Ebook: The Balanced Scorecard as Strategic Controlling Instrument. Introducing the Indicators-based BSC for Implementation of a Corporate Strategy from Four Different Perspectives

Nowadays, many companies should not only discuss about how to obtain profits from their products. They should also be forced to use any other aspect that has the ability to increase the impact for their long-term success. Examples are: discussing about the quality of their products, the relationship between them and their customers and employees, the production process as well as marketing. Those are the challenges for all managers who are not only struggling to achieve their company’s targets - high profits - but also to achieve customers', employees' and stakeholders' satisfaction. Therefore, managers need to seek out an approach which is able to help them finishing their tasks and involves all the aspects mentioned. Nevertheless, it is not easy to reconcile conflicting demands of individual interest groups. The concept of the balanced scorecard (BSC) is one of the modern approaches to handle these challenges. The balanced scorecard is the main topic of this book. More precisely, it explains the benefits of introducing the indicators-based balanced scorecard as a strategic controlling instrument for implementation of a corporate strategy from four different perspectives: financial, customer, internal business process as well as learning and growth perspective. Auszug aus dem Text Text sample: Chapter 2.7. The concept of indicators system: […] Through balanced scorecard as strategic management system, the corporate strategies are operationalised and made measureable with the aid of strategic goals, indicators, annual targets and actions, as argued by Schmeisser & Claussen (2009). An Indicator is needed in the concept of balanced scorecard, because through indicators a manager may measure the performance of company, for example, knowing whether the company has achieved ist targets or measuring how high the customer satisfaction is. Erichsen (2011, p. 53) argued that indicators should transparently clearly represent the complex facts and circumstances. Furthermore, a single parameter mostly is constructed from different figures. Because of that, it enables each indicator may explain how the situation of company so that a decision maker should be helped to take the right decision. In the study of PEA in 1998, PEA stated that the concept of BSC is used to translate a corporate strategic objective into a set of performance into a set of performance indicators which is inserted among four perspectives. PEA argued that some indicators are applied to measure a corporate progress toward attaining ist vision and other indicators are applied to know the long-term drivers of success. Based on von der Gathen (2014, p. 180), the term of „Balanced“ refers to the „not less“ and „not more“ between short-term and long-term objectives, monetary and non-monetary indicators as well (e.g., shareholder and customer-related) between external and internal (e.g., processes and employee-related) measures. Moreover, he (2014, p. 180) stated that the „Balanced“ is also based on looking at the whole company, for ex-ample, financial as well as non-financial performance indicators should be used. Jahnke & Sassmann’s (2003, p. 344) came up and stated that the BSC combines objects and basic information relating to the principles of cause-and-effect and compilation of performance indicators (e.g., early-indicators, influence factors, performance-indicators, value-indicators such as lead-time, failure time) and result key-data (e.g., late-indicators such as profitability, market share, customer satisfaction, customer loyalty, employees’ qualification) and it is similar as stated by Gabriel (2004) that the Balanced Scorecard Method emphasises the observation of early and late indicators. For example, when a company has made a target to increase ist customer satisfaction, the company may struggle how to reduce the error rate as much as possible so that in the future, as a result, many customers are purchasing the good quality products and it would cause an increase of customer’s satisfaction. In this part, early indicators may be indicated as an error rate which a company tries to reduce it and late indicators may be described as whether the company has successfully achieved ist target with looking at ist late indicators such as profitability, market share, customer satisfaction, customer loyalty, and employees’ qualification. Discussing about the relationship between monetary and non-monetary indicators in the concept of BSC, non-monetary indicators have tasks to complete the monetary indicators which are able to be defined as financial indicators. Furthermore, monetary indicators are appropriate to monitor certain targets. By giving a limited number of indicators which concentrate on key business processes by level of management, it enables to minimise information in implementing of BSC. For instance, both monetary and non-monetary indicators are frequently needed for lower levels of management, while top management needs summary and comprehensive monetary indicators (Grove, Cook and Richter, 2008, p. 3). Grove, Cook and Richter (2008, p. 3) stated that commonly, non-monetary indicators are notified more often than monetary indicators. For instance, non-monetary, operating indicators, such as machine downtime, percentage of capacity used, and deviations from schedule, are probably measured every day. Other non-monetary indicators, such as manufacturing cycle time, delivery accuracy, customer complaints, and spoilage, are probably measured once a week. Some non-monetary and monetary indicators, such as inventory days, accounts receivable days, product returns, and warranty costs, are probably measured every three months. Other non-monetary and monetary indicators, such as new products introduced, market share, total cost of poor quality, return on investment and employee training are probably measured per year.