The balance scorecard is a management tool that is used by the management of companies to enable them in planning on how to align the business activities to the vision and strategy of the organization so as to improve the internal and external processes of the company. Communication is used to monitor the organization performance against the strategic goals that have been set by the management of the organization.
The balance scorecard was first developed by Dr Robert Kaplan and David Norton who discovered that the tool would be used to measure the performance of the employees of the company so that they would improve on their performance it was used by the management of companies so as to clarify the vision and the strategies and then to translate them into action. According to some economist they noted that an organization was viewed into four perspectives as per the balanced scorecard. The Learning and growth perspective
This perspective that deals with how the employees can be trained in order for them to gain the knowledge and skills that can enable them carry out their activities effectively. It also deals with the corporate cultural attitudes that relate to both the individual and corporate self-improvement so that the attitude for each the individuals and the corporations would change so that they would perform their activities according to the needs of the organization and not for their own interests.
There had been increased technological changes that have resulted to the management of the organization to train their employees so that they can adapt to those technological, economic and social-economic changes. The business process perspective The perspective deals with the internal business processes.
The metric allows the managers of an organization to learn how well their businesses are run and whether the products and services of the company can conform to the customer tastes and preferences There are two kinds of processes that are used when determining the goals of a company these are mission oriented processes and the support processes. The mission-oriented processes are used in measurement of the employee’s performances so as to ward them according to their skills and responsibilities.
The processes are usually used in the government offices. The customer perspective The recent research showed that customers contributed to the success of the company and therefore it is important to satisfy their needs because incase they do not get satisfied with the services of their suppliers or traders they can look for alternative suppliers who could meet their needs and this can pose to be a big challenge to the marketing department as the volume of sales of the company can be affected negatively.
The management should learn how to satisfy their customers needs by identifying the different types of customers and their different tastes and preferences so that the right kind of products and services are produced for them so as to maintain the customers and also to increase the earnings of the company by providing the right of goods and services that are acceptable to the customers. The financial perspective It is important for the management of organization to provide timely and accurate records of data so that they can give the true financial position of a company.
The implementation of corporate databases it can enhance proper centralization and automation of information that can enhance proper recording of the transactions into the financial statements so that proper analysis of the company can be made. The Tri-cities community Bank was a company that was located in the Midwest United States; it had ten branches that were grouped into divisions that is the southern Division (SD) and Northern Division (ND). The divisions consisted of five branches that were headed by a Branch President and a Branch Chief Loan Officer.
The other staffs that managed the operations of the company were the customer service representatives, loan representatives, mortgage loan originators, head tellers and the administrative assistants. Mrs. Chris Billing was the Southern Division (SD) president from a Marketing Director because she could improve the performance of the company since she had acquired the necessary skills from college about how to improve the performance of the company.
In the year 2000 she implemented the balanced scorecard into the organization although there were protests from the Northern Division (ND) presidents who saw the implementation of the strategy as impossibility since they had not had about the strategy before and was not ready for change. Branch A According to the Customer Service Representative of Tri Cites Community Bank Mrs.
Mary Richards, she stated that the implementation of the balanced scorecards would create greater loan volume for the loan balances, deposits and the certificates of deposit and this would lead to lower profit margin, but it would be beneficial to the company’s growth. According to Mike Moore she stated the measures of the balanced scorecard were realistic, but the implementation of the measures was difficult because it was the first time for the employees to use them thus getting to learn the measures would mean creation of more time to train all the staff about the implementation of the performance measures.
According to Paul Franks he stated that since the employees carried out their activities while using the measures then they would earn more cash bonuses, which improve the company’s performance and also the living standards of the employees of the company if they used the measures since proved good returns to the company once they utilized them appropriately. Branch B Mrs.
Pamela Wise the loan representative of branch B said that the measures would be used to measure the progress of the company while in the process of trying to achieve its goals and objectives as this would lead to meeting the needs of the community and also to increase the profitability of the company. The measures would be used in determining the right kinds of promotions and pay rises for the employees, they would also be used to assign the employees according to their skills and knowledge so as to ensure the duties and responsibilities of the company were carried out effectively.
Branch C Mr. Bill Sovensen stated that the balanced scorecard measures would promote teamwork among the tellers, loan officer and the customer service representatives such that they would enable them to discuss the goals of the organization and also be in a position to understand the activities of the bank so as to promote effective implementation of the company’s goals and objectives. The scorecard measures would enable the management of the company to achieve goals such as selling, cross-selling, and the goal of making customers to feel comfortable with the services of the bank.
The Administrative Assistant Mr. Luo Martin said the balanced scorecard measures would lead to the successful implementation of the goals and objectives of a company. The success of the company would led to the management to organization of recreational places that would be used to appreciate the efforts of the employees so as to motivate them to work harder in their duties and responsibilities and also to avoid employee turnover as it could affect the reputation and performance of the company. Branch B According to Mr.
Gray Smith he stated that the balanced scorecards were important but it was important for the management of the company to choose measures that were relevant to the management’s growth. Mr. Al Taylor stated that the measures would lead to achievement of the company’s goals. Branch E The balanced scorecard would be used to compare the performance of the company with other companies so that the company could keep track of the company’s performance so that the right measures could be put in place in order to enable the company to compete effectively with its competitor
It was noted that in order for the organization to improve in its performance it had to the implement the four perspectives of the balanced scorecard into its organization these were financial measures, customer measure, internal business measures and the retention measures and the learning and the growth perspective. The management of the company Northern Division should have implemented the balanced scorecard into the company in order for it to achieve its goals and objectives.
The benefits of the perspectives were that if one perspective was good then other would also improve, for example if the internal perspective improved then the internal processes would also improve. If the customers were satisfied with the services that they needed then they would continue to purchase the company’s products and also use their services and this would boost the performance of the company .
The sales volume of the company would improve if the company’s financial status improved then the management of the company would be in a position to achieve its strategies successfully, if the company’s strategy would be good then this would be translated to increased returns for the company and the application of the financial measures would be done in an effective and efficient manner.
It was reported that if the employees were trained about sales effectiveness, customer service, product profitability and local bank knowledge, they would be in a better position to serve their customers since the knowledge and skills acquired would enable them to gain relevant experience of how to improve the performance of the company. The management of the bank also noted that the training programs given to the employees such as the in house tests on various training topics, higher-quality referrals and cross-self proposals they would equip the employees with right techniques to handle the company’s activities.
The implementation of the programs would lead to higher customer satisfaction and it would also lead to the management of the company to learn more techniques of retaining their customers so as to achieve high sales volume of the company’s products and services. References Burgelman R A. and. Grove. A. S. (1996) “Strategic Dissonance . California. California Management Review, Vol. 38, No. 2. pp. 8-28. Kaplan, R. S. and Norton. D. P. (1996) Using the Balanced Scorecard as a Strategic
Management System. Harvard Business Review 74, no. 1 75+. (May be accessed at http://www. hbsp. harvard. edu/frames/groups/hbr/janfeb96/96107. html). Liedtka J. M. and Rosenblum J. W. (1996) Shaping Conversations: Making Strategy, Making Change. California. California Management Review, Vol. 39, No. 1. , pp. 141-157. Marsh, P. and et all. (1988). Managing Strategic Investment Decisions in Large Diversified Companies London. London Business School.