BSC Flexibility and the Customer Perspectives - Essay Example

?BSC Flexibility and the Perspectives Insert Insert Insert Insert Introduction The development of the balanced scorecard (BSC) approach has been a response to the critics of the traditional ways of accounting for knowledge-based organizations. It is a strategic framework and methodology of performance measurement that focuses on the development and monitoring through a variety of performance measures (Bose and Thomas, 2007) This paper illustrates and explains flexibility in BSC and customer perspective in relation to a case study. David P. Norton and Dr. Robert S. Kaplan pioneered the approach in the 1990s. The case study is from the British Airport Authority (BAA) at Heathrow Airport’s Terminal 5 project. They termed their balanced scorecard as the T5 BSC. T5 was a performance management system based on key performance indicators and measures. This paper also compares the Norton’s BSC approach to the T5 BSC approach. T5 BSC based on 5 key performance indicators, 10 key measures, and 37 performance data. The performance indicators were selected as high-level quality indicators to drive the project’s objectives & requirements, identify the stakeholders, agreement of benchmarks, performance of inspections and test from the begin to the completion of the project. The indicators related tot the key measures gave general directions of the project through enablers, monitoring progress, or ascertaining outcomes. The performance data were the metrics that were measured for each stage of the project. Team members did this in order to monitor performance. The key measures would be regularly reported and published (Basu, Little & Millard, 2009). The main objective of any measurement system should to encourage managers and other employees to work towards implementing the organization’s strategies. Through the translation of strategy into measure of the balanced scorecard, all parties can know objectives and goals. The parties can then focus on the essential steers and work towards meeting the strategic goals (INPHASE Software (UK) Limited, 1998). Analysis (Comparison of T5 and Norton’s balanced scoreboard approaches) As discussed from the British Airport Authority (BAA) at Heathrow Airport’s Terminal 5 project, key performance indicators and key measures of the project were made to meet the requirements of the T5 Agreement and its complexity, spanning road, rail, and air constructions. The T5 balanced scorecard has incorporated the balancing principles of Norton’s balanced scorecard fours aspects i.e. learning & growth, customer, internal processes and financial. In the T5 BSC, the leading indicators are given by the benchmarks agreed & the verifications planned and work supervised. On the other, in Norton’s BSC, the leading indicators are given by learning & growth aspect. Considering the outcome indicators, the handover agreed and work complete in T5 can be related to the customer aspect in Norton & Kaplan BSC. Norton and Kaplan’s BSC aspect of internal process can be related to T5’s inspected and protected, and compliance assured measurement indicators. On further analysis, not all the measures as groups in each of T5 indicators act according to Kaplan and Norton’s BSC aspects. For example, the financial aspect relates to the total estimated cost of NCRs, a key measure of the compliance assured performance indicator. It can also be argued that the T5 KPIs and key measures have gaps related to the growth and financial BSC aspects but the assembly and manufacturing level performance indicators would not be expected to counter this. Kaplan and Norton’s Balanced Scorecard Aspects T5 Balanced Scorecard Customer Handovers confirmed RFT Closed outstanding work items Confirmed O&M manuals Confirmed Maintenance work plans Learning & growth Agreed test & inspection plans agreed Supervisors RFT-trained Financial Set Samples/benchmarks Total estimated cost of NCRs Internal processes Inspections with respect to the set benchmark & quality standards Checks confirming the protection of work NCRs that have been raised NCRs that have been closed The issued Team certificates of compliance The T5 BSC was designed to show the specific requirements of the project as enablers and at the same time reflect outcomes leading to continuous enhancement. The project team’s experience shows that the non-conformance resolution associated data was most effective in realizing the cost of poor quality, to enhance design and processes by analyzing major causes by supplier and even to attract the attention of the project board (Basu, Little & Millard, 2009). It is also important to note that individuals tend to be more focused than balanced. Most of the time, they concentrate on specific things as much as possible in order to manage them. Therefore, it is unnatural to try to create a balanced set of measures to anyone. However, this might also be disputed as individuals tend to be personally different and some of them might be more effective in focusing on various aspects than just concentrating on a limited number of aspects or issues (Rillo, n.d.). Conclusion From the case study, it can be noted that the British Airport Authority team used an improvement of the traditional approach of the balanced scorecard. It used the key performance indicators and key measure, which relate to the BSC traditional aspects. Achieving major changes especially in large organizations, often takes long to be realized. Many factors, which include the departure of key officials of the change, the cost of maintenance among others, can stagnate the change process at a point far off from completion. Thus, it can be argued that BSC can never be considered finished. This is due to the constantly changing business environment hence an organization’s BSC must be re-conceptualized regularly to show development not within the framework. The changing factors in the business environment include new competitors, customer demands that influence the organizational strategies. Changes in the business environment create challenges within the strategies hence the need for new strategies. Similarly, the measures in the BSC will need review to ensure they maintain their reflection of the stable relationships with performance. The placement of comparison around customer processes and staff performance orients organizations to successful implementation of their corporate strategies. The scorecard also helps in the translation of strategies into a set of goals and objectives as well as monitor evaluation through many performance measures. The process of strategy translation into action related to the balanced scorecard involves changing the organization’s vision into straight and understandable objectives. Some organizations have worked past the traditional BSC approach to use it as a cornerstone of new strategic performance and management systems with the potential of ensuring the organizations achieve their objectives. References Basu, R., Little, C. and Millard, C. (2009). Case Study: A fresh approach of the Balanced Scorecard in the Heathrow Terminal 5 project. Measuring Business Excellence. 13(4). 22-33. Retrieved from: http://www.perf-ex.co.uk/wp-content/uploads/2012/04/T5-case study-MBE-papaer.pdf Bose, S. and Thomas, K. (2007). Applying the Balanced Scorecard for Better Performance of Intellectual Capital. Journal of Intellectual Capital 8 (4), 653-665. Retrieved from: kmteam2.pbworks.com/f/balanced+scorecard.pdf INPHASE Software (UK) Limited. (1998). The Balanced Scorecard Information to Drive Performance. Retrieved from: www.alyousefi.com/download/scorecard.pdf Rillo, M. (n.d.). Limitations of Balanced Scorecard. Retrieved from: www.mattimar.ee/publikatsioonid/.../2004/12_Rillo.pdf Read More