Organization Balanced Scorecard - Case Study Example

Organization balance score card Executive summary The financial unit of any organization cannot be underestimated. This is becausethis is the department in the organization that ensures that the organization is smooth running and it remains profitable. The financial department at Target can be described as one of the most hectic departments to work in. This is because the department is often busy in order to analyze financial information and determine whether or not the company is moving towards the mission of the company. The three objectives of the financial department at Target is to ensure that there is revenue growth by proposing income generating projects, operation on the profit growth and ensuring determining the short term solvency of the company. These objectives are in line with the vision of the company as they ensure which is offering low prices to the consumers. The company makes sure that it capitalizes on the large market by selling its products at lower prices. The need for a balanced scorecard in order to determine whether the company is headed in the right direction in terms of profitability cannot be understated. Therefore, this is done by measuring each objective in the financial sector with a quantified target metric that is associated with it. This process has helped companies understand their position and the weak and strong areas in the organization. In this way, the priority of the objectives can be understood in the organization and therefore, it becomes easier for the management to understand which objective should be implemented first based on its importance. Further, it shows how the different sectors of the company are performing in relation to the vision and the mission of the company. Traditionally most federal agencies measure their managerial presentation by mainly focusing on internal process performances; they also looked at factors such as the number of full time equals that were allotted. However, on the other hand the private sector has always focused on the monetary procedures as their bottom line; this includes return on investment, earnings per share and even market share. It is imperative to understand that alone, neither of the approaches can be able to give stipulation for the full viewpoint of an organization’s routine. However, by ensuring that there is a balance that exists between the internal process as well as results from financial measures, managers can be able to have a complete picture as to whether the company should be able to make improvements. For this reason, the balanced score card was used as it gives top manages a fast and also comprehensive view of the entire organization performance. Target can be described as an innovative as well as influential store; the mission of the statement of the store often focuses on four different but related roles. The first is the establishment of great guest services; these services need to be top notch and in fact this is the first mission of the company. Secondly is for the company to have clean stores, thirdly is stock merchandise and lastly is for there to be a speedy checkout. All these guidelines are important as they make p the culture of the fun, fast and friendly stores that Target is known for. Develop three specific objectives inside each of the four perspectives for the unit.  The customer’s perspective 1. The financial unit must make sure that the customers see the company as a corruption free company with an ever growing profit base. This is an important perspective to the customers as they often like to be associated with a company that is known for its honesty especially in terms of financial matters. If corruption and fraud do occur in the company, there will be no doubt in the customer’s minds that the company is full of rot and consequently they will view the company in negative light. The financial unit must ensure that the company is compliant with all tax regulations and this will make the customers view the company in good and positive light. The metric unit that can be used in this case is the median score of customer survey. The survey should be based on the public image that the company portrays to the public. The company should work to get a median score of 4. In order to get this score, the company should ensure that it holds regular auditing meetings where each person is scrutinized. Further, the score can also be achieved by training the employees to uphold high standards of integrity when conducting their jobs. 2. The company must ensure that it puts its price in a way that will ensure that it is compatible with most consumers. The price should be low in order to attract more consumers. This is because there is a need for the company to understand that price is one of the most important factors when it comes customer satisfaction (Person, 2013). Therefore, there is a need for the company to ensure that it creates consumer friendly prices. Therefore, Target’s price should match that of its competitors and should be in a position to ensure that the company is the market leader when it comes to the lowest price in the market. The metric unit to measure this objective is the median price of the market as compared to Target price of the same commodity. This will go to show whether or not the company is strategically placed in terms of price or it charges its customers high prices. The price should be low as compared to other competitors in the market. The low price can be achieved by Target approaching suppliers and striking deals with them in a bid to ensure that the prices in the stores are reduced. Further, there is a need to buy all goods in bulk in order to enjoy discounts that can be later translated to the consumers. 3. Further, the company should ensure that in order to achieve its vision, the financial unit dedicates a certain amount of money towards the treatment of customers as guests. This is because guests are often treated as if they are dignitaries and therefore, people visiting the store should also receive such treatment. The guests should be able to shop with what can be described as clutter-free aisles as well as fast, friendly and fund team members. The metric unit of this objective is the median score that exists among the customers. The median score can be obtained by having a survey amongst customers on how the customer are treated as guests when they enter Target stores. The median score should be around 4. This can be achieved by installation of consumer friendly equipment as well as the use of trained personnel that often smile and welcome the customers into the stores as guests (Person, 2013). Respect should also be shown when it comes to the consumers. If this is done, the median score will undoubtedly increase as the consumers will feel more appreciated in the store and feel as if they are treated as dignitaries despite their personal, religious, economic and social backgrounds. Internal process 1. There is a need to ensure accountability in the company, this will be important as it will ensure that the company runs efficiently and effectively. Accountability often makes a company to perform better than expected; this is because employees are often motivated as they see their fruits of their labor in the profit of the company. Accountability and transparency is often ensured by the financial unit and consequently, there is a need for the unit to be extra vigilant in order to ensure that there is no type of fraud that occurs in the company. The median score of the employees in regards to the accountability and transparency can be used as the metric measurement when it comes to this objective. The median score should be 5. This score can be achieved by the company putting more stringent measures when it comes to transparency and accountability. It should put up auditors who will be able to oversee the whole process of purchasing, selling and reinvesting the profit back into the store. 2. The financial unit needs to be consistently trained in order to forecast accuracy. This will be important as it will make sure that the products are understood by the financial department and their relative sales in future months are also noted. The ongoing training should ensure that the company understands the types of products that they are supposed to stock and those that should be removed from the shelves (Person, 2013). The number of predictions that go right over the total number of predictions made by the financial department can be used as a measure when it comes to this objective. The number of predictions should be very high as compared to the wrong predictions, this objective can be achieved if there is enough training for the employee in order to be able to forecast accuracy (Niven, 2005). 3. There is a need for the managers in the financial unit to run day to day business with a code of ethics. This will ensure that there is mutual respect in the office and consequently it will ensure that the store’s mission is achieved. Further, the running of the financial unit with code of ethics will also ensure that the company goes forward in terms of profitability as most persons in the office will be motivated to work hard because of the positive environment in the office. The median score on a Likert scale with 1 completely disagreeing and 5 completely agreeing can be used and the median score of this survey gotten can be used as a metric measurement for this objective (Person, 2013). The median score should be around 4. In order to achieve this score, there is a need for the company to be trained about ethics and the doctrine of ethics to be instilled in the company. This can be done through several seminars, and workshops that are organized by the financial unit of the organization. Learning and innovation 1. The first thing that the financial unit needs to do is to raise employee moral as well as productivity. This can be done through the issuing of pay rises or even paid holidays. This will effectively ensure that the company increases its productivity per employee (Voelpel, 2006). This is important for Target stores; this is because the organization wishes to expand its profit margin. The employee turnover can be used as the metric unit of measurement when it comes to this method. The employee turnover should forever increase and this can be done by increasing the morals by issuing pay rises to hardworking employees in a bid to make them even work more. Further, moral lifting can also increase productivity in the organization by Target taking a more sensible approach when it comes to fun days, and holidays (Voelpel, 2006). 2. The company needs to train and develop team members. The financial unit should put aside funds for this project, further; in the financial unit department there is also a need to ensure that the employees are trained in order to conform to the latest technological requirements in the modern financial sector. This will always ensure that the company is a market leader when it comes to training and developing employees. (Papalexandris et al, 2005) The annual hours of employee training can be used as a metric unit of measurement when it comes to this objective. Further, employee turnover can also be used when it comes to this objective as training is expected to increase turnover of the employees. The employee turnover should forever increase, and therefore, this can be done by properly training the employees. The financial unit should release money that will help train the employees in a bid to increase profitability as well as professionalism in the organization (Person, 2013). 3. Lastly, there is a need for the company to ensure that there is innovation. This is because innovation is one of the driving factors when it comes to any industry. Financial innovation will ensure that Target Company goes ahead when it comes to financial services (Niven, 2006). Employee turnover can be said to be the measurement unit to be used when it comes to this object. If there is an increase in innovation there will be definitely be an increase in employee turnover. The employee turnover should increase and this can be achieved by the company ensuring that it has plans on how to increase innovation in the company (Papalexandris et al, 2005). For example, there is a need for brainstorming sessions especially in the financial unit in order to understand how certain problems can be dealt with appropriately. Financial: 1. In order to understand the financials of the Target and whether or not the company is on the success path, there is a need to get certain important information. The first thing that the management in the financial unit needs to look at is positive cash flow. It is imperative to understand that at Target some of the busiest time often include back to school, Christmas and Thanksgiving. These seasons are often associated with buying things from the stores and consequently, Target is often able to position itself strategically in order to harness the money that comes with these peak seasons (Person, 2013). However, it is imperative to understand that the profits taken during this period often compensate for the missed sales goals that occur during the rest of the year. It is imperative to understand that when sales are missed, this often affects the financial performance of a company in a negative away. There is a need for the financial unit to make sure that there is positive cash flow and that it is made a day to day effort which exists with at least 96.3% sustainability (Niven, 2005). A positive cash flow always goes along way when it comes to financial management of a company; there is therefore, a need for the company to ensure that each and every time there is a positive cash flow in the organization (Papalexandris et al, 2005). Therefore, the revenue growth of the company can be measured by the annual rate of growth as the unit of measurement. The revenue can be increased by the company expanding into new territories as well as decreasing its operating costs. 2. It is imperative to ensure that that the majority off the low paid workers who come from low skilled financial institutions are paid (Niven, 2005). Low wages in many cases never equal a satisfied employee, for this reason, the reflection of a negative disposition on the organization might at times occur. Therefore, morality that exists within the workplace can be said to be more than wage, for example, one of the questions that is often asked when it comes to Target is whether the quality of life is able to offset the pay. The financial unit of the company should be responsible in ensuring that all the staff o f the company is paid their dues and that they work productively in order to ensure that the company. The average pay of the company can be used in this situation as it will show whether or not there is equality in pay in the organization. The average pay should be computed based on productivity as compared to inflation; this will make sure that the employees get their value for their money when they are working (Papalexandris et al, 2005). 3. Organizational sales success is often unlike the world of team sports as effort is more appreciated than talent. There is a need for the financial unit to adopt critical sales skills in order to ensure that the company remains top notch. For example, with a profit mentality the company financial management can be able to structure the workforce in a way that will ensure maximum profitability in the stores. This is based on the fact that there are often weak and strong performers and this is often based on certain critical skills which can lead a firm to financial success. The metric unit of measurement when it comes to this objective is the amount of sales sold to the consumers (Niven, 2005). If the right financial investment is made there will be an increase in sales, however, the number will be different when it comes to failed or wrong investments. The only way the financial unit can be able to predict sales better is by being trained better. There are no shortcuts to this method. References Papalexandris, A., Ioannou, G., Prastacos, G.P. and Soderquist, K.E. (2005) An integrated methodology for putting the Balanced Scorecard into action. European Management Journal, 23(2), 214-227. Niven, P. R. (2005). Balanced scorecard diagnostics: Maintaining maximum performance. Hoboken (N.J.: J. Wiley. Niven, Paul R. (2006) "Balanced Scorecard. Step-by-step. Maximizing Performance and Maintaining Results. Voelpel, S., Leibold M., Eckhoff R., Davenport T. (2006), The tyranny of the Balanced Scorecard in the innovation economy, Journal of Intellectual Capital, Vol. 7, n° 1, pp. 43–60. Person, R. (2013). Balanced Scorecards and Operational Dashboards with Microsoft Excel. New York: Wiley. Read More