Postgraduate Department of Information Systems and Technology Management Shubchik O.A.

Donetsk National University of Economy and trade, Donetsk, Ukraine


INTEGRATION OF BALANCED SCORE CARD WITH PERSONAL BALANCED SYSTEM IN CORPORATE ENTERPRISES

 

The rapid development of the concepts of corporate management and management technologies is the hallmark of the Ukrainian economy. Particular attention is paid to strategic management. The analysis of the activities of large corporations showed that performance without proper strategic management is a very risky business. Research in this area leads to the emergence of new paradigms, concepts and tools, based on balanced scorecards.

Therefore, in our work we consider the problem of developing a system of strategic indicators for the management of corporate enterprise and its integration with personally balanced scorecard.

The Balanced Scorecard of corporate enterprises (BSC) is a system of management of the enterprise through measurement and evaluation of its efficiency on the basis of the set of indicators reflecting all significant (in terms of strategy)  aspects of the activity.

It should be noted that one of the most interesting ideas is the management of efficiency based on the Balanced ScoreCard (BSC), offered by R. Kaplan and D. Norton. The main purpose of this concept is to implement the ideas of management of a corporation into a reality, and also to connect the strategy to operations and cost factors.

BSC-Kaplan-Norton model is not unique. The following is considered a number of alternatives that are also designed to evaluate the business activity and to link the indicators used with the strategy of the company.

Lorenz Meisel model (Lawrence S. Maisel) was proposed in 1992. It has the same name as the model of the Kaplan-Norton. Meisel also defines four perspectives on the basis of which business activity should be evaluated. Instead of training and growth perspectives L. Meisel in his model uses the perspective of human resources.

C.J. McNair, Richard L. Lunch, Kelvin F. Cross in 1990 presented a model, which they called the Pyramid of efficiency. As in other models, which we consider, the basic concept is the relationship with the customer-oriented corporate strategy with financial performance, and extended by several key qualitative (non-financial) indicators. The Pyramid f efficiency on four different stages shows the structure of the enterprise, providing two-way communications and necessary for decision-making at different levels of management.

Christopher Adams (C. Adams) and Peter Roberts (P. Roberts) in 1993 proposed another model, called EP2M ("You are what you measure" in the Journal “Manufacturing Europe"). EP2M abbreviation of Effective Progress and Performance Measurement.

According to Adams-Roberts, it is important, first of all, what the company does in the following four areas:

·                                           servicing customers and markets;

·                                           improvement of internal processes (increase of efficiency and profitability);

·                                           management of changes and strategy;

·                                           property and freedom of action.

Hubert K. Rampersand - Bachelor and Master of Science, Ph.D., offers us the concept of "personal balanced scorecard." He sees it as an effective method of coaching and self training that can help achieve good results in their work. The role of the personal balanced scorecard is to change the behavior of an individual in order to improve the efficiency of the organization, increase productivity, introduce new ideas, increase the accomplishment of employees and increase their motivation. Therefore, PBSC is an integral part of the universal system of indicators.

However, the author considers this system with the personal side, so we have tried to highlight the performance of the developed system that relate to economics and management.

Let us illustrate the balanced scorecard and its integration with personal one by the example of the enterprise for production and sale of food products. The company's mission is to manufacture high-quality products to the public, providing revenue to its employees, giving everyone the opportunity to realize his creative potential.

The main strategic direction of the business is to maximize the strengthening of already established commitment of customers by expanding the range of products offered to them.

To speed up the recognition of new products it is possible to use a representative brand gained when only natural products are used in the production. It should be emphasized that the basis of a balanced scorecard is a causal interdependence of targets and indicators. Defining the relationship with personal indicators we pointed out the basic personal performance of each criterion of efficiency of the enterprise.

The top management holds the decomposition so that the achievement of each objective should become the area of responsibility of one of the managers of industrial enterprises. To visualize let us present the decomposition of objectives and scorecard in the table.

 

Projections of balanced scorecard

(Criteria of efficiency)

Objectives of the enterprise

Balanced scorecard

Personal balanced scorecard

1.Finance

1.Effective management of financial resources;

2.Providing of sales volume surplus

3.Reduction of production cost price

 

1.Surplus of sales volume

2.Sales profitability

3.Profitability of equity

1.Salary;

2 Bonuses;

3 Pension;

4 Insurance;

 

 2Marketing

1.Encouraging sales;

2.Increase of customers’general satisfaction;

3.Providing effective pricing policy

 

1.Rating of customers’ satisfaction

2. The indicator of intense product distribution;

3.Share of sales expenses in proceeds

4.Share of new customers in the area

 

1.Bonus for attracting and keeping customers.

3.Production and development

1.Increase of management of capital;

2.Providing quality of products

3.Increase of efficiency of managing working assets.

1.Coefficient of intensity of renewal of working assets

2.Resource capacity

3.Share of expenses for providing the quality of products

4.Share of ownership in working assets

1.Bonus for innovation ideas

2.Share of new products in sales;

 

4.Personnel

1.Improvement of management at the enterprise

2.Improvement of personnel management

3.Increase of personnel efficiency

1.Turnover of workforce

2.Effectiveness of management;

3Surplus of labour productivity

4.Excess of labour productivity surplus over surplus of wages

5.Index of employees’ satisfaction

1. Quantity of fields of competence;

2. Share of achieved training objectives;

3.Level of managerial skills;

4. Average period of holding a position;

5. Level of skills and creative capabilities

 

 

As you can see, the enterprise strategy of manufacturing and sales is to strengthen and expand its presence in the regional sales market while maintaining the competitiveness of the enterprise. A common strategy for the growth stage is a product differentiation, either by creating a brand, or emphasizing any specific product features. Typically, such support is at the stage of its development, and further increases the overall cost of marketing. These costs need to be assessed from a financial point of view as a long-term investment of enterprise. Any undue preference exerted at this stage for short-term financial results, can easily undermine the long-term success of the business, leading to an underestimation of investment in marketing.

By linking this strategy to personal performance, we can determine the rules by which people can assess their progress in achieving the goals of the enterprise. With PBSC one can estimate a person's actions from the perspective of how he uses his personal capacity and achieves personal goals.

Such factor of efficiency, as the staff, its determination and the relationship with the individual indicators, such as the development of skills and creative abilities, competence, directly affects the process of improving the efficiency of the entire enterprise, namely, the improvement of enterprise management, process of staff management, as well as increase of the efficiency of all staff.