The Balanced Scorecard Approach to an Organization
Haco Industries Ltd. is a 37 year old international company involved with stationery products, shavers, personal care and household hygiene. Haco Industries serves over 180 million people across the entire Eastern Africa region. It was established in 1974 and later diversified its focus into personal and household care in the mid 1990s. Haco Industries is one leader in the FMCG (Fast Moving Consumer Goods) market in East Africa. It has partnered with PLI Alberto-Culver USA, E.T.Browne Co. USA, Société BIC France and Jeyes UK in manufacturing and distribution. The balanced scoreboard at Haco is approached to make sure the company grows, prospers and survives. (It is a tool used in Strategic Planning and Management in order to make business activities in line with company vision and strategy, boost internal and external communication and check on performance versus strategic goals). It gives a balanced view of organizational performance to managers, as it incorporates traditional financial measures with non-material/financial ones. This is the case with managers at Haco Industries and thus, the balanced score board approach is used by Haco as an overall tool to track its growth and survival in the households market. The balanced scorecard helps the company satisfy its mission by putting together the company's strategy and tactical measures. The dimensions of learning, innovation and growth, while put to work, make sure that the other three components of its overall dimension also succeed, namely: - customer service, financial and internal operations. The three objectives of improving the company's financial position include the following:-
Improvement on customer cost information
This analyses the standard price per item per customer so that Haco Industries can compare the profitability between customers. This is used in weekly review meetings to communicate the financial state of the entire company and also compare customers based on the profitability, which in turn drives behavior. This falls perfectly within the company's mission and overall strategy in that the growth of the company has to be closely monitored to in order to arrive at and achieve extraordinary value.
Measures in internal perspectives
Haco follows three major goals when it comes to measuring and achieving its internal perspectives. These goals include the following: Planning and delivering of flawless new products; Introduction of new and re-innovated products into the market; and Reduce costs continually. These have been specifically designed in line with the mission. In order for the company to grow and be valuable and maintain its learning, innovation and growth, the company has to maintain a vibrant work force by giving regular feedback on performance.
Good customer service.
Haco Industries has built a customer service dimension which lies entirely in hiring people aligned with the company and retaining those who deliver outstanding customer service. This has helped the company to stay in focus and in touch with its mission and the entire the dimensions hence the industry keep being extraordinary value trough extrusions.
Performance measures of each of these objectives:
Haco measures the performance of improving the costing information on each customer objective by analyzing standard cost per item to the actual cost per item; this is done by actually looking into individual level. Actual costs vary based on time of production, raw materials to be used and overhead costs. However, measuring customer service urgency and responsiveness is the major way Haco Industries uses to gauge customer service. This has four major dimensions for measure which include: Customer satisfaction, customer complaints, on time delivery and return materials rate to measure customer satisfaction. While measuring internal perspectives, Haco Industries addresses these major parts as goals themselves:-
- Plan and deliver flawless new products.
- Indentify new opportunities and processes.
- Reduce their costs.
Expected Level of Performance for each Objective
The performance of the improvement of costing information is to make sure the order processing is bringing profits to the company hence the high volume customers are targeted for ways the company can gain additional profitability. This is used by the sales team too to daily manage net and gross margin levels hence the target. Internal perspective is targeted to continually improve job analysis in order to drive ultimate productivity and profitability. Haco uses this for employment physicals to predict the ability to succeed on the job and for 'fitness to work'. The customer targets on quality, on time delivery and fair value of products and services. This is inclined at improving the customer confidence in the company and maintaining and also attracting more; thus when you take a close look at the basic scoreboard you will realize that it's used in every aspect build a profitable company and keep it aligned with its mission and vision.
Programs Developed to help Implement each Objective
Haco Industries has developed a number of programs and developed new ideas which are made to meet its needs, for example:- Haco has developed a cool tool that has helped greatly to improve costing information. This tool is used in the financial department to analyze and measure daily gross margin levels as well as analyze each customer by items they purchase or order. Haco has as well come up with an analysis method introduced to capture data on very critical motion used on the job. This is conducted by a physical therapist and monitors employees individually in each major category of the job. In addition to the above, Haco Industries also uses surveys in order to ensure customer service is kept at its highest levels possible. This has ensured the company gets relevant and useful feedback as well as keeping any customer complaints in check. In conclusion, we can therefore attest that the basic scorecard has been utilized in an innovative manner by Haco industries and it has helped it to maintain in its mission, vision and overall strategy hence the success and continued growth of the company. Haco has used the balanced scoreboard approach as a daily management tool to prescribe what should be measured to balance the financial perspective, and overally enact strategy.