The Manager of EEC had recently attended a meeting where the topic of discussion was regarding Balanced Scorecard approach. The Manager liked the discussion to an extent where he wanted to continue with the same topic in the next meeting with the managers of EEC (Tjader et al., 2014). The manager actually wants to put the concept in such a way where EEC should consider adopting the technique for usage for the betterment of the company. The topic that need to be presented before the managers of EEC should start with definition, benefits as well as usage of balanced scorecard technique. The discussion should also take into consideration on how EEC will be benefited if they start adopting balanced scorecard technique, as it will actually improve over the overall functioning of business enterprise. At the end, it is even need to recommend that will best suit the company after adopting the balanced scorecard technique for their usage purpose (Simons, 2013).
Definition
Two doctors named as Robert Kaplan of Harvard School as well as David Norton developed the concept of Balanced Scorecard. This concept on balanced scorecard was developed as a method of managing business activities for measuring the strategic planning objectives (Sainaghi, Phillips & Corti, 2013). This method is mostly employed by most of the business, not for profit entities as well as governmental agencies. Balanced scorecard approach is adopted by these entities for developing internal as well as external communication in and within the business practices. The approach can even be used for comparing business performance to that of strategic objectives. This approach has been used by companies simply for measuring the performance of business to a complete strategic planning as well as management system. These strategies help at the time of planning as well as measuring the strategies of an organization on daily basis that ensure that all the activities are aligned with the tactical objectives (Rampersad & Hussain, 2014).
Elements
Four elements are present in a balanced scorecard approach namely, Financial Perspective, customer perspective, internal business process as well as learning and growth perspective. These mentioned perspectives actually focus on different matters that relates to a particular company (Rabbani et al., 2014).
As far as Financial Perspective is concerned, it focuses on matters that relates to how business is perceived by its investors. Investors are of the opinion on how well goals are desired financially by a given company.
As far as customer perspective is concerned, it mainly focuses on matters that relates to how customers perceive a company and how smoothly there is company meeting for discussing the financial objectives for meeting the best interests of the targeted customer.
As far as internal business process perspective is concerned, it mainly focuses on matters where the process is related to customers as well as investors as the most significant one (Perkins, Grey & Remmers, 2014).
As far as Innovative and Learning perspective is concerned, it mainly focuses on matters relating to how company will be taught, developed in bringing innovative ideas for meeting the future objectives and goals.
It is first needed to define the goals of the company if EEC plans for adopting balanced scorecard technique for their usage activities. The next step would be to decide upon the strategies that they need to reach that are already discussed in the above step as it will help in increasing the level of production as well as reducing the cost in association to production. From the above elements discussed in the previous slides, it is now understood that the performance measures will fall into four main groups (Machado & Simplício, 2016).
The first group is the financial groups that will be properly used for providing a holistic view of the company performance and the success that are well associated with the financial aspects of EEC that mainly includes financial ratios measurements.
The second group here is customer groups that need to be used for determining the fact whether customers are satisfied or nor with the products or services that mainly relates to the operations of EEC and measured in terms of customer groups. The best way to judge this level of perspective is timely delivery of products as well as customer service (Lin et al., 2016).
The third group here is internal business process that will actually guide managers of EEC in determining whether internal operations of company are smoothly running or not that satisfies both shareholders as well as customers. Some of the ways where this perspective can be judged is the number of rework needed for the products for developing new business ideas.
The forth group is the innovative and learning group that will guide EEC for determining the fact if any areas are there that need improvement for the employees who work in the company. This perspective can even be judged when this group actually train the employees so that they provide innovative ideas for the company and generate revenue for the business (Keyes, 2016).
After using balanced scorecard technique, EEC can easily transform the strategies of the business into well-defined factors that can be properly determined on a quantifiable parameter. By making use of this approach, a company can easily communicate their strategies to all the employees. If EEC selects this approach, then the owner can easily put down the individual goals with the assigned strategies of EEC to look if accomplishment can be made from it in any form. This particular approach help in measuring the influence regarding the goals of the company that has for the behavior of employees. The given approach helps in offering different view that leads to performance for attainment of strategic development practice in and within the company practices (Kaplan & Atkinson, 2015). The main idea or perception of the approach is mainly to alert managers of areas where company can measure the performance and managers provide proper attention on the areas that need improvement so that company can achieve optimal performance and smooth functioning at the same time.
The balanced scorecard approach will eventually improve EEC through aiding the management after clarifying the vision as well as translating into assessable actions where employees can identify the pre-determined goals already made by the company. The balanced scorecard approach will mainly help in providing sufficient information on matters relating to performance improvements and the improvements that are made out of confidence. Use of balanced scorecard approach will help in some of the areas where the company can first make or formulate in the basic changes as well as enhance the support for the proposal at the time taking into account the whole company activities (Hoque, 2014).
Using the approach will benefit EEC because it will directly increase the level of production and reduce in the cost of products. Here, employees will have access to updated knowledge as well as information on the strategies for the company and once the strategies are achieved, the employees will understand the expectations and future goals of the business enterprise as a whole (Cooper & Ezzamel, 2016).
There are different ways present where company can avoid any types of unethical or illegal behavior. Code of conduct or code of ethics is the formal written document that states regarding the types of product as well as behavior that the company actually expects. Some of the ways are listed below that can avoid the above-violated behaviors mentioned in the previous slides:
Pay for performance is one of the measures that should be executed in proper ways. It is recommended that EEC should adopt Pay for performance program that is purely based on performance as well as sustainability. As far as sales representatives are concerned, their performance will be judged based on the increase in sales over the goals and takes into account staff members whose efforts are present behind the scenes. In case of team projects, their performance will be judged based on the team, submitting the work within deadlines and especially includes quality as well as efficiency (Carr & Gratton, 2016).
There are people who gets involved for determining as well as establishing the performance plan and measures are the Vice President of each division and the Finance. It is the Vice President who are responsible for the actual establishment of the performance measures as well as plan of compensation as they have the essential knowledge and determining whether the measures are applicable and practical at the same time (Busco & Quattrone, 2015).
As far as Finance Department is concerned, they look at the funds that EEC needs to pay for the performance program. As far as Human resource department is concerned, they are responsible for distributing as well as rendering orientation to all personnel regarding the performance program (Bento, Mertins & White, 2016).
It is recommended to EEC for adopting Balanced Scorecard approach because it is the best way to measure the success and level of performance. EEC should use this measuring tool for determining the overall performance of the company. The given approach will help the management of EEC for planning for the objectives where the company can explain the employee’s better ways to achieve the goals in the near future. This approach will help EEC for efficiently communicating the objectives that relates to the performance of all the divisions and employees can provide feedback that help in expanding as well as realizing thoughts of changing ideas. The main goal of this approach is to guide management for observing the company more visibly at the time of undertaking strategic decisions on matters relating to operations. They should take confident decisions that can suffice for long-term and there is smooth functioning of business enterprise.
Conclusion
At the end of the study, it is concluded that business enterprise need to use technique in their practices where they can easily measure the level of performance as and when required. This will help any company to know its pre-determined goals and expected goals before only. One of the most popular ways to measure the performance at different levels of perspectives are balanced scorecard technique. This particular method will help in measuring the level of success as well as performance of a given company.
References
Bento, R. F., Mertins, L., & White, L. F. (2016). Ideology and the balanced scorecard: An empirical exploration of the tension between shareholder value maximization and corporate social responsibility. Journal of Business Ethics, 1-21.
Busco, C., & Quattrone, P. (2015). Exploring how the balanced scorecard engages and unfolds: Articulating the visual power of accounting inscriptions. Contemporary Accounting Research, 32(3), 1236-1262.
Carr, L. P., & Gratton, S. (2016). Scorecard sustainability: Discovering the inflection point for business scorecard termination or major alteration. Journal of Corporate Accounting & Finance, 27(6), 29-41.
Coe, N. & Letza, S., (2014). Two decades of the balanced scorecard: A review of developments. The Poznan University of Economics Review, 14(1), p.63.
Cooper, D. J., & Ezzamel, M. (2016). A Critical Analysis of the Balanced Scorecard: Towards a More Dialogic Approach. In Pioneers of Critical Accounting (pp. 201-230). Palgrave Macmillan UK.
Hoque, Z. (2014). 20 years of studies on the balanced scorecard: trends, accomplishments, gaps and opportunities for future research. The British accounting review, 46(1), 33-59.
Kaplan, R. S., & Atkinson, A. A. (2015). Advanced management accounting. PHI Learning.
Keyes, J. (2016). Implementing the IT balanced scorecard: Aligning IT with corporate strategy. CRC Press.
Lin, M. H., Hu, J., Tseng, M. L., Chiu, A. S., & Lin, C. (2016). Sustainable development in technological and vocational higher education: balanced scorecard measures with uncertainty. Journal of Cleaner Production, 120, 1-12.
Machado, M., & Simplício, P. (2016). Instruments of sustainable management: the Balanced Scorecard in the best companies where to work in Portugal. Transactions on Environment and Development, (1), 65-75.
Perkins, M., Grey, A., & Remmers, H. (2014). What do we really mean by “Balanced Scorecard”?. International Journal of Productivity and Performance Management, 63(2), 148-169.
Rabbani, A., Zamani, M., Yazdani-Chamzini, A., & Zavadskas, E. K. (2014). Proposing a new integrated model based on sustainability balanced scorecard (SBSC) and MCDM approaches by using linguistic variables for the performance evaluation of oil producing companies. Expert Systems with Applications, 41(16), 7316-7327.
Rampersad, H., & Hussain, S. (2014). Personal balanced scorecard. In Authentic Governance (pp. 29-38). Springer International Publishing.
Sainaghi, R., Phillips, P., & Corti, V. (2013). Measuring hotel performance: Using a balanced scorecard perspectives’ approach. International Journal of Hospitality Management, 34, 150-159.
Simons, R. (2013). Performance Measurement and Control Systems for Implementing Strategy Text and Cases: Pearson New International Edition. Pearson Higher Ed.
Tjader, Y., May, J. H., Shang, J., Vargas, L. G., & Gao, N. (2014). Firm-level outsourcing decision making: A balanced scorecard-based analytic network process model. International Journal of Production Economics, 147, 614-623.
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