Applying Balanced Scorecard To Improve Satisfaction †Free Samples

Question: Discuss about the Applying Balanced Scorecard To Improve Satisfaction. Answer: Introduction Survival of a business for a long term period is necessarily reliant upon satisfying market necessities by means of long term process of creation of value. In itself, traditional performance enumeration systems such as return on investment (ROI) have been criticized to be very intently concentrated on pecuniary figures as well as operational level performance such that they often fail to take into account organizational success. On the other hand, the balanced scorecard appeals to managers to carry out a commitment to establish a wide array of dimensions away from narrowly concentrated financial metrics. In essence, the balance scorecard can in consequence act as dials on specific dashboards and direct businesses into higher amount of profitability as managers position themselves to serve their employees better. Review of the trend Nowadays, stiff competitiveness in the market and globalization can be considered as the major challenges in majority of the corporations and management of the firm are seeking several modern approaches to acquire more competitive benefits. In case of corporations are to thrive and at the same time prosper in highly globalized competitive arena then they need to use enumerations and systems of management based on their specific strategies and capabilities (Hoque, 2014, pp.33-59). Ironically, majority of corporations have the inclination to ignore issued such as customer satisfaction, competencies of internal processes and capabilities of organization whilst focussing only on enumerating financial circumstances. Taking into account these state of affairs, issues namely strategic management, benchmarking and use of balanced scorecard become significant. During the past 10 years, since the period of advent of particularly balanced scorecard several alterations have been introduced to ma inly the physical design, procedures of design as well as utility that are utilized to generate the specific tool within corporations (Gibbons, Robert and Kaplan, 2015, pp.447-451). A survey was conducted by taking 174 senior management personnel from mainly German speaking nations, such as Austria, Germany as well as Switzerland replicated that around 26% of the corporations utilize the balance scorecard in a restricted manner at the business unit phase or else utilize the incomplete version of the same (Hansen, Erik and Stefan Schaltegger, 2016, pp. 193-221). Essentially, the chain of cause and effect is seen to be present in the 50% of the user corporations. Over and above two thirds of the firms utilizing the same can be observed to have related their structure of incentive along with system of compensation. A survey undertaken by Joshi made out that an extensive utilization of various financial dimensions namely return on investment, analysis of variance as well as budgetary control in the process of evaluation of performance (Kerai, Sunita and Ahmed Saleh, 2017, p. 27). Restricted emphasis was positioned on satisfaction of customers together with other non -financial dimensions whilst analysing firms performance. The results of a survey conducted with 579 firms in India including 4 transnational firms revealed the issue associated to designs along with application of performance scorecard. The outcomes of the study replicate that adoption of BSC in particularly corporate India compared desirably with United States (Lin et al., 2016, pp. 1-12). Current issues in the environment Based on study of the current environment it can be said that traditional method of performance evaluation and strategic management used in numerous corporations faces certain limitations (Martello et al, 2016, p. 61). It can be observed that it becomes quite difficult to provide satisfactory definition of particularly profit as well as investment. Essentially, profit has several themes namely profit before interest and tax (PBIT), profit after interest and tax (PAT), profit after deduction of various costs and controllable profit and many others. Again, companies utilizing ROI in diverse corporations, it is imperative that firms employ identical accounting policies and mechanisms (Kang et al., 2015, pp. 124-134). In addition to this, utilization of ROI might influence management to choose investment with superior rate of return. However, the investments that would lessen the overall ROI could on the other hand enhance the value of the overall business. Current Tools The current tool under consideration is the balanced scorecard. In essence, the balanced scorecard can help in providing broad consideration of diverse business aspects, counting financial as well as human aspects. On the other hand, this can be utilized as a tool for employee tracking tool rather that in turn can help in analysis of company performance. This tool takes into account the way each section/division affects another division, in place of concentrating on a specific aspect of performance (Shen et al., 2016, pp. 127-139). Definition of the technique The current study identifies the innovative modern system of balanced scorecard that can help in overcoming the issues encountered by the traditional systems. Balance scorecard can be considered as a performance dimension that can be utilized in the area of strategic management to recognize and enhance diverse internal functions of a business and their ensuing external results (Perkins et al., 2014, pp.148-169). This study also elucidates illustratively the modern technique that can be used for reinforcing good behaviour in a specific corporation by isolating four different areas that have the need to be evaluated. The four different areas include learning and growth, processes of business, finance as well as customers. The current segment therefore aids in attainment of objectives, enumerations, goals as well as initiatives that stem from four chief functions of a business. In this way, business concerns are seamlessly recognizing facets that hinder the overall performance of the fi rm (including financial as well as non-financial dimensions). Basically, with the use of balanced scorecard, the management of the firm can analyse the entire company at the time when considering the objective of the firm. A specific corporation might utilize the balanced scorecard to execute stratagem mapping to understand where value is added within a specific corporation. In this case, the requisite information is acquired and analysed from four different business aspects (Baxter et al., 2014, pp. 347- 363). Thus, it can be said that the primary characteristics of the balanced scorecard entail focus on strategic agenda of the concerned firm, selection of comparatively small amount of data for monitoring and presentation of a combination of both financial as well as non-financial items. Succinct summary of the case The article The balanced scorecard in China: Does it work? penned by Kaisheng Zeng and Xiaohui Luo intends to understand restrictions of balanced scorecard mainly from the Western literature in a bid to ascertain the hurdles related to employment of BSC in particularly China. In addition to this, this study intends to deliver suggestions for various Western firms in terms of ways to successfully execute balanced scorecard in China. The case under consideration takes into account trends of implementation of balanced scorecard in China, research regarding the limitations of the same, substantiation as regards the cause and effect association, strategic control barrier and other obstacles associated to implementation of BSC in China and the way Western firms need to prepare for implementation of BSC in China (Frost et al., 2014, pp. 696-749). In the end, the study presents the suggestions for preparation of the balanced scorecard together with the insinuations for both management pract ices along with research. Thus, this study aids in gaining deep insight regarding the low rate of adoption of BSC in the initial period and the way things changed after the year 2008 when nearly 53% respondents declared about adoption of the same (Gibbons, Robert and Kaplan, 2015, pp. 447-451). Comparison with previous period The modern method of performance measurement and firms strategic management was necessarily introduced in the period 1990s by Robert Kaplan and David Norton. However, since that period, the notion has become quite popular and its diverse forms extensively adopted across the entire globe (Cooper et al., 2017, pp. 991-1025). By combining various financial measures as well as non-financial dimensions in a single declaration, the balanced scorecard delivers managers with richer and more pertinent information regarding activities they are handling than is provided by financial measures. Essentially, the changes can be described as an evolution by means of three distinct generations of balanced scorecard design (Martello et al., 2016, p.61). Balanced scorecard of 1st Generation Balanced scorecard was initially described as an approach to measurement of performance. In addition to financial dimensions, managers were inspired to look at dimensions derived from three different perspectives (Lawrie et al., 2015). Learning as well as growth, procedures of internal business, along with customers, selected to replicate the major stakeholders in a specific business. Balanced scorecard was spare and concentrated on high level framework of the instrument. This required association to the companys goals along with vision to aid in the process of selection of dimensions to be utilized, and also inspired the consideration of certain typical interest areas (Perkins et al., 2014, pp. 148-169). These theories suggested the introduction of various attitudinal questions associating to specific visions as well as goals of the corporation to help in the process of selection of dimensions to be utilized. Balanced scorecard of 2nd Generation The practical difficulties related to design of 1st generation scorecards are considerable, as the definition of the balanced scorecard was at the outset vague, permitting for considerable analysis. Essentially, two important areas of concern include filtering and clustering. Discussions associating to clustering keep on to be rehearsed in the present literature, however, discussions associating to filtering can be considered to be less common and normally appear as part of the description of mechanisms of balanced scorecard (Hladchenko, Myroslava, 2015, pp. 167-176). Perhaps the most significant alteration transformed the attitudinal approach to enumerate selection proposed originally by Kaplan and Norton into a specific procedure that yielded certain important dimensions of performance in each and every perspective. The proposed solution was necessarily the introduction of the theme of Strategic Objectives (Rampersad, Hubert and Hussain, 2014, pp. 29-38). Balanced scorecard of 3rd Generation The 3rd generation balanced scorecard format is founded particularly on refinement and modification of the 2nd generation design features as well as mechanisms to deliver superior functionality and strategic evidence (Basuony, Mohamed, 2014, p. 14). Essentially, the origin of specific developments arises from specific issues associated to target setting and substantiation of various strategic intent selections. Particularly, these directed various developments in the period of late 1990s of a further design component presented initially at the closing of design procedure to confirm objectives, dimensions along with targets selected. The important elements of the 3rd generation of balanced scorecard are necessarily the destination statement, strategic objectives, strategic linkage and association model and perspectives as well as measures (Lueg, Rainer, 2015, pp. 34-40) Statement of a case of failure and success The article Why the balanced scorecard fails in SMEs: A Case Study written by Dr, Nopadol Romphom reflects about failures of SMEs in implementation of balanced scorecard. Despite several accounts of successful execution of balanced scorecard in large business concern, Kaplan and Norton deciphered two different sources of failures based on their experience. The two identified sources include failure of design and process failure. The said study elucidates in detail about the SAQ Company Limited instituted during 2002. The company was a retail corporation operating in the sector of electrical appliance that registered yearly sales of approximately 10 million. The manager and owners were in favour of implementation of balanced scorecard for execution of a performance measurement framework that could assist in translating mission as well as strategy into action (Hannabarger et al., 2013). However, this BSC practice was observed to fail and the major cause behind this failure was found ou t to be frequent alterations in strategy of the company. It was witnessed that since the implementation of BSC in the firm, several dimensions were added and constantly modified. The firm observed decline in the sales within three months of the implementation of the tool. Hence, it can be inferred that findings of the current case study helps in expanding the overall knowledge as regards BSC implementation, reflecting factors leading to successful utilization of the balanced scorecard in both large as well as small enterprises. The case of Mecklenburg County, NC presents accounts of success stories of the implementation of balanced scorecard. It can be seen that the company Mecklenburg County essentially lacked both consistent as well as sustainable approach for attainment of vision. In addition to this, the company possessed no consistent model for arriving at financing decisions founded on set priorities and analysing the larger impact of these decisions. However, with the establishment of the balanced scorecard approach, the county instituted an Office of Management and Budget for taking up the responsibility for the firms strategic management procedures and communicating the performance at different levels namely community, corporate as well as departmental levels (Kuhn, Kephas, 2013). Thus, Mecklenburg County engaged different departments in the process of development of scorecard. In essence, Mecklenburg County advanced knowledge and understanding regarding BSC among employees and instituted a proper structure, even though informal. This in turn aided Mecklenburg County to maintain engagement, garner support, constant refinement and ultimately effective usage of the balanced scorecard within each and every department of the company. Overall performance in different nations The first and foremost article on the subject matter of balanced scorecard was presented by Kaplan and Norton during the year 1992 (Freeman, Brandon, 2014). However, since that period, the usage of the balanced scorecard has developed radically as an important strategic management tool and is now observed as a globally recognized system. Reports suggest that this tool is used extensively in private as well as not for profit as well as public sector firms, of different sizes and categories. Let us say, the results of international survey conducted by Bain and Company 2008 with 1430 global executives from corporations in a wide range of industries reflect that the balanced scorecard is the sixth most utilized management tools among 25 (Hoque, Zahirul, 2014, pp. 33-59). Furthermore, the survey also replicated that the balanced scorecard received the eight highest rating of satisfaction (rating was 3.83/5.00) and it was utilized by nearly 50% of the firms surveyed in various major region s of the world. Strikingly, the highest satisfaction level could be observed in the healthcare segment. Furthermore, it can also be hereby stated that one of the most vital management ideas was the balanced scorecard in the last seventy five years by particularly the Harvard Business Review. Analysis There are several scholars who expressed concerns regarding traditional measures of performance that solely concentrated on various financial dimensions. Essentially, scholars before Kaplan and Norton criticised the traditional metrics that laid emphasis on the financial dimensions and concentrated on short term financial outcomes whilst sacrificing various prospects of the long term period (Gibbons, Robert and Kaplan, 2015, pp. 447-451). Analysis of cases reflect that the return on investment (ROI) has several limitations taking into account intricacies involved in the process of presenting satisfactory definition of both profit as well as investment. At the time of comparing and assessing the ROI of various firms, it is obligatory that the corporations utilize identical policies of accounting as well as methods in respect of st7ock valuation, ascertainment of value of various fixed assets, allotment of firms overheads, ways of treating expenditure associated to research and develop ment. In addition to this, ROI can also exert influence on managers to choose investments with superior rates of return (Martello et al., 2016, p. 61). However, there were other scholars who endorsed the idea that together with the financial dimensions, it is important to take into consideration different non-financial metrics, for instance, reduction of cost of process, quality, and times of cycle and on-time deliveries among many others. The concept of associating measures to stratagem is also not a unique concept of the balanced scorecard approach. Thereafter, the notion of balance pyramid was introduced in which vision regarding the balance was integrated into financial as well as non-financial dimensions of firms performance. Balanced scorecard is one of the tool that is used for analysing performance can help in identification of the mission, vision as well as perspectives of the firm, recognition of various stratagems to attain mission and assessment of the performance of the corporation from specific perspectives to acquire an idea regarding the way the corporation can get successful (Shen et al., 2016, pp. 127-139). Evaluat ion of performance of corporation replicate that the tactic to deliver a balanced as well as comprehensive structure for the purpose of reviewing a corporations performance from various perspectives such as financial perspective, customer perspective, growth perspective as well as business along with production procedure perspective. Four different perspectives entailed in the balanced scorecard can be considered to be interrelated as well as inter-associated. For instance, the primary objective within financial perspective is profitability (Martello et al., 2016, p.61). Essentially, profitability can be regarded to be plausible at the time when the perspective of the customers can meet the objective of satisfaction of customers. Detailed analytical review helps in understanding the way balanced scorecard can he linked to diverse performance dimensions. This helps in understanding the way consumers perceive the company and its performance, internal perspective of comprehending factors at which company need to excel at (Martello et al., 2016, p. 61). Besides this, innovation as well as learning perspective can aid in comprehending whether the company can continue to enhance and create value. Additionally, this helps in understanding the way it is important to look at shareholders based on analysis of financial perspective. Objective The current study can help in outlining the issues faced by usage of traditional method of return on investment (ROI) for enumeration of performance of the company. Moving further, the study replicates the way the modern method of balanced scorecard can help in overcoming the issues encountered owing to implementation of the traditional method of return on investment (ROI). This study intends to present the ways in which the modern method can help in addressing the issues identified in the process of enumeration of performance (Perkins et al., 2014, pp. 148-169). Thereafter, this study helps in understanding various benefits of BSC along with illustration of case studies reflecting successes of implementation of BSC. In addition to this, this study also intends to throw light on the limitation of implementation of BSC together with illustration of cases of failure in the process of execution of BSC (Kerai, Sunita, and Ahmed Saleh, 2017, p. 27). Conclusion The above mentioned helps in gaining comprehensive understanding as regards adoption of modern method of balanced scorecard for the purpose of addressing the issues identified in case of traditional method that is return on investment (ROI). This study helps in understanding key features of the traditional performance metrics such as return on investments along with the criticisms attached to the process of intently focussing only on monetary figures. Thereafter, the study moves further to illustrate the modern method, the techniques associated to the new method of assessment of measurement of performance and proper strategic management of the firm. Furthermore, this study also presents succinct summary of a specific case to understand restrictions of balanced scorecard mainly from the Western literature in a bid to ascertain the hurdles related to employment of BSC in particularly China. In addition to this, the study also presents comparison to previous period, announcement of a c ase of failure and success, overall performance in various nations, analysis as well as objective of the study. References Basuony, Mohamed AK. "The Balanced Scorecard in large firms and SMEs: A critique of the nature, value and application."Accounting and Finance Research3.2 (2014): 14. Baxter, Siyan, et al. "The relationship between return on investment and quality of study methodology in workplace health promotion programs."American Journal of Health Promotion28.6 (2014): 347-363. Cooper, David J., Mahmoud Ezzamel, and Sandy Q. Qu. 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