Tableau de bord - Essay Example

? Tableau de bord Executive Summary The study will try to throw some light on two important performance measurement tools which are balance scorecardand Tableau de Bord. The study will try to identify key aspects of both the models in order to understand their individual contribution to performance measurement. The study has selected Balance Score Card over other performance measurement due to its popularity. Detailed analysis of all the four perspectives of balance scorecard will be important part of the study. In the second part, the study will try to identify key performance driver for both the models and recommend “best practice” to organizations. The study will try to analyze usefulness of balance scorecard from the view point of supply chain management. Analyzing shortfalls of Tableau de Bord will be an important part of the study. The study will try to address strategic issues regarding the Tableau de Bord. In the last section, the study will try to recommend a neo classical model of balance scorecard for both profit and non profit organizations; the model will describe performance measurement in terms of corporate culture, managerial system, operational system, marketing activities and resource capabilities. Table of Contents Table of Contents 3 Introduction 4 Main Findings 4 Balanced Scorecard 4 Customers 5 Financial Perspective 5 Internal Business Process 7 Learning and Growth 8 Tableau de bord 8 Key Performance Criteria 10 Conclusion 12 Recommendation 12 Reference 13 Introduction It has been observed that companies planning to measure performance of the internal and external stakeholders opt for Balance Scorecard model proposed by Kaplan and Norton although there are plenty of performance measurement tools available such as Performance Prism, Key performance indicator and little known “Tableau de bord”. Othman (2008) has pointed out that Balance Scorecard is extended version of “Tableau de bord” while other research have nullified this assumption. “Tableau de bord” is widely used in countries like France as an effective performance measurement tool while the model has very little applicability in other countries. Flamholtz (2003) has pointed out that balance scorecard is the best performance measurement tool available for managers. Various research scholars such as Epstein and Manzoni (2010) have tried to create a connecting bridge between Balance Scorecard and “Tableau de bord” while others have criticized the French model for its limitations. Main Findings Balanced Scorecard Research scholars have described balanced scorecard as a strategic option for organizations which helps them to assess performance of different non financial and financial elements. It provides the strategic framework to companies to measure performance variables. Survey conducted by fortune magazine states that more than half of top 500 companies in the globe are using balanced scorecard as a performance measurement technique. Moreover, Harvard business Review has identified balanced scorecard as the most important performance management tool developed in the last forty years. Balance scorecard is complemented with four elements such as Business Process Perspective, Learning & Growth Perspective, Financial Perspective and Customer Perspective. The model measures performance on the basis of above mentioned four perspectives and these performance criterions can be explained in the following manner. Customers The model measures performance gap in terms of customer profitability, customer retention rate, churn rate, customer satisfaction level. Organizations select market segment to offer products in order to achieve profitability and business growth hence mangers need to translate marketing strategy according to demand of particular segment. It has been observed that in many cases companies fail to maintain relationship with internal and external stakeholders. In such situation balance scorecard can be a useful tool for companies to adopt a customer relationship strategy. Balance scorecards use generic value proposition framework in order to measure its customer perspective. Value proposition model can be described in the following manner. (Source: Kaplan and Norton, 1996, pp. 47-92) Financial Perspective In many cases it has been observed that various organizations use balance scorecard to determine financial sustainability of adopted business strategy. Balance scorecard measures performance gap in terms of various sub elements such as revenue growth, return on investment, asset utilization and cost reduction. Impact of balance scorecard in financial aspect of business strategy can be explained by the following table. Business Strategy Balance Scorecard Directed Objective Revenue Growth Cost Reduction Asset Utilization Business Unit Strategy Growth The model measures the increase or decrease in revenue caused by new product launch. Balance scorecard measures revenue versus cost for each employee. The model measures the percentage of annual revenue deployed in research and development. Sustain Balance score card also measures the sales revenue increased or decreased via cross selling. The model measures indirect expenses and variable cost reduction rate as a part of financial perspective. Calculating working capital ratio and cash to cash cycle helps the manager utilize existing assets in the Organizations. Harvest Balance scorecard measures financial performance in terms of product line profitability as a part of Harvest strategy. The model emphasizes on calculating unit cost for each transaction. Balance scorecard measures payback throughput as part of harvest strategy. Internal Business Process Balance scorecard measures performance of internal business process in terms of satisfying objective of internal and external stakeholders. It has been observed that organizations use cross functional monitoring so as to measure internal business process. Performance gap in the value chain can be measured by using balance scorecard. Balance scorecard measures value chain in terms of three factors like operation, innovation and post sale service. Performance measurement process for internal value chain can be explained in the following manner. Innovation Operation After Sales Service Customer Need Identified Balance scorecard measure performance of internal business process in terms of market selection and product penetration. The model measures performance gap created in supply and logistic activities. Balance scorecard measures performance gap in the form of process lead time and service quality Key objective of balance scorecard to measure customer satisfaction from the view point of internal business process Learning and Growth Balance scorecard measures long term objective of business by measuring performance gap in the form of learning and growth. In this stage balance scorecard helps the organization to fulfil long term objective by designing investment guideline for them. Balance scorecard measures performance gap in terms of transparency in organizational information system, capability of the employees and leadership model as part of learning and growth. Research scholars such as Neely (2005) have pointed out that Balance scorecard helps organizations to adopt learning organization concept. Tableau de bord Tableau de Bord concept was developed by French business community and it was developed during 1930s. The model is almost similar to traditional “dashboard” framework and managers are described as “pilots” by the model. Tableau de Bord describes managers as performance driver for organizations. In the initial phase the model was created in order to create performance map for process engineers by formulating a cause effect diagram. In the later stage the model was applied to enhance performance of top management. Epstein and Manzoni (1998) have pointed out that Tableau de Bord provides decision making guideline to managers. In France, organizations implement Tableau de Bord in each sub units because each of the units has different performance indices. Basically Tableau de Bord is more of decision supporting techniques in comparison to overall performance measurement techniques. In most of the cases organizations use the model to measure financial performance which ultimately enhances limitation for the model. Research scholars like Epstein and Manzoni (2004) have pointed out that Tableau de Bord needs to measure non financial variables in order to create a comprehensive performance measurement tool for organizations. The model should indicate key performance indicator for individual units in order to measure performance in quantitative manner. Bourguignon et al. (2004) have argued that Tableau de Bord does not provide answer to learning perspective; hence, it cannot be referred as comprehensive guideline for performance measurement. The model measures performance in single loop learning model (for solving the problem) and double-loop learning process (identifying the path of creating the solution). Biggest drawback for the model is its inability to create a performance measurement structure covering both financial and non financial variables. Tableau de Bord measures performance in terms of variable actions. The model defines performance objectives as critical milestones for managers. The model measures internal performance for business system. Tableau de Bord emphasizes importance of measuring performance in terms of horizontal and vertical integration of business process (Daum, 2005). Key Performance Criteria The study has selected balance scorecard as more useful technique in comparison to Tableau de Bord. The French performance measurement has not provided any guideline to bring balance is measurement and more importantly the model is extended form of performance dash board. Tableau de Bord should measure non financial variables such as stake holder relationship, customer relationship management and many others. The model should measure performance in terms of both qualitative and quantitative manners. The model should use organizational learning and customer relationship as key performance driver rather than showing cause effect diagram of horizontal and vertical integration of operational process. On the other hand, balance Score card fails to create quantitative linkage non financial indicators and expected financial outcomes. The model needs to provide proper justification for incorporating "learning and growth," and Turner (2000) has also argued that the model lacks face validity. Balance Scorecard should measure key performance criteria such as day to day operational activities, various managerial functions such as planning, organizing, controlling and corporate culture (shared value, employee empowerment and communication transparency). The study has selected Balance score card over Tableau de Bord as “best practice” due to following reasons. Balance scorecard creates a link between strategic management guidelines proposed by Mintzberg and performance management (Mintzberg, 1978). The model is very much helpful and brings consistency in corporate and business level strategy adopted by the company (Amaratunga and Baldry, 2002). Balance scorecard provides the balance between financial and non financial variables by giving equal importance to all the variables. The model is a comprehensive framework to measure performance of internal and external stakeholders while other models like Tableau de Bord fail to provide answers to stakeholder relationship. The model provides strategic control over performance measurement techniques. Organizations can change the direction of performance by using the balance scorecard technique. The following model can be used to understand the relationship. (Source: Tapinos, Dyson, and Meadows, 2005, pp. 370 - 384) The diagram is showing that organizations develop the strategy in order to fulfil business objective. Balance scorecard helps the organizations change the strategy after doing careful evaluation of performance result. Norreklit (2000) has pointed out that balance scorecard measures performance in terms of computation of the outcome (lag indicators) and performance drivers (lead indicators) while no other performance measurement tool has been able to define performance in such precise manner. Each of the four perspectives is complemented with lead and lag indicators which helps organization to measure performance in comprehensive manner. Research scholars have pointed out that many organizations use a more complete version of balance scorecard by adding supplier perspective in order to measure performance of value chain partners. Such flexibility and comprehensiveness is missing for performance measurement tools like Tableau de Bord. Integration of supply chain management in the Balance score has increased the potentiality of the model (Van Weele, 2005). Conclusion It is clear from the study that balance score card is more comprehensive in nature in contrast to Tableau de Bord, and this is the reason the majority of corporate show penchant for using balance scorecard to measure performance. Tableau de Bord can create a cause effect diagram for business process, but it fails to address other critical business issues like customer satisfaction and organizational learning. Recommendation Balance scorecard needs further modification in order serve operational, cultural and managerial perspective of balance scorecard. Organizations (both profit and not for profit) need to incorporate following model for balance scorecard in order to address all the key issues of business. (Source: Flamholtz, 2003, pp. 15-26) The recommended model will not only help organizations to measure performance but will provide a strategic guideline for them also. The model will evaluate performance in terms of corporate culture, managerial system, operational system, marketing activities and resource capabilities. Reference Amaratunga, D. and Baldry, D., 2002. Performance Measurement in Facililities Management and its Relationships with Management Theory and Motivation. Facilities [e-journal] 20, 10 Available through: Emerald database [Accessed 18 December 2012]. Bourguignon, A., Malleret, V. and Norreklit, H., 2004. The American Balanced Scorecard versus the French tableau de bord: The ideological dimension. Management Accounting Research [e-journal] 15 Available through: Emerald database [Accessed 18 December 2012]. Daum, J. H., 2005. French Tableau de Bord: Better than the Balanced Scorecard? [pdf] Available at: [Accessed 18 December 2012]. Epstein, M. J. and Manzoni, J. F., 1998. Implementing Corporate Strategy: From Tableau de Bord to Balanced Scorecards. 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Turner, G., 2000, Using Human Resource Accounting to Bring Balance to the Balanced Scorecard. Journal of Human Resource Costing and Accounting [e-journal] 5,2 Available through: Emerald database [Accessed 18 December 2012]. Van Weele, A. J., 2005. Purchasing and Supply Chain Management: Analysis, Planning and Practice. 4th ed. London: Thomson International. Read More