December 11, 2016 | Author: PhuongDx | Category: N/A
Balanced score for the balanced scorecard a benchmarking tool...
The current issue and full text archive of this journal is available at www.emeraldinsight.com/1463-5771.htm
BIJ 15,4
Balanced score for the balanced scorecard: a benchmarking tool
420
Faculty of Production and Operations and Finance, Department of Management Studies, National Institute of Technology, Tiruchirappalli, India, and
M. Punniyamoorthy
R. Murali Faculty of Human Resources and Finance, Department of Management Studies, National Institute of Technology, Tiruchirappalli, India Abstract Purpose – The purpose of this paper is to create a model called “Balanced score for the balanced score card” and to provide an objective benchmarking indicator for evaluating the achievement of the strategic goals of the company. Design/methodology/approach – The paper uses the concepts of “Balanced scorecard” proposed by Robert. S. Kaplan and David P. Norton. This paper also adopts the model given by Brown P.A. and Gibson D.F. and the extension to the model provided by P.V. Raghavan and M. Punniyamoorthy. Preference theory is used to calculate the relative weightage for each factor, using the process of pair wise comparison. The balanced score for balanced scorecard provides a single value by taking into account all the essential objective and subjective factors – be it financial or non-financial. It also provides a suitable weightages for those parameters. The target performance and the actual performance are compared and the analysis is made. Findings – Information from a leading organization was obtained and the balanced score for a balance scorecard was calculated for that organization. The variations were analyzed through this model. The depth and objectivity in the analysis is highlighted. Research limitations/implications – This provides a single bench marking measure to evaluate how far the firm had been successful in achieving the strategies. The paper has adopted the preference theory which limits the weightage to be accorded to the factors concerned. However, further refinement can be provided by the usage of analytic hierarchy process for arriving suitable weightages. Practical implications – The organization can calculate the balanced score by themselves, by assigning appropriate importance to the activities – as they deem fit. It is a tailor made benchmarking information system created by the firm for itself. Originality/value – This is of value to the top management to identify the important activities and setting suitable target measures to be achieved in those activities. The variations are arrived by comparing the targeted performance with the actual. This will help the firm to take suitable actions under those parameters where there are significant deviations. Keywords Balanced scorecard, Benchmarking, Corporate strategy, Analytical hierarchy process Paper type Research paper
Benchmarking: An International Journal Vol. 15 No. 4, 2008 pp. 420-443 q Emerald Group Publishing Limited 1463-5771 DOI 10.1108/14635770810887230
Introduction Businesses houses are continuously striving to be successful amidst the increasingly competitive and constantly changing environments. To achieve that, they must be willing to adopt any processes and accept any benchmarking standards which would help them in not only doing things right but also in doing the right thing.
The bench mark so accepted should be a: . reference or measurement standard for comparison; . performance measurement that is the standard of excellence for a specific business; and . measurable, best-in-class achievement (“On what is a benchmark?”, available at: http://retailindustry.about.com/library/terms/b/bld_benchmark.htm). Competition has become so intense that managers do have less time to respond to market situation. Efficiency in operations and profitability are the key words in driving the organizations today to remain competitive. The rapid technological developments and improvements in communication have forced the manager to deal with a large quantum of data and arrive at the decision, which would produce results comparable to the market standards. This makes the process little too complex. What they perhaps need is some benchmarking indicators to process the data objectively and to come to a conclusion not only correctly but also quickly. It is observed: Benchmarking is a process used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice, usually within their own sector. This then allows organizations to develop plans on how to adopt such best practice, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to challenge their practices. Benchmarking opens organizations to new methods, ideas and tools to improve their effectiveness. It helps crack through resistance to change by demonstrating other methods of solving problems than the one currently employed, and demonstrating that they work (“On best process of benchmarking”, available at: www.managementupdate.info/benchmarking.htm).
Therefore, through this paper, we have devised a process of calculating a suitable bench mark figure called “Balanced score” through which the achievements of the performance in the implementation of the strategy by the firm can be evaluated. The paper uses the concepts of “Balanced scorecard” proposed by Kaplan and Norton (1992a); and the model adopted by Brown and Gibson (1972) along with the extension to the model provided by Ragavan and Punniyamoorthy (2003) to arrive at a single measure called “balanced score”. Need for incorporation of strategic intent in every activity Over the years, the economies have grown leaps and bounds and the companies themselves have outgrown several times. In order to grow further and at a rapid pace, most of them have branched out to become global players. This had forced them to meet larger competition and high volatility in the business environment they operate: Strategy is the direction and scope of an organization over the long term: Which achieves the advantage for the organization through its configuration of resources within a changing environment, to meet the needs of the markets and to fulfill stakeholder expectation ( Jhonson and Scholes, 2001).
Every act initiated by the competitors or its customers of the company has far reaching consequences. It may be that any single desire or the ambition by the top management can alter the destiny of the company.
Balanced score for the balanced scorecard 421
BIJ 15,4
422
Porter (1985) has suggested the five force model and in this model he provides emphasis on all the relevant factors that an organization should consider. He says that for an organization to succeed it needs to take into account the firm, its competitors, its suppliers, its customers and also its substitutes. If all these are not monitored properly and the linkages not understood correctly, then it can impede the performance of an organization. A study contrasting high- and low-performing organizations yielded the data as shown in Table I. So it becomes imperative for the managers to have the clear understanding of the ultimate performance standards the firm has to achieve. Obviously, mere understanding may not suffice. They should also ensure that the information is properly communicated down the line. Further the top management must be in a position to periodically monitor the progress with regard to the achievement of the strategic goals in order to ensure successful achievement of the strategies. For making a meaningful evaluation, they must be having some objective measures to review the efficiency of the company taking into account all the dimensions of its operation. It is observed that, in the present day context in any organization the intangible factors drive the tangibles assets. In a report on the Accounting for Intangibles, it was stated that: Human capital and structural capital are an indication of a company’s future value and ability to generate financial results. This is why a more systematic method of reporting on and managing these intangible dimensions is needed (Skandia Reporting Model, 2001).
So the present day managers should also be proficient in reviewing the efficiency of the company in all the intangible components of the business operation, viz. in employee satisfaction, quality standards, social obligations, customers and other non-financial which are very important to the success of an organization. All the above requirements can be only linked effectively with the help of an appropriate strategy. This is because company can say to itself that it has fulfilled the purpose of its existence only if it achieves the goals derived out of the strategic thinking process. If the company were to achieve its goals, then it would only mean that all the parameters set for all the functions and activities of the firm are to be accomplished. Porter (1996) further describes: Ultimately, all differences between companies in cost or price derive from hundreds of activities required to create, produce, sell and deliver their products or services [. . .] differentiation arises from both the choice of the activities and how they are performed.
Employees have a good Understanding of overall Organization goals Senior mangers are highly Effective communicatorsa Table I.
Source: aStewart (1999)
Well-performing organizations (per cent)
Poorly-performing organizations (per cent)
67
33
26
0
Obviously, the strategies adopted by the firm even to arrive a common generic goal such as, accomplishing higher sales, may be different depending upon the environments in which they operate and the strengths and weaknesses they possess. “The researchers have observed Managing strategy is fundamentally different from managing operations” (Hope and Fraser, n.d.). It has also been outlined that:
Balanced score for the balanced scorecard
An outstanding corporate strategy is not a random collection of individual building blocks but a carefully constructed system of interdependent parts [. . .] [I]n a great corporate strategy, all of the elements [resources, businesses and organization] are aligned with one another. This alignment is driven by the nature of the firm’s resources – its special assets, skills and capabilities (Kaplan, 1996).
423
Hence, it is needed for the organizations to develop a comprehensive strategic approach in all its levels and activities of functioning so that they can effectively initiate and monitor all the activities. Since, the strategies were all compartmentalized in the earlier cases, one department did not understand the measures the others had taken. This resulted in the strategies turning counterproductive and giving rise to the blame game. Hence, the need was felt for developing some methods, which can ensure integration of the strategic content in each and every function of the organization. Further while implementing the strategies the firms face many a problems. It was reported: . only 5 per cent of the workforce understands their company strategy; . only 25 per cent of managers have incentives linked to strategy; . about 60 per cent of organizations do not link budgets to strategy; . about 86 per cent of executive teams spend less than one hour per month discussing strategy (balanced scorecard – BSC collaborative). According to the BSC collaborative, there are four barriers to strategic implementation: (1) Vision barrier. No one in the organization understands the strategies of the organization. (2) People barrier. Most people have objectives that are not linked to the strategy of the organization. (3) Resource barrier. Time, energy, and money are not allocated to those things that are critical to the organization. For example, budgets are not linked to strategy, resulting in wasted resources. (4) Management barrier. Management spends too little time on strategy and too much time on short-term tactical decision making (Evans, n.d.). All these observations call for not only developing proficiency in formulating an appropriate strategy to make the organizational goals relevant to the changing environment, but also call for an effective implementation of the strategy: Managers intent on implementing strategy must coordinate a broad range of efforts aimed at transforming strategic intentions into action. Resulting actions constitute the firm’s realized strategy; and it reflects what an organization has done and ultimately determines how the organizations will fare [. . .] Consequently, the ability to implement strategies is one of the most valuable of all managerial skills [. . .] Several factors impede strategy implementation
BIJ 15,4
424
[. . .] Changing one element has a ripple effect that impacts other parts of the model, which in turn have their ripple effects and so on (Miller, 1998).
From the foregoing observations, we find that the “Balanced scorecard” is precisely the framework that enables the organization to implement the strategy successfully, as this approach helps in providing adequate linkages, to enable the organizations to implement complex and intricate activities involved in implementing the corporate strategies and monitor every activities of the firm with the intent to achieve the strategic objectives. It has also been observed that: The balanced scorecard is a strategic performance management system that links performance to strategy using a multi dimensional set of financial and non-financial performance measures. It focuses on better understanding the causal relationships and links within organizations and the levers that can be pulled to improve corporate governance (Dye, 2003).
Balanced scorecard approach The French and the Canadians were the first to use the BSC in a different form. The French began using a measure called “the tableau de board”, or the dashboard of measure, which included both financial and non-financial measures. The emphasis on quality in the American continent during the 1980s made Canadian companies to include non-financial measures also in evolving their business strategy. This was the initial conception of the balanced scorecard (Stewart and Hubin, 2001). Kaplan and Norton (1992b) had devised the BSC in its present form. They had framed the BSC as a set of measures that allows for a holistic, integrated view of the business process so as to measure the organization’s performance. The scorecard was originally created to supplement “traditional financial measures with criteria that measured performance from three additional perspectives – those of customers, internal business processes, and learning and growth” (Kaplan and Norton, n.d.). In due course of time, the whole concept of the BSC evolved into a strategic management system forming a bridge between the long- and short-term strategies of an organization. Many companies readily adopted the BSC because it provided a single document in which the linkages of activities-more particularly by giving adequate importance to both tangible and non-tangible factors were more vividly brought out than in any other process adopted: Clearly, opportunities for creating value are shifting from managing tangible assets to managing knowledge based strategies that deploy an organization’s intangible assets: Customer relationships, innovative products and services, high quality and responsive operative processes, information technology and databases and employee capabilities, skills and motivation (Kaplan and Norton, n.d.).
The BSC has grown out itself from being just a strategic initiative to its present form of a performance management system. The BSC, as it is today, is a performance management system that can be used by organisations of any size to align the vision and mission with all the functional requirements and day-to-day work. It can also enable them to manage and evaluate business strategy, monitor operational efficiency, provide improvements, build organization capacity, and communicate progress to all employees: The Balanced Scorecard concept has been successfully employed by many companies in recent years to better measure their financial results. According to one study, fully 40 per cent
of Fortune 500 companies were using this system to evaluate performance at the end of 2000. In essence, the Balanced Scorecard was developed because it was becoming increasingly apparent to many executives that traditional financial measures of performance were not allowing companies to relate financial measures of performance to long-term company objectives. For example, traditional financial analysis fails to take into account such key variables as levels of customer service, employee morale, market share by segment and other important factors that influence an organization’s ultimate success (Analyst, 2001).
Hence, it is being adopted by many companies across the world today cutting across the nature of the industry, types of business, geographical and other barriers. Balanced scorecard (BSC) as a concept The mission set by the corporate entity normally reveals the cherished dreams of the firm, which are strategic to its sustained growth. Such guiding principles arising out of the strategic intent of the company, is not fully captured in any traditional system. If this can be calculated and be integrated into the traditional method then it will facilitate to formulate a well-devised plan for the future growth: In the knowledge-driven economy of today, intellectual capital and other such intangible assets have not got desired presentation in the annual reports of companies (Corrigan, n.d.).
The BSC retains traditional financial measures. But financial measures tell the story of past events, an adequate story for those companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the performance of the modern companies as they are forced by intense competition provided the environment, to create future value through investment in customers, suppliers, employees, processes, technology, and innovation. Kaplan and Norton describes the BSC as a processs which “move beyond a performance measurement system to become the organizing frame work for a strategic management system”. The BSC is a system that enables the organization to clarify their strategy and translate them into action. It is a system, derived from the strategy, reflecting the business objectives which the firm had set for itself. The approach supports the strategic planning and implementation by integrating all the activities of the organization around a common understanding, viz. the goals of the organization. The BSC translates an organization’s strategy into a comprehensive set of performance measures that provides framework for the implementation of strategy. Thus, BSC essentially is a means of focusing employee’s attention on desired behavior and desired results. By combining financial and non-financial measures in a single report the BSC aims to provide the managers with richer and more relevant information about activities they are managing than is provided by financial measures alone. The BSC enables the companies to develop a more comprehensive view of their operations and to better match all operating and investment activities to long- and short-term strategic objectives. The BSC approach provides a clear prescription as to what companies should measure in order to “balance” the implications in all the functional areas, arising out of the strategic intent. The components under these can be linked through a cause and effect diagram. For example, we can from the strategy, make out a strategy map and get all the linkages,
Balanced score for the balanced scorecard 425
BIJ 15,4
426
which will be triggered in order to achieve the desired goal. This can diagrammatically bring out cause and effect relationship between the measures. This gives the clearer idea of the complex linkages with which the company has to mow through for its ultimate successes. Strategy map can be made for the entire activities as a whole or for a specific segment. The strategic content of the company can be grouped under different perspectives, which will cover the entire activity of the firm. Kaplan and Norton introduced four different perspectives through which the firm’s entire activity can be integrated. They are: (1) Financial perspective. It evaluates the profitability element of the strategy. (2) Customer’s perspective. It identifies the targeted market, segments and measures the company’s success in these segments. (3) Internal and business perspective. It focuses on internal operations. (4) Learning and growth perspective. It identifies the capabilities in which the organization must excel in order to achieve superior internal process that creates value for customers and share holders. The four perspectives are complete in so far as no additional perspective is required to represent any element of organizational activity that management team might believe worth the focus. Each perspective influences and influenced by the other perspectives and can be shown in Figure 1. This classification covers the entire gamut of activities in the major functional areas of the business. The financial focus concentrates on traditional return-based efficiency and effectiveness metrics. The customer focus lists metrics about customer satisfaction, business potential and unit growth. The process and development focus provides details about efficiency, outputs, and savings and of future growth. The innovative and learning focus gives information pertaining to employee loyalty, skills and competencies. Obviously a good strategic plan is one, which is successfully implemented. The BSC provides a format whereby, all the requirements under the different perspectives will be consolidated and each of the functional departments, viz. production, personnel, marketing and finance would exactly know what they are expected to do and when. This coordinated effort only can make the strategy successful. The growth plan of any Financial Perspective
Customer Perspective
Figure 1.
Internal Business Process Perspective
Innovative and Learning Perspective
organization should be built combining these four perspectives into a single-balanced integrated view. From out of these perspectives, the related objectives, measures and initiatives in the identified critical areas of the firm are defined. In a measurement managed organization:
Balanced score for the balanced scorecard
[. . .] senior management was reported to be in agreement on measurable criteria for determining strategic success and in which management updated and reviewed semi-annual performance measures in [. . .] primary performance areas (Lingle and Schiemann, 1996).
427
Measures are constructed by devising suitable metrics that aid target-setting and performance measurement in those areas. For better understanding and management these measures can be broken down to the individual level, group level, business level and then finally aggregated to the corporate level. Metrics are designed to support strategies. They are carefully selected yardsticks that help in the performance measurement. From our own experience, we expect strategy scorecards to have 20-25 measures. Here, is a typical allocation across the four perspectives (Kaplan and Norton, n.d.): (1) financial – five measures (22 per cent); (2) customer – five measures (22 per cent); (3) internal – eight to ten measures (34 per cent); and (4) learning and growth – five measures (22 per cent). Best Practices LLC (1999) analyzed the scorecards of 22 organizations that had successfully implemented and found just about the same distribution of measures. The metrics are usually determined via a detailed and carefully analyzed survey or interviews. The management should be able to identify shortcomings, to prioritize action items, and then conduct follow-on studies to choose appropriate metrics and the fix the targeted performance to be achieved under each of those metrics. “Metrics” give numerical standards against which a client’s own processes can be compared. Metric benchmarks are of the form: . finished-product first-pass yield of 97 per cent; . scrap/rework less than 1 per cent of sales; . cycle time less than 25 hours; . customer lead times less than 20 days; . productivity levels of $150,000 or more per employee; and . plant-level ROA better than 15 per cent (“Metrics benchmark”, available at: www3.best-in-class.com/bestp/domrep.nsf/). For example, the following can be set of metrics chosen under each perspective, firm as a whole for specified target requirements: (1) Learning and growth perspective: . involve the employees in corporate governance; . inculcate leadership capacities at all levels; and . become a customer driven culture.
BIJ 15,4
428
(2) Internal process perspective: . improve productivity standards; . eliminating defects in manufacturing; . provide adequate technical knowledge and skill for all the levels of employees; and . customer feedbacks to be integrated in the operation. (3) Financial perspective: . about 12 per cent return-on-equity to be achieved; . about 15 per cent revenue growth; . about 5 per cent reduction in production cost; and . about 3 per cent reduction in cost of capital. (4) Customer perspective: . enhance market share by 5 per cent; . about 10 per cent increase in export sales; . obtain competitive pricing; . increase after sales service outlets by 10 per cent; and . to conduct face-to-face meeting with customers by organizing customer meets. BSC not only captures the change in any one measure but also provides insight into the related changes in other perspectives. BSC, therefore helps to have an enlarged vision to the firms management as, each strategic intent will flow across all four perspectives, viz. financial, customer, internal processes, and learning and growth and the necessary impact is captured in those perspectives, respectively, and holds out the promise of improving a company’s prospects of more closely matching its management’s plans to its strategic goals and objectives. Balanced score model for the balanced scorecard The BSC in its present form certainly eliminates uncertainty to a great extent as compared to the traditional financial factors-based performance measurement systems. However, when we set out to measure the actual performance against the targeted performance, mostly not all the criterions is met. For some factors, actual performance is greater than the targeted performance, for some it is less. Therefore, for the decision makers there may be some kind of confusion regarding the direction in which the organization is going. That is, he is not clear whether the firm is improving or deteriorating. This is because the firm might have achieved the desired performance in not so vital parameters but would have failed to show required performance in many vital parameters. Hence, it becomes imperative to provide weightage for the factors considered, so as to define the importance to be given to the various parameters. So this provides a clear direction to the management as to prioritize the fulfillment of the targets set for those measures which have been ascribed for the larger weightage. The firm can reasonably feel satisfied if it is able to achieve the targets set for it, as it would encompass all the performance measures. Basically, “The balanced scorecard” is
constructed taking into account all the strategic issues. The balanced score, which we are suggesting is basically derived for the balanced score card. If the single bench mark measure “The balanced score for the balanced scorecard” is created then it would clearly mean that the firm will be reasonably be in a position to evaluate the achievement of the strategic targets. The balanced score for the BSC tries to arrive at a single value for comparing the target performance and the actual performance of the organization by suitably taking into account the weightage to be assigned to each factor by considering the users view point. His opinions and perceptions are used to create weightages for the parameters selected and a balanced score for the BSC is arrived. Further, if we are able to devise a single benchmark measure, which would give the indication as to the direction in which the organization is proceeding with regard to achievement of the strategic intent, the decision maker can either maintain the status quo or make any required modification. This decision he may be able to take in an objective manner given the required benchmark figure. In short, it is a single benchmarking measure, which evaluates under or over achievement of the firm in respect of fulfilling the goals set by the company. It can also provide the variation of the actual measure from the targeted measure under each of the factors considered. Balanced scores of two different time periods can also be compared to evaluate the performance of the organization over those periods. Thus, the balanced score model for a BSC, as suggested in this paper will provide a single bench mark information for the decision makers to take appropriate action and concentrate on such measures which would result in the achievement of the strategic needs of the company. Development of balanced score model Let us now see the development of balanced score model for BSC. As discussed earlier, the BSC divides all the activities under four perspectives. The perspectives, the measures under each perspective, the target and actual values of each measure are analysed in a framework as shown in Figure 2. The target and actual performance were calculated using the following method: Balanced score for BSC ðtarget performanceÞ ¼ a1 ðb1 c1 þ b2 c3 þ b3 c5 Þ þ a2 ðb4 c7 þ b5 c9 Þ þ a3 ðb6 c11 þ b7 c13 Þ þ a4 ðb8 c15 Þ;
ð1Þ
Balanced score for BSC ðactual performanceÞ ¼ a1 ðb1 c2 þ b2 c4 þ b3 c6 Þ þ a2 ðb4 c8 þ b5 c10 Þ þ a3 ðb6 c12 þ b7 c14 Þ þ a4 ðb8 c16 Þ:
ð2Þ
There are four levels in the balanced score for balanced scorecard model. Level 1 The first level is the goal of the model, i.e. balanced score for BSC. Level 2 This level consists of the criteria for evaluating organizational performance under the following categories:
Balanced score for the balanced scorecard 429
BIJ 15,4
I-Level Goal
Balanced Score for Balanced Scorecard
II- Level Criteria
430
Financial Perspective (a1)
Customer Perspective (a2)
Internal Business Perspective (a3)
Learning & growth Perspective (a4)
III- Level Sub Criteria b1
b2
b3
b4
b5
b6
b7
b8
IV- Level Alternatives
Figure 2. Framework for calculating the balanced score for BSC
c1 c2 c3 c4 c5 c6 TP AP TP AP TP AP
. . . .
c7 c8 c9 c10 TP AP TP AP
c11 c12 c13 c14 TP AP TP AP
c15 c16 TP AP
financial perspective (a1); customer perspective (a2); internal business process perspective (a3); and learning and growth perspective (a4).
Level 3 Each perspective may have sub-criteria for measuring organizational performance. To measure each criterion or sub-criteria the measures are identified. These have been referred to as bi’s. Level 4 For each measure, identified targets are set. These target performance values are then compared with the actual performance achieved. In nutshell, the score is arrived based on the relative weightages of the items incorporated in the model based upon the classification suggested in the BSC approach. The factors of levels 2 and 3 are evaluated using the preference theory. The relative weightage for each factor is arrived at by pair wise comparison using the preference theory. These factors are compared pair wise and 0 or 1 is assigned based on the importance of one perspective over another. In each level, the factor’s relative weightage is established by pair-wise comparison. In the process of comparison, if the first factor is more important than the second factor, 1 for the first and 0 for the second is assigned. If the first factor is less important than the second factor, 0 for the first and 1 for the second are assigned. If both perspectives are valued equally, 1 is assigned for both perspectives. When the values are assigned, it is to be seen that results of the comparison decision are transitive, i.e. if the factor 1 is more important than factor 2
and factor 2 is more important that factor 3, then the factor 1 is more important than factor 3. The factors of level 4 are grouped into financial and non-financial factors to measure the effectiveness of the organization’s activity. The financial factors are cost and benefit. Non-financial factors are classified into factors related with time dimensions and other factors. The above said factors could be brought under categories, which are to be maximized, and the factors, which are to be minimized. The whole framework is given in Figure 3. Now, we can frame a general expression considering the entire factors. The expression is framed in such a manner that the factors are converted into consistent, dimensionless indices. The sum of each index is equal to 1. This is used to evaluate the factors in order to assist to arrive at the relative weightage at the lowest level. This is the framework developed by Ragavan and Punniyamoorthy (2003):
Balanced score for the balanced scorecard 431
Tangible Factors
To be Maximized
Financial Factors
Monetary Dimensions
-Labour saving -Material saving -Inventory Cost saving
To be Minimized
Non Financial
Time Dimensions
Utilisation Time
Financial Factors
Others
Produc -tivity
Monetary Dimensions
-Labour Cost -Material Cost -Overheads
Non Financial Factors
Time Dimensions
Others
-Cycle time -set up time
Loss
Figure 3. Framework for calculating level 4 – alternatives
BIJ 15,4
432
X X X ð1=CMÞ21 þ BTI ð1= BTÞ ESI ¼ BMI ð1= BMÞ þ ½CMI X X X ð1=TMÞ21 þ ðNFI = NFÞ þ ½NFMI =ð 1=NFMÞ21 ; þ ½TMI
ð3Þ
where, ESI – effectiveness score for alternative I; BMI – benefit in money for alternative I; BTI – benefit in time for alternative I; CMI – cost to be minimized for alternative I; TMI – time to be minimized for alternative I; NFI – non-financial factors for alternative I to be maximized; NFMI – non-financial factors for alternative I to be minimized. The relative weightage for all the factors are arrived and the balanced score for the BSC is arrived using equations (1) and (2) for sample framework is shown in Figure 2. Comparing the figures of targeted performance and the actual performance, we may be able to say how the company had fared. Balanced score model in an IT industry In order to illustrate this model using real-time data, information from a leading organization was obtained and the balanced score for a BSC has been reached. The company is one of the world’s leading international insurance and financial services organization, with operations in more than 130 countries and jurisdictions. Its member companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life-insurance networks. In the USA, its companies are the largest underwriters of commercial and industrial insurance and its global business also include retirement services, financial services and asset management. Its financial services businesses include aircraft leasing, financial products, trading and market making. The organization’s common stock is listed in the USA on the New York Stock Exchange and ArcaEx, as well as the stock exchanges in London, Paris, Switzerland and Tokyo. Beyond this small briefing, let us see how the balanced score for the BSC is calculated. The frame work to arrive at the balanced score for BSC for the industry concerned is shown in (Figure 4). Level 1 – goal Balanced score for BSC. Level 2 – criteria In this model four perspectives are considered. They are: (1) financial perspective; (2) customer perspective; (3) internal business process perspective; and (4) learning and growth perspective. Weightage for each perspective are arrived by preference table. In this case of perspectives, 4C2 pairs are considered for pair-wise comparison using preference theory. The possible pair-wise combinations are: . finance and customer perspective; . finance and internal process perspective; . finance and learning perspective;
Balanced score for the balanced scorecard
Balanced Score for Balanced Scorecard I-Level Goal
433
II-Level Criteria Financial Perspective (a1)
Customer Perspective (a2)
Internal Business Perspective
Learning & growth perspective
III-Level Sub-Criteria * -BR-Onsite (b1) -BR-OffShore (b2) -Realization-Onsite (b3) -Realization-OffShore (b4) -Outstanding Receivables (b5) -Billed Vs Allocated (b6) -BA Ratio (b7)
* -CSI Coverage (b8) -Customer satisfaction Index (Average) (b9)
IV-Level Alternatives c1 c2 c3 c4 c5 c6 TP AP TP AP TP AP c7 c8 c9 c10 TP AP TP AP c11 c12 c13 c14 TP AP TP AP
c15 TP
c16 AP
c17 c18 TP AP
* -On-time Delivery (b10 ) -On-Budget Delivery (b11) -Billing Analysis (b12) -Audit Coverage (b13) -Time sheet compliance (WON) (b14) -Time sheet Compliance (SWON) (b15)
c19 c20 c21 c22 TP AP TP AP c23 c24 c25 c26 TP AP TP AP c27 c28 c29 c30 TP AP TP AP
* Training Days/ person b16
c31 c32 TP AP
*(the metrics shown here are company specific ones in which we had made the observation, the details of which is given in the ensuing paragraph and not generic in nature; these are shown here to highlight how this is being worked out) . . .
customer and internal perspective; customer and learning perspective; and internal and learning perspective.
After thorough consultation with the top management, the relative weightage for each factor is arrived at by pair-wise comparisons using the preference theory as described earlier. The weightage thus calculated are used to attach importance for the respective perspectives in the preference table and the relative weightage are shown in Table II. Calculations for level 3 sub-criteria Each perspective will have sub-criteria for measuring organizational performance. To measure each criterion or sub-criteria measures are identified under each of the four perspectives, viz financial, customer, internal and learning. Now let us find out the weightages of every measure under each perspective.
Figure 4. Framework for calculating balanced score for BSC for the firm in question
BIJ 15,4
434
Financial perspective We do not disregard the traditional need for financial data. Timely and accurate financial data will always be a priority, and the managers will do whatever necessary to provide it. In fact, we want to only point out that there is often more than enough handling and processing of financial data at the cost of other relevant and important information and not to entirely ignore them. We have already seen that the current emphasis on financial parameters leads to the “unbalanced” situation with regard to other perspectives, viz. customer, internal process and learning perspectives. Under the financial perspective, the following measures were identified by the industry in question as very important. The information regarding the degree of importance in respect of the following sub-factors for the industry concerned are collected (all the metrics mentioned are company specific and not generic in nature): . billing revenue – onsite; . billing revenue – offsite; . realization per person – onsite; . realization per person – offshore; . number of days of outstanding receivables; . billed vs allocated; and . BA ratio. In this case, 7C2 pairs are considered for pair-wise comparison using preference theory and the relative weightage for each measure (sub-factor) is shown in (Table III).
Factor
Table II. Table for level 2 criteria
Finance Customer Internal Learning
Factor
Table III. Table for level 3 sub-criteria – financial perspective
1 2 3 4 5 6 7
F&C
F&I
F&L
1 0
1
1
0 0
C&I
C&L
1 1
1 0
I&L
0 1
Weightage a1 ¼ 0.4286 a2 ¼ 0.2857 a3 ¼ 0.1429 a4 ¼ 0.1429
3 2 1 1 7
1 1 1 1 1 1 2 2 2 2 2 3 3 3 3 4 4 4 5 5 6 2 3 4 5 6 7 3 4 5 6 7 4 5 6 7 5 6 7 6 7 7
BR-on 1 1 0 1 0 0 BR-off 1 1 1 1 1 1 Real-on 1 0 1 1 0 1 Real-off 1 1 1 1 1 1 Outstanding 0 0 0 0 1 1 Bills/alloc 1 1 0 0 0 BA 1 0 0 0 0 0 1
Weightage 3 6 4 6 2 2 2 25
b1 ¼ 0.1200 b 2 ¼ 0.2400 b3 ¼ 0.1600 b4 ¼ 0.2400 b5 ¼ 0.0800 b6 ¼ 0.0800 b7 ¼ 0.0800
Customer perspective Obviously, the firm felt that the customer satisfaction information is key knowledge and a critical success factor. They informed that the poor performance of this perspective is a leading indicator of future decline, even though the current financial picture may look good. The sub-factors considered are (all the metrics mentioned are company specific and not generic in nature): . customer satisfaction index coverage; and . customer satisfaction index average.
Balanced score for the balanced scorecard 435
In this perspective, 2C2 pairs are considered for pair-wise comparison using preference theory. Equal weightage (0.5) was assigned to both the factors (Table IV). Internal perspective Under this perspective, the firm had broadly identified two kinds of business process. They are: (1) mission-oriented process; and (2) support-oriented process. After identifying the type of process, the sub-factors for the internal perspective for the industry concerned are identified as follows (all the metrics mentioned are company specific and not generic in nature): . on-time delivery; . on-budget delivery (within 10 per cent over-run); . billing timeliness; . audit coverage . time sheet compliance – (WON); and . time sheet compliance – (SWON). In this perspective, 6C2 pairs are considered for pair-wise comparison using preference theory. The relative weightage are as shown in Table V. Learning and growth perspective The industry considers only one metric, viz. training days/person under this perspective. In this perspective, since only one factor is considered total weightage of 1 was assigned to the factor. The weightage is shown in Table VI. Level 4 alternatives The target and the actual performance value of the measures mentioned are considered as factors which could be grouped into financial and non-financial factors to measure Factors CSI coverage Customer satisfaction index
Weightage b8 ¼ 0.5 B9 ¼ 0.5
Table IV. Table for level 3 sub-criteria – customer perspective
BIJ 15,4
436
the organization’s activity effectiveness. The financial factors are cost and benefit. Non-financial factors are classified into factors related with time dimension and other factors. The above factors could be brought under the catogories that are to be maximized or to be minimized as shown in Figure 4. Here, the actual and targeted values for each constituent of the level 3 are substituted in the equations (1) and (2), respectively, to arrive at the weightage for the targeted and actual performance values for the industry concerned. All the weightage are shown in Table VII. These weightage are multiplied and summed to arrive at the balanced score for the BSC. Calculations Financial perspective: TP ¼ a1 ðb1 c1 þ b2 c3 þ b3 c5 þ b4 c7 þ b5 c9 þ b6 c11 þ b7 c13 Þ; AP ¼ a1 ðb1 c2 þ b2 c4 þ b3 c6 þ b4 c8 þ b5 c10 þ b6 c12 þ b7 c14 Þ: Customer perspective: TP ¼ a2 ðb8 c15 þ b9 c17 Þ; AP ¼ a2 ðb8 c16 þ b9 c18 Þ: Internal process perspective: TP ¼ a3 ðb10 c19 þ b11 c21 þ b12 c23 þ b13 c25 þ b14 c27 þ b15 c29 Þ; AP ¼ a3 ðb10 c20 þ b11 c22 þ b12 c24 þ b13 c26 þ b14 c28 þ b15 c30 Þ: Learning and growth perspective: TP ¼ a4 ðb16 c31 Þ; AP ¼ a4 ðb16 c32 Þ: Substituting the respective values.
Factor
Table V. Table for level 3 sub-criteria – internal process perspective
Table VI. Table for level 3 sub-criteria – learning and growth perspective
1 2 3 4 5 6
On time delivery On bud Bill time Audit coverage TS-WON TS-SWON
1 2
1 3
1 4
1 5
1 6
1 1
1
1
0
0
Factors Training days per person
0 0
2 3
2 4
2 5
2 6
0 1
0
1
0 1 0
1 1
0 1
3 4
3 5
0
3 6
4 6
5 6
1 1 0
1 1
4 5
0
1 0
1 1
Weightage 3 2 3 3 3 3 17
b10 ¼ 0.1765 b11 ¼ 0.1176 b12 ¼ 0.1765 b13 ¼ 0.1765 b14 ¼ 0.1765 b15 ¼ 0.1765
Weightage b16 ¼ 1
M Q M M M
Per cent Per cent Per cent Per cent Days/pm
Learning and growth perspective Balanced score
Internal perspective
Customer perspective
M M Q Q M M
M M M M M
USD USD USD/hr USD/hr No of days Per cent Per cent Per cent Per cent Per cent Per cent
Billing revenue – onsite ¼ b1 Billing revenue – offshore ¼ b2 Realization per person – onsite ¼ b3 Realization per person – offshore ¼ b4 Number of days of outstanding receivables ¼ b5 Billed vs allocated (T&M) ¼ b6 BA ratio ¼ b7 CSI coverage ¼ b8 Customer satisfaction index (average) ¼ b9 On-time delivery ¼ b10 On-budget delivery (within 10 per cent overrun) ¼ b11 Billing timeliness ¼ b12 Audit coverage ¼ b13 Time sheet compliance – WON ¼ b14 Time sheet compliance – SWON ¼ b15 Training days/person ¼ b16
Financial perspective
Frequency
Unit
Measure
Perspective
0.1429
0.1429
0.2857
0.4286
Weights (ai)
0.1765 0.1765 0.1765 0.1765 1.0000
0.0800 0.0800 0.5000 0.5000 0.1765 0.1176
0.1200 0.2400 0.1600 0.2400 0.0800
Weights (b1) i–j Actuals 0.5048 0.4481 0.4856 0.5126 0.7656 0.4565 0.3724 0.4878 0.5000 0.5000 0.4762 0.4975 0.5000 0.4975 0.5000 0.4834 0.493873
Targeted (c1) i–j 0.4952 0.5519 0.5144 0.4874 0.2344 0.5435 0.6276 0.5122 0.5000 0.5000 0.5238 0.5025 0.5000 0.5025 0.5000 0.5166 0.506241
Balanced score for the balanced scorecard 437
Table VII. Table indicating balanced score for BSC
BIJ 15,4
Financial perspective TP ¼ a1 ðb1 c1 þ b2 c3 þ b3 c5 þ b4 c7 þ b5 c9 þ b6 c11 þ b7 c13 Þ; TP ¼ 0:4286ð0:12 £ 0:4952 þ 0:24 £ 0:5519 þ 0:16 £ 0:5144 þ 0:24 £ 0:4874 þ 0:08 £ 0:2344 þ 0:08 £ 0:5435 þ 0:08 £ 0:6276Þ
438
¼ 0:215843; AP ¼ a1 ðb1 c2 þ b2 c4 þ b3 c6 þ b4 c8 þ b5 c10 þ b6 c12 þ b7 c14 Þ; AP ¼ 0:4286ð0:12 £ 0:5048 þ 0:24 £ 0:4481 þ 0:16 £ 0:4856 þ 0:24 £ 0:5126 þ 0:08 £ 0:7656 þ 0:08 £ 0:4565 þ 0:08 £ 0:3724Þ ¼ 0:212757: Customer perspective TP ¼ a2 ðb8 c15 þ b9 c17 Þ ¼ 0:2857ð0:5 £ 0:5122 þ 0:5 £ 0:5Þ
¼ 0:144593;
AP ¼ a2 ðb8 c16 þ b9 c18 Þ ¼ 0:2857ð0:5 £ 0:4878 þ 0:5 £ 0:5Þ
¼ 0:141107:
Internal process perspective TP ¼ a3 ðb10 c19 þ b11 c21 þ b12 c23 þ b13 c25 þ b14 c27 þ b15 c29 Þ; TP ¼ 0:1429½ð0:1765 £ 0:5 þ 0:1176 £ 0:5238 þ 0:1765 £ 0:5025 þ 0:1765 £ 0:5 þ 0:1765 £ 0:5025 þ 0:1765 £ 0:5Þ ¼ 0:071983; AP ¼ a3 ðb10 c20 þ b11 c22 þ b12 c24 þ b13 c26 þ b14 c28 þ b15 c30 Þ; AP ¼ 0:1429½ð0:1765 £ 0:5 þ 0:1176 £ 0:4762 þ 0:1765 £ 0:4975 þ 0:1765 £ 0:5 þ 0:1765 £ 0:4975 þ 0:1765 £ 0:5Þ ¼ 0:070931: Learning and growth perspective TP ¼ a4 ðb16 c31 Þ ¼ 0:1429ð1 £ 0:5166Þ ¼ 0:073822; AP ¼ a4 ðb16 c32 Þ ¼ 0:1429ð1 £ 0:4834Þ ¼ 0:069078: Results and analysis For a clear analysis, let us find out the difference between the targeted weightage to that of actual importance given under each of the perspectives as well as under the sub-criteria under those perspectives. This is given in Table VIII. On the whole, the company’s targeted weightage is on the higher side 0.506241 as compared to the actual of 0.493873 leading to a difference of 0.012368. This would mean that the overall performance of the company varies from specified target. This leads us to discuss the reason(s) for the under performance of the company. It is observed that there is not only variation under the overall figure, but also there are variations in all the criteria and the sub-criteria as well. Let us
therefore make a detailed analysis of all the criteria and sub-criteria in each of the perspective. Financial perspective From the financial perspective, the company’s actual performance score (0.212757) is less than the target score (0.215843) (Table IX). It is evident that the organization varies in terms of financial performance from the targeted or the desired level. The reason quoted by the organization for this under performance is inadequate employee training. This is true, because under the learning and growth perspective there is a significant variation of 0.004744. We know that shortage of training results in lower skill levels of the employees, which in turn affect the employee output. But, we feel that this alone cannot be the reason. In fact, we find that under financial perspective the variation in “Billing revenue off shore” (b2) is 0.010677, which is more than the variation shown under training. This clearly shows that the management did not perceive this larger difference in the variation. This is possibly because they were actually working on the financial value of the activity and not on the importance value, the activity deserves. Further under the sub-criteria b1 (billing revenue – onsite), b4 (realization per person – offshore), b5 (number of days of outstanding receivables) though the actual performance is more than the targeted performance, it is necessary for the management to ensure the reason for such a positive variance. Possibly, the firm is diverting more resources than it needs to for the performance of those sub-criteria. For example, if we look at the variance in b5-, number of days of outstanding receivables, we find the variance as very large, which call for a review to find the cause for such a variance.
Perspectives Financial perspective Customer perspective Internal process perspective Learning and growth perspective
Targeted performance
Actual performance
Variance
0.215843 0.144593 0.071983 0.073822 0.506241
0.212757 0.141107 0.070931 0.069078 0.493873
0.003086 0.003486 0.001052 0.004744 0.012368
Measure Billing revenue – onsite ¼ b1 Billing revenue – offshore ¼ b2 Realization per person – onsite ¼ b3 Realization per person – offshore ¼ b4 Number of days of outstanding receivables ¼ b5 Billed vs allocated (T&M) ¼ b6 BA ratio ¼ b7 Sub-total
Balanced score for the balanced scorecard 439
Table VIII. Calculation of the balanced score for the BSC – arriving at the overall variance
Targeted Actuals (ai £ bi £ ci) (ai £ bi £ ci) Variance calculations 0.025469 0.056771 0.035275 0.050136 0.008037 0.018636 0.021519 0.215843
0.025963 0.046093 0.033301 0.052728 0.026251 0.015652 0.012769 0.212757
20.00049 0.010677 0.001975 20.00259 20.01821 0.002983 0.00875 0.003086
Table IX. Arriving at the variance for financial perspective
BIJ 15,4
440
Customer perspective Regarding the customer perspective the actual performance (0.1312) varies from the target performance (0.1344), thus producing the variance of 0.003242 is given in Table X. Interestingly, in the two sub-criteria selected, one sub-criteria, viz. customer satisfaction index (average) ¼ b9, shows a significant difference and hence calls for a detailed review. Internal perspective In the internal, perspective shows the actual performance (0.08783) varies from the target performance (0.0762) is given in Table XI. Here, also we observe that the sub-criteria time sheet compliance – WON ( ¼ b14) needed managements attention. Possibly, the performance under this subcriterion may be enhanced by providing adequate internal training for the employees. Learning and growth perspective (a4) Training days=person ðb16 Þ
0:073822
0:069078
0:004744:
Learning and growth perspective also shows difference in that the actual performance (0.06908) varies from the target performance (0.073822). This will naturally happen, as in the only metric identified under this perspective the actual performance under the measure training days/person varies from the targeted weightage. Inadequate training like this can possibly result in increased rework constituting a major problem. Findings and contributions If we have a resource, which needs to be distributed to different activities, then the resource is not obviously divided equally amongst the activities. For example, if we have a resource of $1 million and five activities are to be attended to we do not earmark $200,000 for each activity. This is also true for the allocation of any other non-financial resources such as employee allocation, management’s attention, machines training needs, quality requirements, etc. According to the importance the activity deserves, we provide suitable weightages and allocate the resources, be it financial or non-financial.
Table X. Arriving at the variance for customer perspective
CSI coverage ¼ b8 Customer satisfaction index (average) ¼ b9 Sub-total
Table XI. Arriving at the variance for internal perspective
On-time delivery ¼ b10 On-budget delivery (within 10 per cent overrun) ¼ b11 Billing timeliness ¼ b12 Audit coverage ¼ b13 Time sheet compliance – WON ¼ b14 Time sheet compliance – SWON ¼ b15 Sub-total
0.073168 0.071425 0.144593
0.069682 0.071425 0.141107
0.003486 0 0.003486
0.012611
0.012611
0
0.008802 0.012674 0.012611 0.012674 0.012611 0.071983
0.008003 0.012548 0.012611 0.012548 0.012611 0.070931
0.0008 0.000126 0 0.000126 0 0.001052
So in this paper, we have detailed a process of identifying the essential criteria to be achieved by the company and the relative importance the company should give for the fulfillment of those criteria. If the company either gives less attention to the fulfillment of any sub-criteria, then the organization has to set it right as otherwise the performance of other criteria would suffer. This situation is also true if it gives more attention than is needed to the sub-criteria. But obviously, if there is variance in any sub-criteria which has the higher weightage allocated to it, then it commands more attention, as such variations would have a leveraged impact on the overall performance of the organization. So, it becomes apparent that the performances under all the perspectives are interdependent. If the performance in a subcriterion under any perspectives is affected, then it may result in the show of adverse or favorable performance in the sub-criteria of the other perspectives. That is why the management had given the reason of training inadequacy as the sole reason for the failure of adequate performance in other perspectives. So by adopting the balanced score process as detailed in this paper, we are able to identify the deficiency with respect to the importance afforded by the organization in their entire set of activities. Hence, this approach can be used for different situations without any difficulty. This is again a measure of importance provided by the organization itself. The organization is setting up for themselves the bench mark with respect to the importance that should be afforded to the fulfillment of different sub-criteria. So it is a tailor made benchmarking information system created by the firm for itself and hence the question of unsuitability of the bench mark does not arise. It has been observed that: This Best Practices Benchmarkingw Report includes best practices to help companies create optimal structures for benchmarking, successful approaches to prioritizing research requests, methods for building buy-in for benchmarking as a concept and effective ways to track process improvements. When well executed, benchmarking initiatives help companies compare their processes, identify gaps in performance and discover proven tactics for closing those gaps. Successful companies harness the power of benchmarking to lower cost positions, increase productivity and drive greater competitiveness (“Best practices benchmarking”, available at: www3.best-in-class.com/bestp/domrep.nsf/).
True to this observation, we are providing a benchmark figure which would enable to evaluate the performance in the implementation of the strategy. In this process, we have taken into account the subjective factors also and provided a suitable measurable index. Many objective methods exist to find out the causes of under performance in the areas of financial measures. There are not many objective methods available to find out which are the areas of non-financial measures affecting the performance of the firm and to what extent. Limitation of the research The levels 2 and 3 factors are evaluated using preference theory and it has certain limitations. When we compare the degree of importance of one factor over another and assign 1 for a factor and 0 for another, it means that 0 importance is attached to that factor. There is a possibility, that factor may have uniformly 0 value in all the pair-wise comparisons. This results in factor getting 0 relative importance. In other words, in the decision a 0 value factor does get a role, which is not necessary.
Balanced score for the balanced scorecard 441
BIJ 15,4
442
Future prospect of the research To remove the above said limitation, future research may be carried out to evaluate criteria (ai’s) and the sub-criteria (bi’s) by using analytic hierarchy process (AHP). Even by adopting AHP, pair-wise comparison can be made and different values be assigned based on the degree of importance ranging from 1 to 9. The reciprocal values can also be assigned based on the importance of one factor over the other. This may provide more refinement in providing adequate weightages to the relevant criteria and the sub-criteria. Conclusions There are any numbers of attempts made to show the efficacy of the usage of the BSC for showing better performance. While retaining all the advantages that are made available by using the BSC approach in providing a frame work for showing better performance, through this process of calculating the bench mark figure called “Balanced score” we are able to add more value for the analysis. We are able to identify those parameters whose actual performance vary from the targeted performance and find out their relative proportion of adverse or favorable contribution to the performance of the company by assigning appropriate weights for such parameters – be it financial or non financial. Therefore, we are in a position to objectively capture the reason for variations in the performance from the targeted levels in all the functional areas of the business with the use of the concepts of BSC as well as applying the extended information arising out of arriving at the “balanced score for the balanced scorecard”. In conclusion arriving at a balanced score for BSC which is by and large considered as a powerful approach in formulating a business excellence model, will certainly help the users of this approach to make an objective evaluation while implementing the same in their business environment. References Analyst (2001), “Accounting for intangibles Skandia reporting model”, Analyst, October. Best Practices LLC (1999), Best Practices Bench Marking Report, Developing the Balanced Scorecard, Best Practices LLC, Chapel Hill, NC. Brown, P.A. and Gibson, D.F. (1972), “A quantified model for facility site selection application to the multi product location problem”, AIIE Transactions, Vol. 4 No. 1, pp. 1-10. Corrigan, T.D. (n.d.), “Capital budgeting in the context of the balanced score card”, available at: www.iaes.org/conferences/past/philadelphia Dye, R.W. (2003), “Keeping score”, CMA Management, 18-23 December/January. Evans, M.H. (n.d.), “The balanced scorecard”, available at: www.exinfm.com/training Hope, J. and Fraser, R. (n.d.), “Beyond budgeting”, BBRT, CAM-I, Europe White paper. Jhonson, G. and Scholes, K. (2001), Exploring Corporate Strategy, Text & Cases, 4th ed., Prentice-Hall, India, pp. 1-38. Kaplan, R.S. (1996), Mobil USM & R (a): Linking the Balanced Scorecard, Harvard Business School, Boston, MA, 9-197-025 – 6.l. Kaplan, R.S. and Norton, D.P. (1992a), “The balanced scorecard: measures that drive performance”, Harvard Business Review, January/February, pp. 71-9. Kaplan, R.S. and Norton, D.P. (1992b), The Balanced Scorecard: Translating Strategy into Action, Harvard Business School Press, Boston, MA.
Kaplan, R.S. and Norton, D.P. (n.d.), The Strategy Focused Organizations, Harvard Business School Press, Boston, MA, pp. 1-30, 369-80. Lingle, J.H. and Schiemann, W.A. (1996), “From balanced scorecards to strategic gages: is measurement worth it?”, Management Review, March, pp. 56-62. Miller, A. (1998), Strategic Management, 3rd ed., Irwin Mc-Graw Hill International Edition, New York, NY, pp. 313-45. Porter, M.E. (1985), Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, New York, NY. Porter, M.E. (1996), “What is strategy”, Harvard Business Review, November/December, p. 62. Ragavan, P.V. and Punniyamoorthy, M. (2003), “Strategic decision model for the justification of technology selection”, International Journal of Advanced Manufacturing Technology, Vol. 21, pp. 72-8. Skandia Reporting Model (2001), Skandia Reporting Model: Accounting for Intangibles – Edited Excerpts from the Supplement to Annual Report 1994, Skandia – Analyst, October. Stewart, A.C. and Hubin, J.C. (2001), “The balanced scorecard: beyond reports and rankings”, Planning for Higher Education, Vol. 29 No. 2, pp. 37-42. Stewart, T. (1999), “The status of communication today”, Journal of Strategic Communication Management, February\March, pp. 22-5. About the authors M. Punniyamoorthy is a Graduate in Mathematics, with a BTech in Production Technology from Madras Institute of Technology, Chennai, and MTech in Industrial Engineering and Operations Research from Indian Institute of Technology, Kharagpur. He possesses ICWAI (inter) qualification and did his Doctorate in Management from Bharathidasan University, Tiruchirapalli. He is presently working as an Assistant Professor in the National Institute of Technology. One of his papers “A strategic decision model for the justification of technology selection” published in the International Journal of Advanced Manufacturing Technology, UK (Vol. 21, 2003, pp. 72-8) has been selected by the American Society for Mechanical Engineers as one of the best ten papers in the area of technology selection. M. Punniyamoorthy is the corresponding author and can be contacted at:
[email protected] R. Murali is a Post Graduate in Mathematics and has a Management Degree from Indhira Ghandhi National Open University. He is also a cost accountant and is presently a Fellow in the Institute of Cost and Works Accountants of India, which is the apex body of cost accountants in India. He has worked in one of the biggest Nationalized Banks of India having a large network of branches in India and abroad for more than 26 years and has also served for more than ten years in the staff training college of the bank handling in the areas of credit and human resources. He is presently working as a Lecturer in the National Institute of Technology in cost and management accounting, financial management, economics, strategic management and human resources related topics.
To purchase reprints of this article please e-mail:
[email protected] Or visit our web site for further details: www.emeraldinsight.com/reprints
Balanced score for the balanced scorecard 443
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
