Total Quality Management and Balanced Scorecard - A Comparative Analysis

Recent years have witnessed rising interest towards integrated performance measurement and control systems. Total Quality Management (TQM) and Balanced Scorecard (BSC) are management philosophies that have been widely discussed not only in academic world, but also in business world. The aim of this paper is to compare the contents of TQM and BSC and to build a hierarchy of concepts between these managerial terms. The goals and objectives of TQM and BSC are supposed to be quite similar. Most of the research effort will be concentrated on having a vision of possibilities to use BSC as a tool for implementing TQM. TQM is a philosophy to offer value-adding services to customers effectively and profitably. The basis for this Japanese born philosophy was created in the 1960’s. It integrates quality development in personnel motivation to promote customer satisfaction. Deming, Juran and other well-known quality authorities have published a number of articles and books concerning the implementation of these quality philosophies. BSC, introduced by Norton and Kaplan in 1992, is a performance measurement method and also a strategic management tool having four different perspectives to the success of a company. Traditionally, financial business indicators have failed to explain the good or poor situation of a company. BSC, however, also includes nonfinancial performance measures and objectives driving towards better performance. The main conclusion of the study is that both concepts can be seen as philosophies. TQM is a collection of tools surrounded by the philosophy of quality thinking. BSC is a strategic tool for strategic planning and implementation, and it is also surrounded by the philosophy of cause-and-effect –relationships. It depends on the point of view, and the extent of implementation of these concepts, which one is used to implement the other one.