Balance Scorecard Issues - Essay Example

Mission The mission is to be the first choice in parcel delivery service among individuals and corporate houses in the chosen market. Strategy Costoptimisation Improve incidence of being the first choice for a customer Boost internal process efficiency to build business Employee orientation towards organisational mission of customer first choice Strategy map Cost optimisation Improve incidence of being the first choice for a customer Objective Efficient management of existing customer base Grow high value customer base Performance of carbon footprint scheme Improve investor confidence Measure Cost optimisation Revenue generated Carbon footprint index Net profit Objective Customer retention and attraction Timely complaint and query resolution Effective parcel tracking information Improve geographic spread through strategic global alliances Increase social-benefit oriented activity Measure Market share Customer satisfaction index Customer satisfaction index New market creation Customer awareness Boost internal process efficiency Employee orientation towards organisational mission of customer first choice Objective Pilot and launch new schemes for specific customer groups, e.g, aged, disabled, ethnic, etc. Control complaint due to loss/damage Improved customer contact for future requirements Online parcel tracking capability Decentralised decisions to improve customer issue resolution Measure Increase in new customer order volume tracked Customer satisfaction index Market share and repeat order volume Query resolution index Query resolution index Objective Secure and timely parcel collection and delivery in line with company policy Clear documentation with customer understanding ensured Reduced customer complaint for missed collection/ delayed delivery Reduced claim severity on parcel loss/damage Measure Repeat order volume Customer satisfaction index Delivery efficiency index Loss/ damage index Timeframe Milestones Q1 (Jan – Mar) 2010-11 Develop internal process book to ensure timely and secure delivery along the lines of industry best practices Develop major IT systems for enabling query resolution and tracking Design issue redress process to verify claim and address compensation issues within defined time frame Develop customer attraction and retention initiatives Creation of learning and development process framework Implementation of CSR based plans Q2 (Apr – Jun) 2010-11 Implement and weekly reporting of customer focused initiatives Fortnightly progress reports on IT system capability for query resolution and tracking Track effectiveness of decentralised decision making in enhancing service quality Commencement of online parcel tracking capacity for high value, express delivery Customer feedback on expectations versus actual experience of organisational service Customer-oriented process training for 1st batch of delivery personnel Q3 (Jul – Sep) 2010-11 Employee feedback process on changed business policy and frontline impact Commencement of local online delivery tracking systems for 100% parcel delivery Database creation to enable analysis of customer demographics for future strategic initiative tracking Report on impact of customer-oriented initiatives and repeat orders acquired Mid-year performance and status report on key business initiatives Q4 (Oct – Dec) 2010-11 Finalise priority client policies Evaluation of major L&D programs Evaluation of new internal processes on identified parameters Finalise business plan for 2011-12 What is a Balanced Scorecard? The balanced scorecard is a management system that allows you to monitor and manage organisational initiatives and performance. This method links organisational capability with its activities and results. Kaplan and Norton (1996) highlight that it: …translates a business unit’s mission and strategy into tangible objectives and measures. The measures represent a balance between external measures for shareholders and customers, and internal measures of critical business processes, innovation, and learning and growth. The measures are balanced between the outcome measures – the results from past efforts – and the measures that drive future performance (p. 10). Advantages of balanced score card approach Performance tracking Niven highlights the importance of the BSC in allowing ‘an organisation to translate its mission into concrete objectives that align all employees (2006, p. 93).’ The Balanced Scorecard is a document that integrates the vision, mission and objectives of the organisation and provides a dashboard view of the status of the many initiatives being taken towards organisational goals. The initiatives are drilled down from a larger purpose based on financial performance and customer appreciation. Initiatives that seem to go off-course, can be brought back on track with this approach. Flexibility This method allows the organisation to steer the course and make immediate changes to plans in the face of unforeseen business circumstances. The dashboard view allows the organisation to foresee chosen methods that need to change and enables immediate action. On the other hand, an organisation may devise plans to provide flexible schemes to attract different customer types. The cost versus flexibility advantage is continuously tracked and the customer is enabled to take an immediate decision regarding this strategic initiative. Providing perspective Drury (2004) points out that this approach provides a snapshot of four perspectives: the financial perspective brings out past performance while the customer perspective involves looking inward to understand the customer’s view of the company. The internal process perspective forces an external view of the impact of adopted processes and the learning and growth perspective provides a view to the future and the organisational capability in harnessing and progressing internal intelligence (p. 1005). Lag and lead measures This approach also provides the business with measures to gauge past performance and likely future performance. Lead measures should provide a prediction of lagging measures (Niven, 2006, p. 144). The combined use of these measures helps the organisation to assess the ability to tap new markets, attract the right customers, use appropriate pricing strategy and reduce claims. This in turn enables the design of suitable reward systems at all levels to tie in performance with identified objectives (Davenport and Harris, p. 63). Limitations of the balanced scorecard approach Effective strategy articulation The efficacy of the approach depends on the capability of the organisation to articulate strategy effectively and link it with measurable objectives. Strategy articulation is an art that requires the collective intelligence of the organisation to propound and buy into. Niven highlights the need for a CEO to link in the different aspects of the mission and objectives and ‘craft a story that works at two levels: entertainment and business logic (2006, p. 25).’ Poor articulation leads to low effectiveness. Davenport and Harris underscore the need to link the non-financial measures to financial ones to put a coherent case that investors appreciate ( p. 62). Cause and effect model Niven underscores that the practical application of a cause and effect model that underlies the balanced scorecard approach may not show consistent results. …’it is difficult if not impossible to prove causation between two performance measures (2006, p. 25) References Davenport, Thomas H. & Harris, Jeanne G. (2007). Competing on analytics: The new science of winning. Harvard: Harvard Business Press, Drury, Colin (2004). Management and Cost Accounting. Cengage Learning EMEA. Kaplan, Robert S. and Norton, David P. (1996). The Balanced Scorecard: Translating Strategy into Action. Harvard: Harvard Business Press Kaplan, Robert S. and Norton, David P. (2001). The strategy-focused organization: How balanced scorecard companies thrive in the new business environment. Harvard: Harvard Business Press. Niven, Paul R. (2006). Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results. For Dummies. Read More