Literature Review
Niven (2010) describes that Robert Kaplan of Harvard and David Norton coined the Business Scorecard (BSC) in 1992 to measure intangible assets that played a vital role in increasing their financial figures. Kaplan and Norton believed that for managers to improve on their management of intangible assets; they had to incorporate the measurement of their value into their management programs. After the formulation of the business model several companies adopted it and 15 years down the line, it was further adopted by thousands of other public, private and nonprofit companies. The concept was further expanded to include the communicating, describing, and implementation of the strategy. The four BSC perspectives include the perspective of learning and growth, the customer perspective, the perspective of the business process, and the financial perspective. In order to merge the initial and the developed structure, three factors were highlighted by Kaplan and Norton.
Balanced Scorecard for Performance Measurement
Initially, the Balanced Scorecard (BSC) contained the financial incentive as the backbone for success but has however been supplemented with 3 other metrics which include the customer, learning and growth and the internal process. Niven (2010) illustrates that the three drivers were later on proposed by Kaplan and Norton as other fundamentals for achieving the shareholders long term values. In the past, BSC did not advocate for the nonfinancial measures as a method of motivating, measuring, and evaluating the company’s performance. Improvement of intangible assets leads to an increase in the financial output of the company. An example includes employees’ training leads to enhancement of their service delivery and the services further leads to customers’ satisfaction.
Strategic Objectives and Strategy Maps
Brown (2007) demonstrates that in many companies the adoption of the right metrics is important in the realization of the balanced scorecard. The past metrics entailed customer retention, yields, customer retention, employee satisfaction, and potential leads. However, companies that entirely depended entirely on these general metrics ended up dissatisfied.
In order to avoid such scenarios, the companies should not begin by selecting the metrics. Brown (2007) explains how companies should start by stating what they want to achieve from their strategies and the organizations should employ the 4 BSC perspectives to describe their objectives. The financial objective was formulated to increase the shareholders wealth while supporting other objectives like the productivity, risk management and growth in revenues. The customer objectives described the satisfaction level, retention and increase in shareholder value.
The companies lacked specific objectives that outlined worth in the customers perspectives. The proposed value, quality, functionality, purchase experience, price and service, were the fundamental factors that formed strategy. This strategy differentiates the organization from its existing rivals. The process perspective objective reflects how the company would offer differentiated value while meeting its financial objectives, so as to improve its productivity. Nowadays, strategic objectives are formulated in quotes so as to express the customers and employees voice in the organization. Brown (2007) explains that after the formulation of customer and employees objectives, it was now simple to select the metrics that measured the respective strategic objectives. At this point, the metrics were now aligned to the organization’s strategy.
The Strategic maps begin from the casual relationships brought about by interactions of the strategic objectives. Pham-Gia (2009) gives examples of the casual relationships of the strategic objectives include: trained employees lead to reduction of process defects; the enhanced processes lead to minimized customer lead-times: the improvements in quality constitute to greater customer satisfaction which additionally lead to loyalty and high revenues in the long run. Therefore, the objectives are interrelated in terms of cause and effect relationships.
The strategic map is formulated on the basis of BSC measures and objectives interrelations. In the contemporary times, all of the BSC projects formulate the strategy map where the strategic objectives are created first, followed by the selection of metrics for every objective. Form the strategy map and the balance score card, the learning and growth perspective creates the weakest interrelationship. Under the employees’ generic measurement, the metrics lacked a link between the workers capabilities and the strategy. Pham-Gia (2009) contrary explains some writers had identified that human-resource development led to the improvement of the financial performance.
From the gap that existed, it followed the creation of strategic human-capital and the strategic job family. Pham-Gia (2009) further explains that the developments led to the formation of organizational capital and the information capital. The extensions were later incorporated as part of the organization’s intangible assets.
The Strategy Management System
Pham-Gia (2009) depicts that the strategy management systems were developed as a measurement tool for managers so as to monitor motivate and control their strategies. The strategy management systems include the boundary systems, diagnostic systems, internal control systems, belief systems and the interactive systems.
The strategy management system was developed to transform the balanced scorecard from being a diagnostic system to a more interactive system. Many of the managers use the existing management systems like the project management system, revenue system, budget and henceforth, incorporate them interactively. Through the use of the strategy management systems, it enables interactive based systems that are customized so as to incorporate the balanced scorecard and the strategy maps in implementing their strategies. (Tonchia & Quagini, 2010).
Tonchia & Quagini (2010) argues for the achievement of strategy execution, five management and leadership processes need to be implemented. The change need to be mobilized by the leadership from executive. The strategy is later supposed to be translated. The company is then aligned with the formulated strategy. The employees then need to be motivated to make strategic decisions during their daily operations. Lastly, the strategy is then governed to ensure a continuing process. Today, the company’s strategy is linked with its operations. The comprehensive management system has simultaneous coordination’s between all organization staffs. Processes that are operated at different departments like budgeting, HR communications should be coordinated so as to promote strategic alignment.
Analysis
Customer Perspective
The nursery volunteers can learn that for the success in horticulture farming, customer value-packages need to be implemented. The small project can take advantage of independent developments and innovation activities that can highly propel the business. Tonchia & Quagini (2010) points out some of the innovation activities include horticulture breeding and the horticulture technologies. The new breeds can help the start-up horticultural business to start at an upper hand as compared to other farms.
Majority of horticultural farms operate using the cost leadership strategy which can only provide a short term solution. The customer perspective incorporates the food-safety standards and quality demands which can be maximized to achieve the customers’ expectations. Smith (2013) adds that some of the safety standards include clean vegetable handling processes, clean food packaging, right quantity of the vegetable products and timely handling of the customer queries. The customer perspective should be co-joined with the business internal processes so as to achieve its strategic objectives. The customer perspective can be enhanced by focus strategy or product differentiation so as to achieve maximum satisfaction. The product differentiation can be adapted through plantation of different vegetable varieties or plants interbreeding which can result to unique output and capture a diversified market.
Internal Business Process Perspective
The volunteers can learn on the importance of the horticulture internal operations like if the business commodities and services conform to the customers’ expectations. The business accounting and costing systems should be aligned with customers’ expectations in terms of affordability. Smith (2013) argues if the business rates its products too high or too low, the customers can perceive the business as incompetent or offering substandard commodities.
The business should adapt efficient operational services so as to be profitable in the short and long run. The business can further the use of volunteers as compared to hired staff who can increase the costs of operation. Smith (2013) confirms that only specialized agricultural personnel can be consulted from time to time to promote the efficiency. The business can also decide to venture into specialization where they can decide to produce only a particular type of vegetation. Advantages of specialization include the realization of economies of scale and minimization of costs which can be achieved henceforth. Through the realization of the above advantages, the benefits can then be reciprocated to the customers as lower prices and improvement of the horticultural produce.
Financial Perspective
Through the adoption of the horticulture farming, the nursery volunteers can incorporate the traditional financial and non financial incentives to achieve its strategic goals. One of the financial metrics includes the profitability. Kammerer (2009) demonstrate that in order for the small business to achieve its strategic goals, the volunteers would first have to formulate and implement their profitability objective. The financial objective is important because it provides the sole energy and feasibility of the business. However, if the business does not meet the set criteria, the business can then incorporate the non financial objectives to spearhead its sustainability.
One of the non financial metrics that can be used includes the volunteers’ personnel development. The nursery volunteers can be trained so as to effectively implement their acquired knowledge. The training would assist the agricultural volunteers to efficiently plan and execute their duties effectively. Kammerer (2009) adds on the financial metrics, the nursery volunteers can learn about the budget keeping, profitability, costing of the horticultures, benchmarking, how to project their sales, which can promote efficiency when learned. The financial metrics assist the nursery volunteers to plan and efficiently allocate the limited resource to the activity that is urgently or inadequate in operation. The combination of the non financial and financial metrics can assist the volunteers to plan on the stakeholders’ demands as well as the internal operation processes.
The Learning Process Perspective
The learning perspective is concerned with the agricultural volunteers training and adaptability to the business set of values. In this category, the optimum focus is on the volunteers’ development. The horticultural industry is continuously changing through the introduction of better agricultural systems and methods, discovery of new green house pests and management. Through the use of some grant and donation funds, the volunteers can use the metrics to evaluate the best channel to promote the new training. Kammerer (2009) confirms that in any case the success of the business depends upon the development of the agricultural volunteers.
Kammerer (2009) points out learning have a wider scope than training; therefore, the business can employ the use of tutors and mentors from the industry, to motivate the volunteers. The learning process also assists in communication among the workers which can foster quick decision making and better handling of problems.
Conclusion
Through the merging of the traditional and modern balance scorecard in the management factors, the modern balance scorecard currently constitute of the non financial metrics as part of strategy implementation. The traditional financial metrics alone is inadequate in the achievement of employee satisfaction. The agricultural volunteers can also incorporate non financial metrics so as to achieve business and customer satisfaction. The customer and the learning process perspectives are added focuses which can help the horticultural business achieve its set strategies.
