Examining Balance Score Card as a Measurement of Managerial Success

Published:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Business is now getting competitive day by day and business environment is changing constantly. In this scenario if they want to be successful they have to adapt some processes and benchmarking standards to do necessary things and important decision making.

It is an evaluation process which is mostly used in strategic management. Organizations evaluate and develop plans to increase performance as per best practices mostly within their own sector.

Benchmarking is a continuous process and tool to improvement. It is providing other methods of solving problems than the usual methods and showing their effectiveness as well. Benchmarking is search of best practices of business and measurement against the best.

This then allows organizations to develop plans on how to adopt such best practice, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to challenge their practices. Benchmarking opens organizations to new methods, ideas and tools to improve their effectiveness. It helps crack through resistance to change by demonstrating other methods of solving problems than the one currently employed, and demonstrating that they work.

Benchmarking requires to identify the industry best practices which results into superior performance, its perceived value is as a continuous process of measuring against the best. Ti can be done only by the change of its current practices and business processes that a business will achieve overall effectiveness through Benchmarking. To acheive effectiveness such change requires effective leadership and decision making.

What is a Balanced Scorecard

The Balanced Scorecard (BSC) is a strategic performance management technique to find out that whether company's long term goal is matching with its short term performance or not. Here the measurement is not only concerned with the financial outcomes of the organization, but other things like operating performance, marketing performance also matters. We can say that Balance Scorecard helps organization a overall view of its business which helps it to achieve there long term goals. This then allows organizations to develop plans on how to adopt such best practice, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to challenge their practices. Benchmarking opens organizations to new methods, ideas and tools to improve their effectiveness. It helps crack through resistance to change by demonstrating other methods of solving problems than the one currently employed, and demonstrating that they work.

Because of this organizations were encouraged to find out other factors what affects its financial outcome.These process werw marketing and human resource related.

Traditional financial reporting systems describes an indication to the facts that what was a firm's performance in past and it can also predict that how it can perform in future.You can take an example that a firm can increase its current earning by reducing the service quality to the customers, but then future earnings can be negatively impacted because to reduced customer satisfaction.

In order to solve that issue, Robert Kaplan and Norton provide the Balanced Scorecard, to measure performance having not only financial measures but other business line processes also.

So, the balanced scorecard analyse the organization's strategy into four perspectives with the following:

objective measures and subjective measures perspective

internal and external measures perspective

between performance results and the drivers of future results

If any company is implementing any strategy, then it should uplift its bottom line performance as examine by the financial perspective. For example, a firm can thing to gain current benefits to reduce the benefits to its customers, but then future earnings can be negatively impacted because to reduced customer satisfaction.

In order to solve that issue, Robert Kaplan and Norton provide the Balanced Scorecard, to measure .This then allows organizations to develop plans on how to adopt such best practice, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to challenge their practices.One very important what the organizations should keep in mind that its not a short term process where results will shown so early. It is a long term process where the results may delayed also.

Balanced Scorecard Benefits

Following are the benefits of Balance Scorecard-

Strategy can be transferred into parameters which can be measured.

By this way strategy can be communicated to every one in organization.

Making compatibility between behaviour of employees.

Feedback of implementation result helps the strategic planning process.

Even in the starting Balance Scorecard was considered as a tool to measure the performance only, but in latter part it is used to communicate the organization's strategy to its internal and external customers and stakeholders.

According to the BSC collaborative, there are four barriers to strategic implementation:

Vision barrier.

Management spends too little time on strategy and too much time on short-term tactical decision making so Management barrier.

No one in the organization understands about the strategies of the organization. Most people have objectives that are not linked to the strategy of the organization that is called People barrier.

Time, energy, and money are not allocated to those things that are critical to the organization. For example, budgets are not linked to strategy, resulting in wasted resources, it is called Resource barrier.

Benchmarking using Balanced Scorecard

to use Balance Scorecard and Benchmarking to achieve desired outcome, the management should be able measure the performance of all its other activities which is related to its business.The management should know what are its most profitable businesses and where they are loosing money. For example a particular organization like LG which is in the business of producins goods like TV, refrigerator and etc., but it is not necessary that every product is earing equal revenue. No one in the organization understands about the strategies of the organization. Most people have objectives that are not linked to the strategy of the organization that is called People barrier.

Time, energy, and money are not allocated to those things that are critical to the organization. For example, budgets are not linked to strategy, resulting in wasted resources, it is called Resource barrier. Measurement of marketing performance is very crucial for the effective management of all the various business getting and retaining activities.

For better understanding and management the measures can be broken down to the individual level, group level, business level and then finally aggregated to the corporate level.

Metrics are designed to support strategies. They are carefully selected yardsticks that help in the performance measurement

"Metrics" give numerical standards against which a client's own processes can be compared. Metric benchmarks are of the form:

- finished-product first-pass yield of 97 per cent;

- scrap/rework less than 1 per cent of sales;

- cycle time less than 25 hours;

- customer lead times less than 20 days;

- productivity levels of $150,000 or more per employee; and

- plant-level ROA better than 15 per cent ("Metrics benchmark", available at: www3.best-in-class.com/bestp/domrep.nsf/).

For example, the following can be set of metrics chosen under each perspective, firm as a whole for specified target requirements:

Learning and growth perspective:

- involve the employees in corporate governance;

- inculcate leadership capacities at all levels; and

- become a customer driven culture.

Internal process perspective:

- improve productivity standards;

- eliminating defects in manufacturing;

- provide adequate technical knowledge and skill for all the levels of employees; and

- customer feedbacks to be integrated in the operation.

Financial perspective:

- about 12 per cent return-on-equity to be achieved;

- about 15 per cent revenue growth;

- about 5 per cent reduction in production cost; and

- about 3 per cent reduction in cost of capital.

Customer perspective:

- enhance market share by 5 per cent;

- about 10 per cent increase in export sales;

- obtain competitive pricing;

- increase after sales service outlets by 10 per cent; and

- to conduct face-to-face meeting with customers by organizing customer meets.

BSC not only captures the change in any one measure but also provides insight into the related changes in other perspectives. BSC, therefore helps to have an enlarged vision to the firms management as, each strategic intent will flow across all four perspectives, viz. financial, customer, internal processes, and learning and growth and the necessary impact is captured in those perspectives, respectively, and holds out the promise of improving a company's prospects of more closely matching its management's plans to its strategic goals and objectives.

Writing Services

Essay Writing
Service

Find out how the very best essay writing service can help you accomplish more and achieve higher marks today.

Assignment Writing Service

From complicated assignments to tricky tasks, our experts can tackle virtually any question thrown at them.

Dissertation Writing Service

A dissertation (also known as a thesis or research project) is probably the most important piece of work for any student! From full dissertations to individual chapters, we’re on hand to support you.

Coursework Writing Service

Our expert qualified writers can help you get your coursework right first time, every time.

Dissertation Proposal Service

The first step to completing a dissertation is to create a proposal that talks about what you wish to do. Our experts can design suitable methodologies - perfect to help you get started with a dissertation.

Report Writing
Service

Reports for any audience. Perfectly structured, professionally written, and tailored to suit your exact requirements.

Essay Skeleton Answer Service

If you’re just looking for some help to get started on an essay, our outline service provides you with a perfect essay plan.

Marking & Proofreading Service

Not sure if your work is hitting the mark? Struggling to get feedback from your lecturer? Our premium marking service was created just for you - get the feedback you deserve now.

Exam Revision
Service

Exams can be one of the most stressful experiences you’ll ever have! Revision is key, and we’re here to help. With custom created revision notes and exam answers, you’ll never feel underprepared again.