Question

1. Briefly explain the concept of a balanced scorecard. Why are non-financial performance measures important?
2. ZY Airlines is concerned about the quality of customer service at their call center. You have been asked to develop two measures of customer-satisfaction and quantifiable targets for those measures.

Answer 1

ANSWER-

A) STEP-1 { EXPLANATION OF CONCEPT OF A BALANCED SCORECARD }

A BALANCED SCORECARD IS A TOOL OR A PERFORMANCE METRIC USED IN STRATEGIC MANAGEMENT TO EVALUATE OR MEASURE THE COMPANY'S PERFORMANCE BY ITS BOTH FINANCIAL AND NON-FINANCIAL INFORMATION AND DATA. IN SIMPLE WORDS, A BALANCED SCORECARD IS A TOOL USED IN BUSINESS, TO MEASURES ITS RELIABLE AND ACCURATE PERFORMANCE AND POSITION IN THE MARKET BY USING BOTH FINANCIAL AND NON-FINANCIAL DATA.

A BALANCED SCORECARD MEASURES PERFORMANCE BY BOTH FINANCIAL AND NON-FINANCIAL DATA BY FOCUSING IN THESE FOUR AREAS :

• FINANCIAL AREA OR PERSPECTIVE- IN THIS AREA, A BALANCED SCORECARD FOCUSES ON THE FINANCIAL PERFORMANCE OF THE COMPANY BY ITS FINANCIAL REPORTS . IT CHECKS COMPANY'S FINANCIAL POSITION, ITS FINANCIAL CAPACITY TO PAY OFF ITS LIABILITIES, WHICH IN BRIEF STATES ITS FINANCIAL STATUS .
• CUSTOMER AREA OR PERSPECTIVE- IN THIS AREA, A BALANCED SCORECARD FOCUSES ON THE COMPANY'S CUSTOMER FEEDBACK HISTORY WHETHER CUSTOMERS IS HAPPY FROM THEIR SERVICES OR NOT. IT CHECKS CUSTOMER SATISFACTION, RETENTION, ACQUISITION,AND CUSTOMER PROFITABILITY. THIS PERSPECTIVE IS VERY IMPORTANT FOR BUSINESS PERFORMANCE EVALUATION AS CUSTOMERS ARE THE KING OF NOWADAYS, BUSINESS ENVIRONMENT.
• INTERNAL BUSINESS PROCESS OR INTERNAL CONTROL- IN THIS AREA, A BALANCED SCORECARD FOCUSES ON BUSINESS INTERNAL CONTROL PROCESS, WHETHER IS IT GOING ACCURATELY, ACCORDING TO THE STANDARD MANNER OR NOT.
• THE LEARNING AND GROWTH PERSPECTIVE-   IN THIS AREA, A BALANCED SCORECARD FOCUSES ON THE GROWTH AND DEVELOPMENT OF EMPLOYEES. MANAGERS EVALUATE EMPLOYEES GROWTH BY THERE CAPABILITIES, AND SATISFACTION.

BY FOCUSING ON THESE FOUR PERSPECTIVE, A BALANCED SCORE CARD EVALUATE A BUSINESS PERFORMANCE AND POSITION BY BOTH FINANCIALLY AND NON-FINANCIALLY TERMS.

STEP-2 { IMPORTANCE OF NON-FINANCIAL PERFORMANCE MEASURE IN A BALANCED SCORECARD }

AS WE ALL KNOW, A BALANCED SCORECARD EVALUATES BOTH FINANCIAL AND NON-FINANCIAL PERFORMANCE OF A BUSINESS BY USING ALL DATA INCLUDING FINANCIAL PERFORMANCE, ITS EMPLOYEES GROWTH AND LEARNING CAPACITY, AND THE BIG ONE, ITS CUSTOMERS SATISFACTION HISTORY.

IMPORTANCE OF NON-FINANCIAL PERFORMANCE MEASURE:

• LONG -TERM / SHORT TERM ORGANISATIONAL STRATEGIES- BY FOCUSING ON EACH AND EVERY EMPLOYEES AND CUSTOMERS SATISFACTION, ORGANISATION BUILD BOTH SHORT TERM AND LONG TERM STRATEGIES TO HOW TO EXPAND BUSINESS PERFORMANCE. COMPANY INCREASES QUALITY OF CUSTOMER SERVICES AND EMPLOYEES INCENTIVES TO MOTIVATE THEM.
• REAL POSITION OF BUSINESS- BY MEASURE NON- FINANCIAL PERFORMANCE, A BALANCED SCORECARD PROVIDES US A CLEAR AND ACCURATE POSITION AND PERFORMANCE OF COMPANY IN THE MARKET.
• SUCCESS - IT PROVIDES THE CLEAR SUCCESS AS SUCCESS IS NOT DEFINED BY ONLY FINANCIAL TERMS BUT REAL SUCCESS IS GRAB BY BOTH FINANCIAL AND NON-FINANCIAL AREA BY SATISFY CUSTOMERS AS WELL AS ITS SHAREHOLDERS.
• GOODWILL- BY NON-FINANCIAL PERFORMANCE, IT EVALUATES OR CALCULATES THE PROPER GOODWILL OF THE COMPANY.

ANSWER B)

STEP-1

AS BY GIVEN INFORMATION, WE COME ACROSS TO KNOW, THAT ZY AIRLINES IS CONCERNED ABOUT THE QUALITY OF CUSTOMER SERVICES AT THEIR CALL CENTER. IN THIS CASE, CUSTOMERS ARE THE KING, THEY HAVE TO FOCUS ON THEIR CUSTOMERS TO INCREASE THEIR BOTH FINANCIAL AND NON-FINANCIAL PERFORMANCE.

TWO MEASURES OF CUSTOMER SATISFACTION AND QUANTIFIABLE TARGETS ARE -

• APPOINTMENT OF EMPLOYEES HAVING GOOD SKILLS AND PLEASING AND POLITE BEHAVIOUR-  BY APPOINTING EMPLOYEES HAVING GOOD CONVERSATION SKILLS, SPEAK DIFFERENT LANGUAGES THAT CUSTOMERS UNDERSTAND IS THE BEST MEASURE TO INCREASE THE QUALITY OF CUSTOMERS SERVICE AND THE TARGETS. THE PLEASURE BEHAVIOUR OF EMPLOYEES INCREASE CUSTOMER SATISFACTION AND ALSO TOUCH THE TARGETS AS THERE GOOD QUALITY OF CUSTOMER SERVICES SATISFY CUSTOMERS AND ALSO CLEAR THEIR QUERIES AT CALL CENTER.
• COMPUTERS AND OTHERS DEVICES USED SHOULD BE TECHNICALLY UPDATED AND WELL REPAIRED- FOR INCREASING THE QUALITY OF CUSTOMER SERVICES, ONE THING ORGANISATION SHOULD TAKE CARE OF THAT ALL DEVICES WHICH IS USED IN THE CONVERSION BETWEEN CUSTOMERS, SHOULD BE TECHNICALLY UPDATED AND REPAIRED SO THAT THERE SHOULD BE NO HINDRANCES BETWEEN THE CONVERSION OF CUSTOMERS AND CALL CENTER EMPLOYEES. IT WILL PROVIDE EFFECTIVE CONNECTIVITY WITH THE CUSTOMERS, WHICH INCREASES THE QUALITY OF CUSTOMERS SERVICES.