The Balance Score Card Method

Question: Discuss about the Report for The Balance Score Card Method. Answer: Introduction There have been several ways where companies have managed to garner their business in the world markets and the centralized markets. The concept of measuring the companys analytics help the organization and all accountants in the company to measure out different terms where the company has managed business and whether the current investment plans of the company have been in the loss charts or in the profit charts. The financial way of measurement provides many effective measurements techniques and ways for these purposes, however the given scenario has illustrated a business company which operates an airline known as Elites and has been serving the area known as Shine. The main business structure of the airline has flourished in the recent years because of their capabilities to capture the markets with more penetration and providing extremely low cost tickets as compared to the other airlines. The company has also managed to become the leading airline operating in the state because o f its formed hegemony which comes in complete collaboration with the government operating in Shine and their capability to provide the airline with the route plan that distinctively make the airline run and being the only one on these routes. The Airline has also managed to become extremely determined to be clean and on time for their clients, in this particular retrospective, the airline has received numerous awards from the Aviation departments which have been well reputed over the years and thus all of these traits acting out as the most successful marketing plan for Elite. The recent change and diverse policies which have been enforced by the Shine has caused the company to embark on the journey of now finding the effects and implementation of these policies on the company profit, variations and to show different indicators which could improve their working. This very purpose has caused a new innovation in the company to use a system called Balance Scorecard Sheet method which h as been on non-financial ambit and helps to provide all the desired effects and results which the company wants. Importance of using Balance Scoresheets The balance Scorecard is a systematic way of measuring the direct performance of any company or organization, it uses specific trait analysis systems and keeps the managers completely aware of the stance their organization has been working on. The need and importance for these balance sheet is that they increase the different amounts of verbal communication and in verbal communication between all of the employees and the directors of the company by letting each and every entity completely aware of the fact that the organization is completely on the path to prove its prosperity. The method truly thrives on the basis of using different arrays of metrics which are incorporated in a non-financial way and would perfectly help out Elite Airlines into calculating their progressions with changing policies. The basic etymology of this method has been developed into the recent years because the necessary performance evaluation for the organization is not the only thing which the Balance Score Card gives out, it gives the opportunity to the executive and strategy managers in the company to completely execute the data and provide the remedial actions needed to cater the problems and jolt down different strategies.[1] Financial Vs Non-Financial Financial methods which have been used by companies for ages long have been using the following tools in order to keep the companys managements and strategical measures to be intact and completely aligned. Rating The scales for employees This particular rating method has been used by organization for rating their employees and their performance in the organization by making them completely aware of their points and also specifying different scales and measurements for different tasks and assigned goals to the employees. The typical example which can be laid down is that many organization use the scale variation from 1 to 10, in this particular scenario 1 has the lowest rating value whereas 10 has been defined as the efficient and best possible rating for the employees.[2] This method enhances the appraisal of employees and makes them more motivated about their jobs and relevant behavior and hence promulgates about the company being standalone in the progressive behavior. Paired Comparisons The paired comparison which can be used between two different employees who are working under the same position. This particular method of non-financial method of evaluation of a company's strategic goals identifies two different people anb then the responsible managers than make different analysis between the two people and assuming them to be more competent or not. However such type of behaviors have in the past shown that these methods can create different classes whereas the lowest ranked employees are often fired from the firms and the others on the good side re promoted. The balance sheet method has made its way into different countries around the world because of its unique capability and making efficient decisions. The reason why many people have identified this method to be the next potential in the industrial organizations is because the financial methods provide data analytics which involve different customers interactions and relations which have been proved not to be in use by many recent organizations operating in the current world, these analytics have been proved to be insufficient information and mostly relate to the world of the past for these organizations which proves to be incapable for the company to make different judgement about their future plans.[3] The Current non-financial methods which have been discussed in this report provide employee information, different financial status, future perspectives of the company which can make the executives of the Airline Company to differentiate between their old methods and the new ones with a diverse approach. Difference between balanced scorecard and traditional performance measures Robert S. Kaplan and David P. Norton have given an amazing concept of measuring other factors within a company by making it easier to compete in the market. These measures allows the company to take care of your other performance factors like environment, targets and goals of the company.[4] Kaplan and Norton contrast the adjusted scorecard with the dials and pointers in a plane cockpit. Four Perspectives Kaplan and Norton suggest that chiefs assemble data from four critical points of view: The client's point of view. Directors must know about the needs of their clients whether they are properly fulfilled or not! The inner business point of view. Supervisors need to concentrate on more on the internal structure of the company because it contributes a lot in achieving the required targets. The development and learning point of view. An association's capacity to enhance, learn and improve the new concepts in order to make their base strong enough to survive in the competition. The budgetary viewpoint. In the private division, these measures make sure about the profits and losses, return on investment, profitability, etc.[5] Considering traditional performance measures, they only focus on the financial part of the organization and in the current scenario where the Board of Directors are looking forward to expand their business by covering all their weak parts so it is important for them to take care of other factors which will definitely affect their performance. Traditional performance measures help you understand the profits and losses of the company for a short period of term which is only helpful for short term whereas in order to compete others, it is really important that Elite airline focuses more on other performance factors. Traditional performance measures are not feasible in the long run because they just give you the analysis of the profits and losses of the company.[6] They will let the company know what costs and expenditure has been required for the next period or what has already been done. Critical evaluation of balanced score card as a performance measurement tool to maximize success. There are some major points which can lead Elite Airline to maximize success by driving the balanced scorecard properly and effectively. Be specific Instead of just focusing on the above four perspectives, it is ideal to think something out of the box for your company. Elite airline should focus more on the needs and demands of the company so that they can address them properly. They should not only stick to the financial performance of the company. Creating performance index Performance index helps you manage companys performance manually like one should make check list on a chart which focuses on all the goals or mini goals which are required to be achieved within a specific period of time.[7] This way, each and every employee would understand the need of the time and would work accordingly. Involve everyone in the strategy It is really very important to take advantage of the balanced scorecard and get something out of it by addressing everyone to manage their own objectives. This way, everyone would work according to their own objectives and can produce better results instead of all working on the same thing at one time. Make a long term approach A balanced scorecard allows you to make a long term approach instead of just looking things for a short time period. This can only be done when you involve more people in getting the better results. It is really beneficial for the company if it formulates a long term strategy because the growth of the company is dependent on the factors which are applicable in long term. Recommendations through each performance measure If Elite Airline is looking for assessing its finances properly and efficiently, then balanced scorecard allows you to track and monitor the financial success and how the company is looking after the shareholders as well. This performance measure will enable them to see the Return on Investments, revenue and profitability, etc. Elite Airline must focus on the customer satisfaction mainly through this performance measure of the balanced scorecard because customer retention makes the company stronger for a long term period. It is very important for Elite Airline to concentrate on their future growth which primarily includes two factors, operational capital and human capital. As the competition is increasing for Elite Airline, it is really important to keep changing, learning and improving in order to make your future even better. Elite Airline needs to work on achieving the internal operational goals which will help them grow rapidly. It will help the company to see which activities are fulfilling the needs of the company. Current developments and emerging issues of balanced score card and performance measurement We have seen how the balanced scorecard can help the company to achieve its goals and especially when there is more competition. But at the same time, there is one other side of the picture as well which shows us how companies are unable to use the scorecard efficiently. There have been some emerging issues lately with the use of balanced scorecard performance measures because the companies get confuse over different perspectives it handles. It has got a lot of benefits but sometimes companies overlook its main objective and purpose. The problems due to balanced scorecard performance measures can be resolved but there are some companies out there which still prefer using the traditional performance measure just to assess their financial performance.[8] References Cheng, M.M. and Humphreys, K.A., 2012. The differential improvement effects of the strategy map and scorecard perspectives on managers' strategic judgments.The Accounting Review,87(3), pp.899-924. Grigoroudis, E., Orfanoudaki, E. and Zopounidis, C., 2012. Strategic performance measurement in a healthcare organisation: A multiple criteria approach based on balanced scorecard.Omega,40(1), pp.104-119. Hoque, Z., 2014. 20 years of studies on the balanced scorecard: Trends, accomplishments, gaps and opportunities for future research.The British accounting review,46(1), pp.33-59. Kim, J. and Rhee, J., 2012. 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