BSC
Balanced Scorecard: Sparklin Automotive Company
By using financial and HR measures it is possible to recognize the impact on business performance. These areas of Balanced Scorecard are Accounting and HR Performance.
Management recognize that measurements are a necessary strategy to an effective management process. In order to implement new strategies there needs to be improvement in manufacturing processes as well as the level of performance of workers. HR is instrumental in providing the resources to raise the skillset of workers by providing training opportunities. Oftentimes management introduces new requirements and quotas for workers without examining the affect of the past guidelines for improvement as to relevancy or even necessity. A balanced scorecard combines an operative measurement guideline that allows SAC to define strategic goals that align to helping drive change in key areas. Some of these areas include production, process improvement, customer satisfaction and market development.
The scorecard supplies management with four different angles in order to select the right balance of each that will complement another. The key financial indicators examined in BSC will allow for tweaks to be made based on traditional accounting indicators that can measure not only financial progress. It can show how productivity influences customer, internal processes, even innovation produced by workers through improvement activities.
The measurements shown by the balanced scorecard can assist SAC in realizing a shared vision that encourages system thinking to impact present and future success. While balancing the internal and external measurements based on performance and accounting ratios.
Such measurements will allow management to explore the tradeoffs that are required to impact key success factors. By analyzing the results from the BSC it is possible to determine how well SAC is aligned to meeting the goals of the corporate strategy.
Balanced Scorecard Objectives
Assumptions about HR Firms are that increasing training and mentoring opportunities will produce highly skilled employees. This will improve the level of efficiency and create better solutions for day-to-day job functions, that result in improved business processes.
Assumptions about Business Processes
Internal business process improvement will then lead to better results for the manufacturers as products are built with higher quality and customers report greater satisfaction. With happy customers come more sales this means more demand for the products manufactured. With higher revenues more people can be hired to produce products faster to meet demands. The increased advertising and marketing will draw new customers and new market opportunities. The increased labor force will raise productivity levels. With increased revenues comes more attention from investors willing to invest capital. These investors expect a higher Return on Investment (ROI). With more capital being invested, more advertising, marketing, and investments in better equipment will require hiring. With highly skilled workers new innovations and better quality products are produced and so the cycle starts again. It will also lead to improvements in customer satisfaction. This will lead to higher sales and profits that improves the financial implications for the company. All of this activity can be tracked using accounting and ROI.
Using Accounting as a BSC Measurement
Executive management's financial perspective is to map out achievable financial goals. One way to achieve this is to set realistic timelines to complete financial objectives. Then align an objective to each financial goal. Choose performance measures that align with top management's financial goals by applying a time table to each performance deliverable.
Take Time to Gather Measurable Results
This is done by defining the tasks or requirements necessary to meet each performance measure. Allow for a measurable alternative for each performance measure. This provides an award for based on creativity as well following managerial requirements. Set a target level of performance. Lastly there must be a feedback loop at a predetermined interval.
Phase 1 Select Measurements of Performance
These are measurements of accounting performance such as:
Return on Investment
Residual Income
Economic Value Added
Return on Sales
Operating Income is not the best choice for a metric. Operating Income as a metric is too broad an area to realistically use as an indicator...
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