The Benefits Of Implementing A Balanced Scorecard In Performance Management Essay.

Performance Measurement System

Question:

Discuss about the Accounting for Science and Technological.

The globalization and advancement of science and technological field have brought dramatic changes in the business context. In one hand it provides extensive facilities to the business organization; on the other hand, it has brought various difficulties to the business organization. Globalization provides the facilities to expand the market across the globe, and the technological advancement specifically the advanced computer, internet, as well as information and communication technologies boost the organizational efficiency. The output process of the performance measures can be accurately measured by showing the relative desires included in the results. The performance measurement system helps in determining the quality, cost and the time (Arnold, 2012). In this matter, the management accounting is shown to be beneficial for the companies. The performance measurement system also helps in creating and managing the key performance indicators as per the needs of the management. The stimulation of the behaviour must be made by showing the success in the performance measured. The construction of the performance is depicted to be illustrating the ways of assessing the performance. These processes need a balanced measurement for the purpose of implementing the individual characteristics as undertaken for the study (Bacon, 2010). 

The balance scorecard helps in enhancing the performance management within FCH as well as it helps in using the revenues, cost and activity drivers. It helps in measuring the performances of the employees and the processes of operational activities. With the help balance scorecard the learning and developing process of the employees of FCH use to be improved as their performances are measured correctively by the management and provide them effective helps and guidance for their further improvement. It also improves the internal business process or the business operation of the organization as individual performances of the employees of the organization have been improved so it helps in improving the entire process. Besides this, with the improved efficiency business operation of the organization it can deliver better product and services to the customers. Therefore, the customers are satisfied with the company and its services. Moreover, as it helps in ensuring the customers satisfaction it improves the loyalty of the customers. The larger loyal customers base the company can implement better strategies to grow in the market that help in substantial financial growth of the FCH.

The implementation of the balanced scorecard is provided in the following steps that illustrate the process used by the FCH which is as follows:-

• It helps to reach to an agreement which considering the terms and its own meaning. it clearly explains the strategy descriptions, strategy maps, business goals and also the focus on the teams made. It is also illustrated as a KPI measurement tool which is being used for showing the summarization of the following ideas as measured by the management (Kaplan, 2012).
• It helps in making the management to understand the expected results that would be achieved in future. It clearly explains the strategic decision making and the discussion of the execution made by the management for the betterment of the company. It also helps in making a cultural shift when the employees start seeking jobs with the varying strategies of the organisation (Rahman, 2015).
• It helps in organising the proper decisions with surrounding the strategies constructed by the organisation for the future. It simply defines the alignment strategy undertaken by the organisation with involving the team members where the employees can easily share their thoughts for the betterment of the organisation (Sharma and Gadenne, 2011).
• Adding the KPI’s and the action plans will enable in establishing the appropriate management of the key indicators which will be used for managing the functions of the organisation. This is illustrated as the best option which is showing the explanation of the measurement of the work and also the brainstorming metrics can be defined by using this strategy.
• It helps in undertaking the cultural shift which is essential for the organisation. It can be justified by undertaking the crash test of the balanced scorecard produced by the FCH and also it will enable to ensure the company about the benefits of the cultural shift taken by the company.

The balanced scorecard is proved to be helpful for the FCH by showing the measurement of the performance for the FCH. The performances can be measured by the help of the four steps which are described in the following points:-

• Customers’ perspective – It must be focused by showing the relationship with the management and also the relationship enables the growth of the company which is very much beneficial for the company. The focus is being made by illustrating the construction of the work process which will be suitable for having an appropriate relationship (Parrino, 2015).
• Internal perspective- The internal perspective is defined as the relationship of the FCH with the employees who will enable the company to have an appropriate development of the structure. The fruitful enhancement of the work will be easily defined to be showing the enhancement work.
• Innovative and the learning perspectives: The innovation and the learning perspectives will help the company to have an appropriate environment for the development of the FCH. The implementation of the innovative strategies and also the development of the structure will help in the establishment of the good reputation in the market.
• Financial Perspectives- The measurement of the inflows and the outflows of the cash will enable the company to have an appropriate measurement of the profits and the expenses made by the company. This will show the development or the deterioration of the company FCH.

The balanced scorecard is an efficient concept of the performance management, and it has several advantages, however, at the time of implementing the balanced scorecard system, the companies may face difficulties. The reason behind this is that the balanced scorecard does not give practical guidance for the development. Moreover, some of the managers perceive it as a "quick fix" which can be easily applied within the organization (Emery, Finnerty and Stowe, 2011). Employing a balance scorecard scheme is an evolutionary procedure, and it is not a single time task, which can be verified quickly.

Advantages of Balanced Scorecard for FCH

In case the management does not identify this form in the initial period as well as be unsuccessful to commit to the long period, then the company will get a disappointing outcome. However, few approaches permit for the rapid beginning to the scorecard system evolution.   For the evaluation of the system, the scorecard is very much essential for the identification of the issues. The scorecard helps in establishing the correct information by showing the path for mitigating the issues (Finch, 2010).

Therefore, the development of this work is very much essential for the management of the organization. The mitigation of issues is very much important for showing the balancing of the perspectives. It also helps in showing the mitigation of issues in the measurements that forces the managers to distract from the main motive.

There are few main issues with the implementation of the balanced scorecard, which are illustrated below:

 The scorecard requires being relevant and concise. They must be described with the visual indicators which can be understood easily. Moreover, the score must be gathered at an idea frequency in order make the decisions as well as must be defined in a way that the score can constantly be applied through the company. The system, which has a sloppy or inconsistent scorecard, will be vulnerable for the critics who wish to evade responsibility for the outcome (Helbæk, Lindset, and McLellan, 2010).

The main reason, which the business organization uses to overemphasis financial scorecard at the cost of other significance operating variables, is the simplest fact that the system already presents for gathering as well as reporting the financial scores. The organizations that purposely plan for defining the main few scores as well as commit the resources to automate data gathering, as well as following reporting, intend to attain a good outcome. Unfortunately, in the most of the organization in case of collecting scorecard data take too much time plus energy that they will not be collected effectively. This is the reason behind that why in is vital to prioritize the key performance indicators; hence the company can be assured that its investment in the scorecard is spent on the information, which will be most pertinent to enhancing the performance of the organization (Kew and Watson, 2012).

The balanced scorecard works most efficiently at the time these are reviewed more frequently to detect the differences. In the case of a balanced scorecard, the value of the scorecard alters on a daily basis as well as the variables within the control management can be exaggerated on dial basis that time it is suggested that the scorecard must be reviewed on a daily basis (Paramasivan and Subramanian, 2009). 

The vague strategy is being defined as the ideals and the aspirations that cannot be implemented by the organisation to frame out the structure of sustainability in the future. This failure provides the organisation to face the revisit situations and also the strategies cannot be cleared. This seems to be affecting the balanced scorecard and also the financial targets cannot be easily fulfilled. The effect on the medium and the long term can be easily determined by showing the perceptions and the values made by the company. The enhancement of the desired value can be made by mitigating the refining and revisiting strategies which are affecting the organisation.

Implementing the Balanced Scorecard in Steps

Conclusion

The management accounting is one of the most important aspects of the contemporary business organization. It helps the management is taking effective management decision for the organization. It helps in analyzing the financial and non-financial data of the organization to make the decision on behalf of the company.  The performance management is crucial for the management of the company as it helps in assessing the performance of the employs of the company and thus helps in measuring the performances of the organization (Khan and Jain, 2007). The balanced scorecard is one of the most effective tools for measuring the performance of the different processes within the organization as well as the people involved with the process. It also helps in assessing the performance of the company. Apart from this, it helps in recognizing the loophole within the process and management can take important decisions to rectify the drawbacks and improve the efficiency of the business operation processes and thus improve the overall efficiency of the organization. In this way, the organization can improve the productivity as well as the profitability of the company.   

The cost of the premium widget should be low so that the profit margin of 20% can be achieved. The profit margin is 20% then the cost should be $40.

The company should use all the resources in an appropriate manner in order to decrease the cost of production(Pandey, 2015). The company should also use its employees efficiently. There are different techniques that can be used for eliminating the cost gap that are as follows:

• Minimizing the numbers of components
• Cheap staff should be used
• Standard components should be used
• More efficient and new technologies should be used
• The staff members should be provided with adequate training to use the techniques efficiently
• Decreasing the non-value-added operations and activities
• Different materials should be used

The market-based transfer price would be most appropriate for the organization as the goods from one division could be easily transferred to another without any subsidiaries. The Company may use the transfer pricing and also the companies are showing the working out of the work.

The internal cost failure includes waste, scrap, rectification or rework and failure analysis. The external failure cost includes repairs and servicing, warranty claims, complaints and returns. The external failure cost will exceed the internal failure cost when there is a supply of poor quality of products and poor service quality to the customers. It affects the overall operation of the company(Correia, 2005).

The difficulties that can be faced by the CP are decrease in the demand of the products in the market and to deal with the new rules and regulations. The decrease in the demand of the products means decrease in the profitability and share price of the company. The risks can affect the overall operation of the company.

References 

Arnold, G. (2012). Corporate financial management. Harlow, England: Pearson.

Bacon, F. (2010). Corporate financial management. Acton, MA: Copley Custom Textbooks.

Correia, C. (2005). Corporate financial management.Cottesloe, W.A.: Skystone Investments.

Emery, D., Finnerty, J. and Stowe, J. (2011). Corporate financial management. Morristown, NJ: Wohl Publishing.

Finch, B. (2010). Effective financial management. London: Kogan Page.

Helbæk, M., Lindset, S. and McLellan, B. (2010). Corporate finance. Maidenhead, Berkshire: Open University Press/McGraw-Hill Education.

Kaplan, R. (2012). The balanced scorecard: comments on balanced scorecard commentaries. Journal of Accounting & Organizational Change, 8(4), pp.539-545.

Kew, J. and Watson, A. (2012). Financial accounting. 1st ed. Cape Town: Oxford University Press.

Khan, M. and Jain, P. (2007). Financial management. New Delhi: Tata McGraw-Hill.

Pandey, I. (2015). Financial management. New Delhi: Vikas Publishing House PVT LTD.

Paramasivan, C. and Subramanian, T. (2009). Financial management. New Delhi: New Age International (P) Ltd., Publishers.

Parrino, R. (2015). Corporate Finance. Singapore: John Wiley & Sons.

Rahman, N. (2015). Corporate Finance. North Ryde: McGraw-Hill Australia.

Sharma, B. and Gadenne, D. (2011). Balanced Scorecard Implementation in a Local Government Authority: Issues and Challenges. Australian Journal of Public Administration, 70(2), pp.167-184.

Welch, I. (2014). Corporate finance. Los Angeles: Ivo Welch.

Wolf, M. (2010). Fixing global finance. Baltimore, Md.: Johns Hopkins University Press.