Liao Xiaohui and Li Hong
With the continuous expansion of the balanced scorecard in China, as far as its application practice is concerned, there is a problem of insufficient understanding of the basic design concept of the balanced scorecard, which leads to the balanced scorecard not playing its due role as a "high-value strategy implementation tool". Therefore, re-examining the balanced scorecard from the perspective of design concept is conducive to improving our comprehensive understanding and effective application of the balanced scorecard.
Keywords: BSC strategic management; Design concept; App application
Classification number: F270.7 document identification number: a.
Article number:1005-913x (2006) 03-0010-03.
About the author: Liao Xiaohui (1980-), female, from Jinzhai, Anhui Province, a teacher at the School of Finance and Public Administration of Anhui University of Finance;
About the author: Li Hong (1979-), male, from Lu 'an, Anhui Province, is a teacher at the School of Finance and Public Administration of Anhui University of Finance.
Author: Liao Xiaohui (School of Finance and Public Administration, Anhui University of Finance, Bengbu, Anhui, 23304 1).
Li Hong (Anhui University of Finance, School of Finance and Public Administration, Bengbu, Anhui, 23304 1)
References:
JJ Lin. Strategic Management Oriented to Balanced Scorecard [M]. Huaxia Publishing House, 2003.
[2]Irv Beiman, Sun Yongling. Strategic Practice of Balanced Scorecard in China [M]. China Machinery Industry Press, 2003.
[3] Jin Yan, Bai Miangao, Rui Lin. Application Practice of Balanced Scorecard [M]. Haitian Publishing House, 2004.
[4] Wu Shaoyong. On the Balanced Scorecard [J]. Business Research, 2003, (20).
[5] Yin,, Wang,. Review of Balanced Scorecard Research [J]. Economic Management, 2005, (2).
[6] Robert S. Kaplan and David Naughton. Organization focusing on strategy: How the Balanced Scorecard Company thrives in vard Business School Publishing Company, 200 1.
How to Establish Balanced Scorecard in China Enterprises?
In the past, the company had two departments responsible for supervising the performance of business departments: the development department of the company was responsible for formulating strategies; The finance department keeps historical records, prepares budgets and evaluates short-term performance. Development strategists make five-year and ten-year plans, while the finance department makes one-year budget plans and short-term forecasts. There is no connection between the two groups. Now, the balanced scorecard has built a bridge between the two. Financial indicators are established on the basis of the traditional functions performed by the finance department, and the other three dimensions of indicators enable the long-term strategic objectives of the development department to be evaluated. The powerful combination of strategic development and financial control provides an effective performance measurement tool for managers.
summary
Balanced Scorecard: It was written by Robert, a famous American management master. Kaplan and David, President of Fuxing International Consulting Company? Norton put forward an epoch-making strategic management performance evaluation tool on the basis of summarizing the successful experience of performance evaluation system of twelve large enterprises.
Balanced scorecard is a strategic human resource management idea and guiding method, that is to say, when we formulate the strategic development indicators of enterprises, we should comprehensively consider the balance between financial indicators and a series of non-financial indicators in the process of enterprise development, rather than just paying attention to the financial indicators of enterprises. The details are as follows: 1. The strategic goal of an enterprise consists of financial indicators and a series of non-financial indicators; 2. The performance appraisal indicators of each department and employee of the enterprise are obtained by decomposing the strategic objectives of the enterprise: decomposing the strategic objectives of the enterprise into each department and then decomposing them into each employee of each department. In this way, the daily work of employees is naturally linked with the strategic objectives of the enterprise.
Why is it called a "balanced" scorecard?
The "balance" of the balanced scorecard is reflected in several aspects:
Balance between short-term and long-term: the goal of an enterprise is to obtain the maximum profit; Construction enterprises should get continuous income, not "winning the lottery". It is from a strategic point of view that the balanced scorecard can reasonably adjust the relationship between long-term behavior and short-term behavior of enterprises, so as to realize the sustainable development of enterprises. In the four parts of the balanced scorecard, some indicators are ahead and some indicators are behind.
Balance between finance and non-finance: Although profit is the ultimate goal of an enterprise, financial indicators are inseparable from non-financial indicators such as customers, internal processes, learning and innovation. Only when these two aspects are improved can the enterprise's strategy be implemented.
Balance between indicators: These four indicators should be treated equally without bias. This aspect is very different from the "short board management" we used to. The reason is that "short board management" is often short-term, so it has a strong tendency; And BSC is a long-term strategic evaluation, so it must be coordinated. These four aspects constitute a complete cycle. If one aspect is neglected, even if the other three aspects are well done, the enterprise will inevitably fail in the end. Because its cycle is broken, it will inevitably become the "short board" of enterprises in the later period, limiting the development of enterprises.
Internal capacity
The balanced scorecard breaks the traditional performance management method that only focuses on financial indicators, and thinks that the traditional financial accounting model can only measure what happened in the past. In the industrial age, the management method of focusing on financial indicators is still effective, but in the information society, the traditional performance management method is not comprehensive. Organizations must gain the motivation of sustainable development by investing in customers, suppliers, employees, organizational processes, technology and innovation. Based on this understanding, the balanced scorecard method thinks that organizations should examine their performance from four angles: customers, business processes, learning and growth, and finance.
Through this comprehensive measurement framework, it can help enterprises to analyze which are the key success factors to complete the enterprise mission and which are the indicators to evaluate these key success factors, so as to urge employees to achieve their goals.
Financial aspects. The financial performance measurement of the balanced scorecard indicates whether the enterprise's strategy and its implementation and execution contribute to the improvement of the final operating results. Common indicators include: asset-liability ratio, current ratio, quick ratio, accounts receivable turnover rate, inventory turnover rate, capital profit rate, sales profit and tax rate and so on. The direct purpose and result of enterprise management is to create value for shareholders. Although the long-term or short-term profit requirements will be different due to the different corporate strategies. But there is no doubt that in the long run, profit will always be the ultimate goal pursued by enterprises.
On the customer side. The customer measurement of balanced scorecard includes customer satisfaction, customer retention rate, new customer acquisition rate, profitability and target market share. In today's customer-oriented era, how to provide customers with products and services that meet their needs and improve their competitiveness has become the key to the sustainable development of enterprises. The customer's point of view is to test the performance of the enterprise from the aspects of quality, performance and service.
Internal business processes. The measurement method of internal business processes focuses on those internal processes that have the greatest impact on customer satisfaction and the realization of organizational financial goals. The balanced scorecard method introduces the innovation process into the internal business process, requiring enterprises to create brand-new products and services to meet the needs of existing and future target customers. These processes can create the value of future enterprises and promote their financial performance. Has the enterprise established a suitable organization, process and management mechanism, and what are its advantages and disadvantages in these aspects? Internally, the assessment indicators are formulated from the above aspects.
Learn and grow. There are three main sources of organizational learning and growth: talents, systems and organizational procedures. The balanced scorecard will reveal the huge gap between the existing capabilities of talents, systems and procedures and the capabilities necessary to achieve breakthrough performance, so as to invest in improvement. The growth of enterprises is closely related to the improvement of the ability and quality of employees and enterprises. In the long run, only by continuous learning and innovation can enterprises achieve long-term development. Laugh last in a changing society.
Learning and Growth: Can We Keep Our Advantage in the Future?
Business process perspective: what must we be good at?
Customer perspective: What do customers think of our company?
Financial perspective: How is our financial operation?
Why are the balanced scorecard these four aspects?
The balanced scorecard is Robert? Kaplan is designed for the strategic needs of general enterprises. Financial indicators are the ultimate pursuit and goal of enterprises, and also the fundamental material guarantee for the existence of enterprises; In order to improve the profit level of enterprises, we must take customers as the center, meet customer needs and improve customer satisfaction; To satisfy customers, we must strengthen our own construction and improve the operating efficiency within the enterprise; The premise of improving the internal efficiency of enterprises is the learning and innovation of enterprises and employees. In other words, these four aspects constitute a cycle, which explains the four factors that enterprises need to meet from four angles, and promotes the development of enterprises through appropriate management and evaluation. When a certain cycle ends, enterprises will face new strategic goals and start new innovations and new cycles. It can be said that profit strategy, customer strategy, internal behavior strategy and learning strategy basically contain several key factors for the development of general enterprises. So the balanced scorecard is composed of these four aspects.
Can the balanced scorecard only be these four aspects?
In fact, when Robert Kaplan created the balanced scorecard, it was aimed at general enterprises, and the four aspects he proposed were also general solutions. Therefore, in practical application, managers must make appropriate changes in combination with the enterprise's own situation. Profit strategy, customer strategy, internal behavior strategy and learning strategy are not necessarily reflected in all enterprises, and not all enterprises only have these four aspects. For example, in another article "Looking at the Future of China Tobacco from the Balanced Scorecard", I emphasized that the tobacco industry should strengthen brand building in addition to the above four aspects; Similarly, financial enterprises should strengthen risk monitoring, and the oil industry should join the "response to external changes" and so on. So in practice, there may be three aspects, five aspects or more, four aspects but the content has been replaced. Copying the ideas of predecessors will often only become an obstacle to their own progress.
A brief comment on the case
Professor Zhang Yichi, Department of Organization and Management, Guanghua School of Management, Peking University: As a systematic tool to implement business strategy, the balanced scorecard has been widely concerned for 10 years, which can be seen from the fact that some business schools in the United States regard the balanced scorecard as a separate course. Theoretically speaking, the balanced scorecard conforms to the transformation of the company's business objectives in recent years from being solely responsible for shareholders to being relatively responsible for stakeholders. Technically speaking, the balanced scorecard provides a set of systematic ideas for the design of the implementation plan of the company's business strategy and the evaluation of the results afterwards. It is the docking and integration of strategic management issues concerned by the top management and operational control issues concerned by the grassroots.
Compared with many traditional enterprise performance management methods, the balanced scorecard does have some outstanding advantages. For example, the balanced scorecard can always take the overall strategic goal of the company as the core goal, and can closely combine the individual efforts of employees with the overall strategic goal of the company when planning performance indicators, so that employees can know the company's goals. It should be pointed out that the comprehensive advantages of the balanced scorecard have also been fully reflected in the traditional performance management target management system. My personal view is that the balanced scorecard method is only an extension of the traditional performance management target management method from a single business goal to the overall strategic goal of a diversified company. This "diversified target management method" inherits the advantages of the traditional target management method and the shortcomings of the target management method. For example, in the case that the company's operating environment is unstable, or the company itself doesn't know much about the competition in its own market, in the process of applying the balanced scorecard technology, the setting of the company's overall strategic goals and the individual goals of employees obtained through layer-by-layer decomposition are itself a difficult problem to solve. Obviously, whether the goal itself is achieved is of little value, because it involves the question of whether the goal level is set properly. If for the above reasons or for the new business field that the company has just entered, when the company can't judge the quality of the business according to the results afterwards, the traditional performance management method that emphasizes the evaluation of the work process and involves the attitude and behavior of employees may be more appropriate. Especially when we consider that if the attitude and behavior of employees are regarded as a key goal of the company, like many excellent enterprises, the limitations of the balanced scorecard idea may be more obvious.
Zhan Zhengmao, a researcher at China Consumer Research Co., Ltd.: The balanced scorecard breaks through the traditional financial-centered measurement and evaluation system, linking the strategic objectives of the organization with the process of realization, linking the current performance of the enterprise with the future profitability, and making the organizational behavior of the enterprise consistent with the strategic objectives of the enterprise through the evaluation system. Balanced scorecard requires enterprises to transform their vision, business strategy and competitive advantage into employee performance indicators, thus helping enterprises to implement their vision and strategy, which is related to performance management. However, the balanced scorecard involves a wider scope, takes longer and is more difficult, which is not a task that ordinary human resource managers can complete alone.
The reason why the balanced scorecard is difficult is that an enterprise must first have a clear business strategy, then turn it into measurable performance indicators, and finally decompose it into employee performance indicators in detail. These processes are simple to say, but I'm afraid they are not easy to implement. They must mobilize all staff (including the top leaders), take months (even after years of revision), and even hire external consultants to help them not to work behind closed doors.
Application of balanced scorecard
During the period of 1998, the Strategy Committee of GM Europe Company achieved the goal of improving the joint degree of the whole enterprise and the innovation status of the company by creating a balanced scorecard. The company is located in 8 business divisions and 12 functional departments in different countries, and developed their own scorecards according to the same process and style. In Mobil oil company, the balanced scorecard has gradually become the template of personal scorecard. "A large group of Mobil is engaged in the work of personal scorecards and has made remarkable achievements," said Edward T. Lewis, an expert in the marketing and refining department of the company.
According to Gartner Group, by 2000, 40% of the 65,438+0,000 companies in the world published by Fortune magazine adopted the balanced scorecard system. William M. Mercer's recent survey of 265,438+04 companies found that 88% companies put forward the balanced scorecard, which is helpful for the design and implementation of employee compensation plans. The non-financial evaluation method revealed by the balanced scorecard is widely used in the design and implementation of employee bonus plans in these companies.
Boyimen's management consulting experts introduced the balanced scorecard to China as early as 1996. At present, many domestic experts, scholars and business people are discussing the promotion and application of the balanced scorecard. With the deepening of enterprise reform, performance evaluation has been paid more and more attention by management, and scholars who study balanced scorecard have also developed from the initial management accounting to the fields of human resource management and strategic management.
How to establish a balanced scorecard
The following are typical steps to establish a balanced scorecard:
1, stand by. Enterprises should first make clear the business units suitable for establishing the balanced scorecard. Generally speaking, a business unit with its own customers, sales channels, production facilities and financial performance evaluation indicators is suitable for establishing a balanced scorecard.
2. First interview. Senior managers in many business departments (usually 6 ~ 12) will receive background materials about the balanced scorecard and internal documents describing the company's vision, mission and strategy. The promoter of the balanced scorecard (the external consultant or manager who organizes this action within the company) interviews each senior manager to grasp their understanding of the company's strategic objectives.
3. The first round of manager discussion. The senior manager team works with the sponsors to design the balanced scorecard. During this process, various opinions were put forward on the company's mission and strategy in the group discussion, and finally an agreement was reached. After determining the key success factors, the team will develop a preliminary balanced scorecard, which should include performance evaluation indicators of strategic objectives.
4. The second round of interview. The sponsor checked, consolidated and proved the results of the manager's seminar, and held talks with each senior manager on this tentative balanced scorecard.
5. The second round of management discussion. Senior managers and their direct subordinates, as well as a large number of middle managers get together to discuss the vision, strategic statement and tentative balanced scorecard of the enterprise, and begin to conceive the implementation plan.
6. The third round of manager discussion. Senior managers gathered together to reach a final agreement on the vision, objectives and evaluation methods formulated in the previous two seminars, set flexible goals for each indicator in the balanced scorecard, and confirm the initial action plan to achieve these goals.
7. implementation. A newly established group designed the implementation plan of the balanced scorecard, including establishing the connection between evaluation indicators and databases and information systems, promoting the balanced scorecard throughout the organization, and formulating secondary indicators for decentralized units. If you want to know more about China stock market and more information about listed companies, please come to the stock market special zone ...
8, regular inspection. An information blue book on the evaluation indicators of balanced scorecard should be compiled quarterly or monthly for the top management to check and discuss with scattered branches and departments. In the annual strategic planning, goal setting and resource allocation procedures, a re-examination of the indicators of the balanced scorecard should be included.
The literature Harvard Business Review rated balanced scorecard method as the most influential management theory in recent years. According to authoritative survey, more than 55% of Fortune 1000 companies have implemented the balanced scorecard or its concept.
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