The Significance of Balanced Scorecard and the Support - Book Report/Review Example

 Introduction This report aims at advising the community of volunteers who would be training the young people, who face learning difficulties. These young people would be taught to grow plants, so that they can be do something which is socially good and also give a meaning to their lives. The objective of his report would be to make the volunteers understand the significance of balanced scorecard in the organisation, and how can it be helpful in performance management and measurement of their organisation. A balanced scorecard would be developed, keeping in mind the benefits, and measures that can be proposed for the nursery garden. Further, ten major key performance indicators (KPIs) would be stated in order to lure grants providers. Performance Measurement If results are not measured then the success cannot be differentiated from failure, so reward for success also cannot be claimed and unintentional failure cannot be avoided. It is a process of analyzing, collecting, and reporting information related to performance of teams, individuals, organisation, etc. The criteria that is determined as capability or skill is called good performance. Performance is measured in organisation with the help of various tools or techniques. In order to access the accountability and measure the competing factors, it is very important to develop and implement a balanced scorecard in non-profit organisation, as in this case (Antarkar, and Cobbold, 2001). The financial part such as the expenditures, operating expenses, donations has to be measured. Kaplan and Norton (1996) have introduced a revolutionary performance measurement tool, which was initiated with the motive of measuring the financial as well as non-financial performance of the organisations or companies. Though the initial focus of balanced scorecard was mainly the profit making companies, but the non-profit organisations also require monitoring the financial budgets and complying with it, so it can be also used for non-profit making organisations. The only constraint in case of non-profit making organisation is that it lacks the elegance of the financial measures (Araujo, Marqui, and Martins, 2008). Balanced Scorecard Approach Balanced scorecard is a planning and management tool that is extensively utilised in both profit and non-profit organisation for developing vision and improve the internal and external strategies for the organisation. In this case balanced scorecard would be implemented in the nursery garden, so as to assess the performance of the volunteers in terms of trainings delivered to young people and success rate, donations received, grants generated from people, revenue generated from the sales of products derived from the plants grown, and self funding, outcome of the voluntary services, goodwill, etc (Bacal, 2011). All these indicators would be measured. According to Forbes (1998), in case of non-profit organisation shareholder returns cannot be adequately measured and profitability cannot be ascertained because the functions are not done with profit making objective. They also noticed the fact in case of non-profit organisations, developing quantitative measures for measuring the organisation performance through balanced scorecard becomes difficult. This also applies to the nursery garden because it would also be involved in voluntary services of training young people with learning disability to plant trees (Balanced Scorecard Institute, 2012). Another reason that has been stated is that the non-profit organisations have goals which are amorphous and put forward services which are generally intangible in nature, but in case of nursery garden, this would be partly different because nursery garden would be teaching young people to plant trees, which involves tangible services, and the goals are not vague, unlike other non-profit making organisations. Herzlinger (1996) has however, argued that the non-profit making organisation can also measure the non-financial aspects in quantitative terms, such as number of trees planted in a month or year, and benefits derived from such activities. However, before implementing balanced scorecard in the organisation, the strategies have to be defined. In case of non-profit making organisations, the strategies are the initiatives or list of programs that would be conducted, but it does not contain the outcome that the organisation would be achieving through them (Bischoff, 2011). Just measuring milestones through balanced scorecard would not serve good for the organisation, Initiative towards achieving the strategies objective should be taken, which is the means and not the end. In this case employee participation plays a very important role, such as the training volunteers (Bhatia, 2008.). Benefits of using Balanced Scorecard In this section the benefits of balanced scorecard would be discussed in order to first explain the volunteers as to how the balanced scorecard can be helpful for them and their organisation. Only if they understand the objective behind implementing balanced scorecard and developing KPIs, then only they would be able to attract funders for grants, and the guardians of young people with learning disability (Blokdijk, 2008). The benefits are stated below: 1. Balanced scorecards will assist nursery garden to bridge its daily operations, with the strategic objectives. 2. It will provide nursery garden, a strategic focus, streamline the resources, and the financial support which would make the mission and vision of the come true. 3. The measurement structure will change the strategic focus of nursery garden from just initiatives and programs to the result or outcomes that need to be derived from the operational functions. 4. It will align the different department, their initiatives with the volunteers responsible for such functions. 5. It will assist the management of nursery garden to improve the process of communication and execution of the plans for the young people. 6. Performance reporting will improve because balanced scorecard is a tool which reveals the target and the achievement simultaneously, so the volunteer at nursery garden will be able to assess their own performance as well as their peer’s performance. It is an open and transparent system, which will give every stakeholder in the organisation to view every performance related to the donation, plants planted, products derived from the plants, sales activities, self-funding by young people, and other activities initiated by nursery garden. Developing a Balanced Scorecard Overview The concept of performance management and measurement revolved around measuring financial performance of the company and performance of the employees. However, performance measurement in modern organisation includes both financial and non-financial aspects. In case of non-profit making organisation as nursery garden, financial aspect in only important to run the organisation, but not for any profit motive, so the strategic objectives, initiatives to be taken, and the performance measures for the balanced score would be different in this case. In such a context, a comprehensive scrutiny of the four divisions of balanced scorecard would be done, namely, a) Financial perspective, b) customer perspective, c) internal process perspective, and d) learning and growth perspective. a) Financial Perspective: According to Kaplan and Norton (1996), the priority will always be given to accurate and timely funding, but in case of nursery garden financial perspective would include assessment of donations that is received through funders, young-people with learning disability, and funds received from sales of products from plants that are planted by the volunteers and young people. The scorecard will reveal the monthly, quarterly, and yearly targets and achievement, which will assist the volunteers to understand the growth of the community group by its financial data. This will assist in risk assessment and also in conducting cost and benefit analysis. b) Customer Perspective: The nursery garden is not a profit making organisation, so the service receivers are not really the customers for the community group. However, the group caters to the young people who have learning disabilities and also lure the funders to grant funds for a voluntary activity, undertaken by nursery garden and its volunteers. The satisfaction level of the young people can be judged by the work that they are doing, that is by planting trees. This will also assist the volunteers to take decision for initiating other voluntary activities that these young people can do and be happy. c) Internal Process Perspective: The internal business process is the metric in balanced scorecard that will assist the volunteers to understand the efficiency of their daily activities and their journey towards the mission set by them during the inception of this initiative. The objectives will includes the number of trees to be planted each day, week, month or year. Other programs would be also set based on this, and outcomes would be decided, such as planting fifteen trees per day will assist in achieving a target of planting approximately 500 trees per month, which will probably engage 15-20 young people with learning disability. d) Learning and Development Perspective: This segment will play a major role in nursery garden because the core objective of this community group is to make the young people with learning disability learn some productive work, which they can do rather than what they are incapable of. This will serve the society in a better way and also engage the disable young ones in fruitful work. In this context training will play and major role, so practical training sessions have to be noted and recorded. Performance Measures The performance measures and the values that these measures will assist in generating are explained below. Measures Values Financial Measures Sales of products derived from the trees planted Help in accumulating funds for the community for serving young people with learning disability. Organise better and diverse programs for the disabled young ones. Cash Flow and Income statement This will assist in calculating the expense and income of the community’s operational functions. It will also support in planning out future programs and initiatives. Bank Reconciliation statement This will assist in viewing the donations that are received and deposited n bank. It will also ensure that the transaction entries are correctly done. Non-Financial Measures Customer Satisfaction Young people can give their feedback Funders’ will to offer grants again and again for the community. Social Performance indicators Environment friendly initiative that will offer the city a better and cleaner atmosphere. Promote others to come forward for similar activities, so being is trend setter is also an indicator. Awards and Accolades for social service Recognition Government grants Measurement of targets achieved Number of trees to be planted (daily/monthly/yearly) Number of young people to be trained to grow and take care of trees Maintenance of nursery by checking the supply of equipments required to plant trees, materials for proper grow of plants, such as fertilizers etc. Training and Learning New variety of plants can be grown with the help of research and learning. Assist in enhancing the curiosity, and interest of the young people towards planting trees, and maintaining the nursery. Steps for Developing Balanced Scorecard After assessing the performance measures and the values that they will offer, steps to develop a balanced scorecard will be learned. They are stated below: Step 1: The measurement framework has to be prepared first, in order to make the approach manageable. This will assist in implementing balanced scorecard at every level. Step 2: The strategic objectives has to be ascertained and feasibility of those strategies has to be tested in order to eliminate complexities and false expectations. Step 3: Choosing right strategic measures for the chosen objectives has to be decided. The values that would be derived for those measures have to be planned and metrics has to be set for a measured progress. Step 4: Implementation plan has to be developed with the target values only. Volunteers have to be included in this function, so that they understand process well (Epstein, and Manzoni, n. d.). Key Performance Indicators (KPIs) In this section the KPIs of nursery garden would be discussed in order to assure the grant funders that the funds they are providing are being utilised for social causes and for the improvement of the society (Warren, and Reeve, 2006). They are explained below: KPIs Explanation 1. Process Quality The systematic process which the volunteer will utilise to manage the young ones and achieve their objective will reveal the promptness and skill of the volunteer involved in the community service. 2. Quality of Management Management plays a significant role because firstly, managing the young people with learning disability and making them sow plants, secondly gathering funds from all the three sources, and thirdly, selling the products derived from plants in market to gather funds. These entire tasks have to be performed systematically, which will reveal the quality (Respicio, and Burstein, 2012). 3. Input Training young people Acquiring grants from funders Planting trees Selling the products derived from plants Organising events and programs 4. Output Many young people engaged in a significant social cause Receiving grants from individuals, companies or government Recognition and appreciation for the work done for the community and for the young people with learning disability (Turban, McLean, and Wetherbe, 2007). 5. Condition of support function Support functions includes infrastructure development, and publicity Initiatives taken for the young people for their development other than just planting trees Training methods has to be fun-filled and interesting. 6. Results More and more young people and their guardians should take interest and come forward to support the community work stated by nursery garden Funder would willingly want to offer grants repeatedly because of good quality service 7. Impacts Increasing goodwill Environmental friendly initiative will provoke others to join for similar activities Young people would be accepted in the society with much respect than before. 8. Number of trainings and events More trainings and events organised will assist in publicity and also give the young people adequate exposure and recognition. 9. Sponsorships/ Grants/ Donations This will determine the popularity and position of nursery garden in monetary terms. Funders would be able to understand that the community can be trusted and grants can be offered. 10. Efficiency and Effectiveness Activities has to be significant, such as planting trees, selling eco-friendly products, organising promotion events to attract more young ones with learning disabilities, and also welcoming new volunteers. All these functions have to be efficiently done, which will reveal the effectiveness of nursery garden and its community service. Conclusion This report was prepared with the aim of explaining the volunteers, the significance of balanced scorecard and the support it can provide to their community, and luring funders to offer them grants for the social cause. In order to clarify the volunteers regarding the function of balanced scorecard, the measures have been stated and the values that can be derived from it have been explained. This will offer a clear view as to in what why balanced scorecard can serve them better. The four segments of balanced scorecard and its applicability in nursery garden has revealed the benefits that can be derived from this performance measurement tool. In order to assist the volunteer further, four steps have been explained to implement the scorecard. In order to lure the funders, KPIs have been explained, to reveal which KPI can be helpful in explaining what quality of the nursery garden. It can be concluded that balanced scorecard is a performance measurement tool, and when performance has to be measured in both profit as well as non-profit making organisation, then nursery garden should also have a balanced scorecard. References Antarkar, N., and Cobbold, I., 2001. Implementing the balanced scorecard – lessons and insights from a multi-divisional oil company [pdf] Available at: < http://www.2gc.co.uk/pdf/2GC-CS-Truro-090312.pdf> [Accessed 2 April 2013]. Araujo, I. C., Marqui, A. C., and Martins, R. A., 2008. Multiple case study on balanced scorecard implementation in sugarcane companies [pdf] Available at: < http://www.gepeq.dep.ufscar.br/arquivos/Multiple%20Case%20Study%20on%20Balanced%20Scorecard%20Implementation%20in%20Sugarcane%20Companies.pdf> [Accessed 2 April 2013]. Bacal, R., 2011. Performance management. 2nd ed. New York: McGraw-Hill Professional. Balanced Scorecard Institute, 2012. Balanced scorecard basics. [Online] Available at: < http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx> [Accessed 2 April 2013]. Bhatia, S. K., 2008. Emerging human resource development (Hrd) (Focus On: strategic approaches, competency development and retention). New Delhi: Deep and Deep Publications. Bischoff, A. L., 2011. The balanced scorecard: Applied on Ericsson AB. Munich: GRIN Verlag. Blokdijk, G., 2008. Balanced scorecard 100 success secrets, 100 most asked questions on approach, development, management, measures, performance and strategy. North Carolina: Lulu.com. Epstein, M. J., and Manzoni, J. F., no date. The Balanced Scorecard and Tableau De Board: A Global Perspective on Translating Strategy into Action. Available at: http://www.insead.edu/facultyresearch/research/doc.cfm?did=46617. [Accessed 2 April 2013]. Kaplan, R. S., and Norton, D. P., 1996. The balanced scorecard: Translating strategy into action. Boston: Harvard Business Press. Respicio, A., and Burstein, F., 2012. Fusing decision support systems into the fabric of the context. Amsterdam: IOS Press. Turban, E., McLean, and Wetherbe, 2007. Information technology for management: Transforming organizations in the digital economy. New Jersey: John Wiley & Sons. Warren, C. S., and Reeve, J. M., 2006. Financial and managerial accounting. 9th ed. Connecticut: Cengage Learning. Read More