Muda, I., Roosmawati, F., Siregar, H.S., Manurung, H. and Banuas, T., 2018, January. Performance Measurement Analysis of Palm Cooperative Cooperation with Using Balanced Scorecard. In IOP Conference Series: Materials Science and Engineering (Vol. 288, No. 1, pp.1-6). IOP Publishing.

Oghuvwu, M.E. and Omoye, A.S., 2016. Mergers, acquisitions and corporate performance: The balanced scorecard approach. Accounting and Finance Research, 5(4), pp.63-75.

Pradhan, A. and Murari, K., 2019. Performance Evaluation of Banks in Bhutan: An Application of Balanced Scorecard Approach. IUP Journal of Bank Management, 18(1).

Quesado, P.R., Aibar Guzmán, B. and Lima Rodrigues, L., 2018. Advantages and contributions in the balanced scorecard implementation. Intangible capital, 14(1), pp.186-201. Reilly, R.F. and Schweihs, R.P., 2016. Guide to intangible asset valuation. John Wiley & Sons.

Sánchez-Márquez, R., Guillem, J.A., Vicens-Salort, E. and Vivas, J.J., 2018. A statistical system management method to tackle data uncertainty when using key performance indicators of the balanced scorecard. Journal of Manufacturing Systems, 48, pp.166-179.

Sen, D., Bingol, S. and Vayvay, O., 2017. Strategic enterprise management for innovative companies: The last decade of the balanced scorecard. International Journal of Asian Social Science, 7(1), pp.97-109.

Woodhouse, J., 2019. What is the value of asset management. Infrastructure Asset Management, 6(2), pp.102-108.

Appendix 1

Benefits of Westpac Bank from Balanced Scorecard Approach

Key sections of Balanced Scorecard of Westpac Group (Bank)
(Source: annual report, 2019)


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