Balanaced Scorecard and Performance Measurements - Case Study Example

BALANCED SCORECARD AND PERFORMANCE MEASUREMENTS Introduction The balanced scorecard (BSC) is a strategic performance measurement tool, which can be utilised by the management in measuring success. Measurement and monitoring of success is an essential element in seeking to ensure organisation’s resources are utilised in achieving the best results. The BSC presents a mixture of financial and non-financial elements which are applied in measuring components of the organisation aimed at achieving specified targets. The balance scorecard presents a comparison of the vision and mission with the companys performance (Merchant & Van der Stede. 2007). The scorecard is effectively utilised in measuring the utilisation of resources in seeking to achieve the objectives stipulated within the context of the organisational vision and mission statement. The balanced scorecard for Otago Museum makes consideration of the companys objectives as compared to the various stakeholders within the organisational structure. The stakeholders The various stakeholders within the organisation need to be able to measure the performance in relation to the objectives of the organisation. As a non-profit organisation, effective functioning of the internal systems is essential in ensuring the stakeholders are focused in performing their responsibilities within the organisation. A consideration of the organisational vision enabled transformation of the objectives into operational goals, which become the fundamental responsibilities for the various stakeholders. The understanding of their responsibilities enables the stakeholders to identify instances when operations are not within the desired outcomes. This enables the stakeholders to adopt measures for making corrections in seeking to ensure the operations remain within the expected standards. Directors and management These are the stakeholders who have continuously ensured the organisation remains operational. Their fundamental function is the coordination of resources towards achieving the identified outcomes of the organisation. These individuals are involved in the development of the organisational strategies in seeking to ensure delivery of the strategic objectives. Many of the developed strategies remain based on the organisational objectives, which are derived from the vision. The management functions and leadership provided by these stakeholders has remained fundamental in ensuring continued operation of Otago. These stakeholders need to be constantly informed about the modern trends within the business in order to integrate them within the context of Otago operations. The strategic planning and subsequent controlling of activities are the basic functions performed by these stakeholders Employees The employees are the fundamental stakeholders involved in the direct undertaking of different responsibilities which are focused on ensuring continued operation of the museum. The internal business process are undertaken by these stakeholders in seeking to ensure that the organisational objectives. The employees perform many of the organisational operations and their input within the organisation is extremely significant to the success of the organisation. Success among these stakeholders would be measure in terms of the operational effectiveness in delivering the desired outcomes. The established targets, which include inspiring and enriching the communities through provision of historical information, remain the fundamental guidelines for the employees in undertaking their responsibilities. The employees require having sufficient information which they can utilise in information visitors of the museum and other stakeholders seeking to understand the operations. Visitors These are the individuals who visit the museum seeking information on the different services provided by the organisation. The visitors are the fundamental stakeholders for whom the organisation exists to serve. All the strategic plans developed and implemented by the other stakeholders are focused at ensuring the number of visitors increase. The organisational visitors are the fundamental sources of financial resources for the various business units of the organisation. Despite the organisation being funded by the government and being non-profit organisation, the presence of business units is a significant element of importance within the organisation. The shortage of funds experienced has significantly made the visitors to become a fundamental source of income for funding the operations. Organisational strategies The organisational strategy for Otago has been focused on ensuring development within the various segments of the organisation, which are fundamental to the operations. The current strategic objectives are focused on ensuring that the benefits of the organisational operations reach the entire stakeholder with significant emphasis being made on the community. The element of focusing upon the immediate society becomes essential in creating a rapport with the immediate community. The support which an organisation receives from the community can be a fundamental source of organisational success. Many of the cultural objects which the museum contains have been borrowed from the society within the neighbouring region, hence the need for integrating the communal needs within the organisation’s objectives. The business approach which the organisation has undertaken follows a non-profit making approach for implementing business units. The pricing for these business unit services has been subsidised through the funding which comes from the different sources of financial resources. The organisation has faced increased levels of competition form other museums operating within the country and being funded by the government. This has resulted in the total funding for the cultural activities and museums being shared among various museums within the country. This has resulted in the organisation introducing some business units within the organization provide other sources of funding. The profits from these operations are focused on subsidising the funding provided from government sources. In seeking to minimise the funding challenges experienced by the organisation, the organisation should seek to utilise different strategies into the future. Expansion of the operations would be a fundamental strategy which could increase the income of the museum. This can be implemented through partnerships with other organisations interested in similar activities, and the increasing of the business units within the museum. Partnerships would be fundamental in the provision of funding and new operational strategies which can be learnt from partner organisations (Kaplan & Norton 2013). A change in the operational strategies could enhance the effectiveness and transformation of the services provided within the organisation. The income is the greatest challenge facing the organisation and focusing on the financial sources for the organisation would significantly improve the operations of the museum. Requirements for Performance measurement system for Otago Otago is a non-profit making organisation which operates mainly form funding provided by the government. The provision of different business units within the organisation has been fundamental in increasing the funding for the organisation. The expansion of an efficient performance measurement system for the organisation would involve consideration of different organisational aspects (Merchant & Van der Stede. 2007). The implementation is relatively different form the implementation of similar projects within a private, profit-making organisation. The subsequent elements should be well thought-out in the development of performance measurement system for the museum. Project orientation would be essential in defining the benefits for implementing the performance measurement system. Establishment of the project orientation is an essential feature because it helps the stakeholders to alleviate any fears regarding the implementation process. Undertaking of the different activities enables the stakeholders to understand the systems and become supportive of the project. Readiness assessment can be defined as the evaluation of the internal capabilities of the organisation in ensuring support for the implementation of the system. This assessment can be defined as risk management tool which seeks to analyse the potential barriers before the development of an implementation plan for the performance measurement system (Kaplan & Norton 2004). This assessment provides the stakeholders with a clear organisational view in seeking to establish presence of sufficient performance measurement framework within the organisation. The absence of effective framework will necessitate remedial action to ensure existence of a proper performance measurement framework before implementing the system. Performance measurement strategy enhances the adoption of a process-oriented approach for implementing the system within the organisation. Development of these strategies is an essential element which enables merging of the stakeholder expectations to the performance measures required by the organisation (Sharma 2009). The consideration of stakeholder expectations and subsequent development of performance measurement strategies ensures that the system becomes stable and satisfies the fundamental stakeholder requirements. Performance measurement architecture enables the specification of various attributes which will be utilised in measuring performance. The architecture is a fundamental element for determining the design, structure and content of the system before implementation. These attributes will be determined according to the mission and vision of the organisation. This enables the various activities to be performed by different stakeholders to be determined and accurately identified (Johnston & Pongatichat 2008). The architecture follows top to bottom approach which requires the mission to be developed first. The other considerations include objectives, strategies, and performance indicators respectively, in the top to bottom approach. Measurement profile is developed in accordance with the different performance indicators identified in the architecture of the system. The profiling of the different measures enables the various business processes to become sufficiently analysed in order to determine the requirements and existing gaps. The completion of measurement profile enables the development of an information database to support the various activities undertaken in implementing the system. Communication is another fundamental aspect which the must be analysed and enhanced in seeking to ensure successful implementation of the system. communication must be enhanced to ensure the various stakeholders within the system are informed about the various elements which make up the system (Moxham & Boaden 2007). Effective communication is essential in ensuring that the stakeholders understand the various system parameters making the system. Balanced scorecard The major business stakeholders within the context of the museum are the visitors, employees and the directors of the museum. The museum has continuously sought to ensure the satisfaction of the different stakeholders involved within the business operations. The funding organisations remain the fundamental determinants of the approaches which will be utilised in implementing the performance measurement system (Sharma 2009). The balanced score card identifies the numerous stakeholders who will be involved within the various activities ensuring successful application of the performance measurement system within the organisation. The major decisions regarding operations of the museum will be undertaken in regard to the consideration of the different functions of the stakeholders. The existence of good relationships between the different stakeholders has been essential in enhancing the performance of the organisation. The organisation has remained focused at ensuring that satisfaction of the different stakeholder is achieved through the operations undertaken within the organisation. The funding for the organisational activities have been subsidised through the introduction of business units which present the organisation with other funding channels (Jensen 2001). The income sources of the museum should be closely considered in seeking to ensure sufficient management of the various stakeholder concerns. The good relationships between the stakeholders have been fundamental in ensuring increased number of visitors to the museum, over the recent years. Continued funding is essential in seeking to ensure successful business operations, within this non-profit making organisation. Much of the financial support comes from the state, with other funding options available to the organisation being the business units as well as partners. The increased utilisation of different approaches ensures that the organisation increases the income generation through engaging in different income generation activities. Satisfaction of the visitors with the services provided by the organisations is an essential element in ensuring continuity of successful business operations (Hubbard 2010). These operations are considered when seeking to make considerations for different stakeholders as they are the individuals whom the operations target. The balanced scorecard enables the performance indicators to be analysed and effectively assessed for accurate measurement and implementation of a system. Assessment of these parameters ensure the minimisation of business risk upon the operations being undertaken. Purpose of the scorecard The balanced scorecard is a significant strategic management tool, which enables organisations to assess the operations seeking to improve the operations. The tool enables strategic plans to become implemented following intensive assessment of the existing frameworks supporting different organisational operations. The scorecard can be described as a performance measurement framework which utilises the organisational functions in seeking to enhance the functioning of the organisation (Niven 2006). The evaluation of operational processes enables the stakeholders to recognise the weaknesses and challenges faced by the previous management approaches utilised within the organisation. This becomes fundamental in enabling the stakeholders can implement a change focused approach towards improvement of the business processes. The scorecard enables the organisational strategic plan to become transformed and aligned with the vision of the organisation. The scorecard is utilised in seeking to enhance the organisational weaknesses with the strengths contained within the organisation. Alignment of the organisational vision with the performance measures will enable the performance indicators to be evaluated in line with the organisational vision and mission. The BSC is an essential tool for analysing the performance of an establishment based on the established indicators. This tool presents the value proposition for the organisation and seeks to analyse the various elements which present the performance measures (Johnston & Pongatichat 2008). Effective strategies applied within the balanced scorecard enable the organisation to implement process improvement aspects within the business processes. In undertaking the function of process assessment, the key performance indicators become essential elements for initiating analysis of the processes in seeking to establish existing gaps. The utilisation of the balanced scorecard enables different stakeholders to identify the various strategic plans and themes which the organisation seeks to implement. The objectives contained within the organisation become clearly defined ensuring the successful implementation of different elements of the BSC. Through the adoption of the BSC numerous organisational initiatives become transformed into operational goals which are achieved through business operations (Kaplan & Norton 2013). This is undertaken through planning the components of the scorecard in a logical sequence, through the integration into the performance measurement framework contained in the organisational structure. This enables various organisational strategies to become effectively evaluated in regard to the existing organisational vision. The development of a balanced scorecard is a business process that must be continuously implemented through close integration of the services provided to the strategic objectives of the organisation. The process involves undertaking an analysis of the internal processes of the organisation, in seeking to identify the elements which require improvements. The strategic map enable the organisation to establish the aspect of value creation through aligning strategic objectives with the vision of the organisation. The performance measures become the target measures which organisations utilise in determining success. The implementation of a balanced scorecard should result in the improvement of business processes, which are measured through the established performance indicators(Poister 2008). The accurate measurement of the performance indicators occurs through the continuous assessment of the established performance indicators. The balanced scorecard is a commonly utilised approach for implementing strategic measurement systems within organisation. The fundamental difference between the scorecard and other strategic measurements is the process of making preparations through consideration of different elements within the organisation (Norreklit 2000). This enables the outcomes of the scorecard to be better than the other approaches. This is so because the scorecard has cause-cause effect relationship assessment. The scorecard presents the best measurement approach since it does not only measure strategies but also implements a controlling element into the system. Conclusion The balanced scorecard presents stakeholders with the capacity to undertake an analysis of the organisation in order to improve the processes. The scorecard enables the performance of the organisation to be measured in relation to the established performance measurement indicators, established by the organisation. This performance measurement tool can enable the Otago Museum to identify and improve the different internal functions and their outcomes as well (Moxham 2009). The measurement of these functions enables an organisation to collect data regarding the internal processes of the organisation and subsequently understand the outcomes of these functions. The findings received form the scorecard form a fundamental basis for implementing organisation strategies and objectives through consideration of the stakeholder requirements. Many organisational long-term strategic plans remain heavily dependent on the different elements contained within the scorecard. References Hubbard, D.W., 2010. How to Measure Anything: Finding the Value of Intangibles in Business 2nd ed., New Jersey: John Wiley & Sons. Jensen, M.C., 2001. Value Maximization, Stakeholder Theory, and the Corporate Objective Function. European Financial Management Review, 7(3), pp.297–317. Johnston, R. & Pongatichat, P., 2008. Managing the tension between performance measurement and strategy: coping strategies. International Journal of Operations & Production Management, 28(10), pp.941–967. Kaplan, R.S. & Norton, D.P., 2013. Alignment: Using the balanced scorecard to create corporate synergies, Boston: Harvard Business School Press. Kaplan, R.S. & Norton, D.P., 2004. Measuring the strategic readiness of intangible assets. Harvard Business Review, 82(2), pp.52–63. Merchant, K.A. & Van der Stede., W.A., 2007. Management control systems: performance measurement, evaluation and incentives, New York: Pearson Education Ltd. Moxham, C., 2009. Performance measurement: Examining the applicability of the existing body of knowledge to nonprofit organisations. International Journal of Operations & Production Management, 29(7), pp.740–763. Moxham, C. & Boaden, R., 2007. The impact of performance measurement in the voluntary sector: Identification of contextual and processual factors. International Journal of Operations & Production Management, 27(8), pp.826–845. Niven, P.R., 2006. Balanced Scorecard. Step-by-step. Maximizing Performance and Maintaining Results 2nd ed., New Jersey: John Wiley & Sons. Norreklit, H., 2000. The balance on the balanced scorecard a critical analysis of some of its assumptions. Management Accounting Research, 11(1), pp.65–88. Poister, T.H., 2008. Measuring performance in public and nonprofit organizations, New Jersey: John Wiley & Sons. Sharma, A., 2009. Implementing balance scorecard for performance measurement. ICFAI Journal of Business Strategy, 6(1), pp.7–16.  Read More