Financial and Performance Management

This document discusses the process, advantages and disadvantages of balance scorecard, identification of critical success factors, proposed balance scorecard and performance measurement in financial and performance management. It provides insights into the importance of client perspectives, internal process perspectives, financial perspectives, and workforce perspectives. The document also proposes a balance scorecard framework for the given case scenario.

FINANCIAL AND PERFORMANCE MANAGEMENT

Table of Contents
Table of Contents.............................................................................................................................2
1.0 Summary of the Process............................................................................................................3
2.0 Advantages and Disadvantages of Balance Scorecard (BSC)...................................................6
2.1 Advantages............................................................................................................................6
2.2 Disadvantages........................................................................................................................6
3.0 Identification of Critical Success Factors (CSFs)......................................................................8
3.1 Clients’ Perspectives..............................................................................................................8
3.2 Internal Process Perspectives.................................................................................................8
3.3 Financial Perspectives...........................................................................................................9
3.4 Workforce Perspectives.......................................................................................................10
4.0 Proposed Balance Scorecard and Performance Measurement.................................................11
5.0 Proposed Strategy Map............................................................................................................15
6.0 Conclusion...............................................................................................................................16
References......................................................................................................................................17
Appendices....................................................................................................................................19
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1.0 Summary of the Process
Step 1: Identification of the objective
 Require additional data to evaluate the performance management system in the
nonfinancial organization
 Provision of effective and satisfactory service offerings to the customers, clients and
community irrespective of the cost factor
 A degree of financial support and funding is significant Conduction of suitable performance evaluation process to address internal concerns
Step 2: Receiving entire support from GPI’s senior management and executive director
 Developing the balance scorecard that can help the organization to address its found
determinates. Accountability for the application method
Step 3: Team development and application of balance scorecard
 Explaining the objective of the current project
 Understanding the exact scope or opportunity of this balance scorecard Implementation of accurate performance assessment tools
Step 4: Communication
 Identifying the exact purpose of balance scorecard
 Determining the actual benefits of the balance scorecard
 Comprehending the exact disadvantages of balance scorecard Beneficial sides of balance scorecard development and its implementation
Step 5: Critical success factors
 Gaining insight related to a different perspective of 4 different factors
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 Client and community perspectives Internal process perspectives
 Financial perspectives Workforce perspectives
Step 6: Demining performance measure and target setting Application of effective methods and metrics of measurement
Step 7: Assigning tasks to individuals
 Gathering effective data
 Comparing the derived findings against the targets
 Explanation of variances
Step 8: Developing implementation plans
 Framing of the timeline to present effective balance scorecard
 Discussing suitable initiatives to attain performance objectives or goals
With the passage of time, nonprofit businesses are facing unexpected challenges in terms of
executing their primary mission due to the rise of public security and demand for transparencies
needed by the stakeholders. The above-stated factors are somewhat enforcing nonprofit
organizations to look into their performances criteria in more holistic format. Considering the
case of GPI, a balance scorecard is proposed to frame for measuring the intangible assets like
human capital, strategic capital, structural capital within their management system. In the
opinion of Martello, Watson and Fischer (2016), it can be understood that the primary concern of
every nonprofit organization is to ensure customer or community satisfaction rate. Similar had
been the case of GPI, where the company has been aiming to form an effective balance scorecard
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to evaluate its performance criteria and the suitable propositions it can include in future to
resolve its existing shortcomings. It would also help the management to comprehend the
expertise level of its staff and also the potential of its internal methods to meet the rising
demands of the society. Since the brand entirely depends on fund collectors or donators,
therefore, it also needs to ensure that the funds are effectively used on elevating the service
standards that can help the dysfunctional community to enrich their standards of living.
The current project aims to evaluate the performance management process of GPI, based on
which a suitable balance scorecard framework would be proposed to enhance the service
standards and performances of GPI. At the beginning of the study, the researcher lays down the
detailed process flow as to the topic of BSC supported by a brief discussion on the advantages
and disadvantages of BSC. In the subsequent parts of the paper, the researcher identifies the
CSFs based on the given case study and thereby proposes the BSC required for the instant case
scenario. In addition, the paper provides a strategy map for the organization. Finally, the
researcher wraps up the discussion by way of concluding note.
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2.0 Advantages and Disadvantages of Balance Scorecard (BSC)
2.1 Advantages
BSC may be considered to be one of the most widely used frameworks for the managerial
decision making as the model provides in insight into the CSFs of the organization in terms of
relevant measures and initiatives to be undertaken by the organization in order to achieve
operational excellence. First of all, it may be stated that the BSC provides a structure and well-
defined framework for the formulation of business strategy. Moreover, it helps the management
to align the various departments and units of the operations. There have been instances where the
implementation of the model has enabled to management to integrate the business processes and
its elements in coherent manner and thereby enhance the productivity as a whole. To put it
differently, it may be construed that the BSC provides guidelines for the management to align
individual aims with that of the organizational aims (Boateng, Akamavi and Ndoro, 2016). It
may also be noted that the framework helps the management to manage employees in terms of
their satisfaction, productivity and objectives (Cooper, Ezzamel and Qu, 2017).
2.2 Disadvantages
On the contrary, BSC may be alleged to have been suffering from certain inherent limitations.
One of the prominent disadvantages of BSC is that the implementation of BSC may prove to be
costly, especially for the small business houses. Since the model is comparatively complex to
understand and hence requires training, there remains a cost implication, which small-sized firms
may not be able to afford, at times. In addition, it may also be observed that the BSC may not be
replicated from the past examples and experiences. BSC assumes that every aspect of the
business is synced with each other which may not be true at times. Moreover, the primary
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essence of BSC may seem to be rigid to practically implement most of the times (Cooper,
Ezzamel and Qu, 2017)
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3.0 Identification of Critical Success Factors (CSFs)
3.1 Clients’ Perspectives
It has been identified from the provided case study that the client plays the most significant role
in GPI business. Welfare and improving the standard of living of a dysfunction society has been
the foremost objective of the organization, therefore, understanding the accurate requirements of
clients and their perspectives would be highly necessitated for the nonprofit business. In the
opinion of Martello, Watson and Fischer (2016), customer satisfaction has been the core target of
this business. Hence, the organization shall not only focus on the basic service lines but also
render on activities that can help the business to enrich the value proposition index of its clients.
Establishing a new service line to accelerate the brand image shall not be the main consideration
of the organization, rather, helping the community to gain actual satisfaction shall be its key
performance indicator to depict or measure the actual success of this business (Gibbons and
Kaplan, 2015). Moreover, the provision of assessed quality service would be an effective
indicator to gauge the satisfaction level of clients and also his family members’ satisfaction level.
The specific method can be followed by conducting a periodical survey and collecting clients’
feedback against the offered services. This can definitely assist the management with adequate
positive and negative feedbacks. The negative opinions can definitely support GPI to identify
their loopholes and accordingly addressing with suitable solutions for process improvements.
This approach can guarantee the highest service standards where GPI definitely enhance its
clients' satisfaction ate with its offerings.
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3.2 Internal Process Perspectives
The internal process perspectives for the balance scorecard need to stem from the business
methods of GPI that can manage to create maximum impact on its community or customer
satisfaction. Factors that usually affect the internal process of GPI include cycle time, employee
skills, quality, clients’ expectation management and productivity. In the consideration of
Gibbons and Kaplan (2015), organizations especially the one operating in the nonprofit zone
shall attempt to recognize and determine it's business’ core competencies and installation of right
technical support to elevate clients’ satisfaction level. It has been assessed from the provided
case that GPI has a number of effective internal processes to elevate the value margin amongst
clients and the community as a whole. The brand is also experiencing a constant alternation in
the process, which required effective and proactive technical servers to trace and record the huge
lists of the client and the services they require or have been offered to them (Muda, Erlina and
Nasution, 2018). This approach can help GPI to maintain a positive and healthy relationship with
clients and community members. A rise in the efficacy level ensures that clients or customers
are getting required attentions through the necessary tools and equipment. On the other hand, the
allocation of budget and its application in the right process has been another critical factor to
guarantee that community has been entirely benefitted from the fund collected for the purpose
rather 5than spending on miscellaneous or variable expenses.
3.3 Financial Perspectives
The financial performance of the organization has been considered to be stable as the appendices
establish the same. However, an insight into the financial facts and figures may reveal that the
organization primarily depends on the state funding for revenue generation. In this context, it
may be stated that the CSFS with respect to the financial perspectives of a non-profit
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organization is critical to assess before implementing a BSC framework therein. Since the
primary goal of the organization is not oriented towards profit seeing, the financial parameters
should be prioritized to accumulate the surplus which, in turn, will be utilized towards the
community and society as a whole (Kalender and Vayvay, 2016).
3.4 Workforce Perspectives
According to Moullin (2017), the above-mentioned factors and activities cannot be conducted if
the resources management in done inefficiently within the workplace. Since GPI is a nonprofit
organization that specifically offers health-related and welfare service to the community,
therefore, the resources need to be well trained to have the correct product knowledge and
understand the actual issues of clients and prescribe the best fit services accordingly. To serve
effectively to the disabled society required adequate training in which the workforce shall use
their expertise to improve the standards of living. Employees also require effective rewards and
support to retain their degree of motivation in the workplace. Hence, the management of GPI
needs to identify its employees' needs and the supports they require further to improve their
service offerings (Hansen and Schaltegger, 2017).
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4.0 Proposed Balance Scorecard and Performance Measurement
Proposed Balance Scorecard (BSC)
The management of the given organization in the case study may need to create a BSC for the
CSFs as discussed previously. The figure herein shows the proposed BSC of GPI.
Financial
(Key Ratios, Revenue, Surplus, Cost Structure,
Optimization, Funding etc.)
Internal Process
(Delivery, Productivity, Success Rate etc.)
ORGANIZATIONAL LONG-TERM AIMS AND OBJECTIVES
Customer
(Satisfaction Index, Follow-up and Monitoring, Value
Proposition etc.)
Workforce
(Motivation, Hygiene, Benefits, Integrity, Aims
Alignment etc.)
Proposed Balance Scorecard (BSC)
(Source: Created by author)
Client
For non-profit business, the management may need to consider the client as the first and
foremost criteria for devising BSC (Veltri and Bronzetti, 2015). In this context, it may be stated
that the said organization, in the given case study scenario has been able to prioritize its clientele
in such a way that the service delivery has been segregated across various parameters. The
figures in appendices below show that the childcare has been increased in the current year as
compared to the previous year. On the other hand, service delivery towards disabled adults has
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been declined substantially. Similarly, the various program undertaken by the organization for
the4 disabled persons have experienced a fluctuation in terms of service delivery and the
management hence, may need to take a note of the same for the purpose of devising BSC in this
regards (Boateng, Akamavi and Ndoro, 2016). The senior management and the persons
responsible for the given programs may be given the charge to look into the matter and adopt the
necessary measures in order to assess the implication for such fluctuation and enhance the client
servicing framework in line with organizational objectives.
Internal process
The internal process of the organization has been strong and efficient with effective internal
control in place. the figures and information as provided in the given case study may show that
the service provided by the firm has been well praised and critically acclaimed by various houses
and have been awarded largely. The service delivery may, therefore, be construed to be synced
with the larger framework of organization objectives of GPI.
Financial
The financial parameters of the firm may exhibit that the adult residential services have been the
major sources of expenditure with the lion's share of 62% of entire revenue earned for the given
financial year. On the contrary, state funding is the primary source of revenue for the firm with
67% proportion of total revenue. Therefore, the key elements in the financial framework are
these two heads where most of the revenues are generated and expended simultaneously. The
managers may need to consider these two aspects of the operations and evaluate the respective
risks of non-attaining the given parameters within the stipulated guidelines of GPI. The
deviations must be accounted for in a timely and efficient manner so that the necessary measures
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may be undertaken to optimize the cost structure as well as streamline the top-line of the
operations of GPI.
Workforce
The employees range over 400 who are either full time or part-time employees with GPI and
they serve continuously towards the various service delivery operations for the GPI and for the
society as a whole. Moreover, the organization employs almost 10 volunteers who work for
disabled persons under various programs targeted and specially devised for them. The
management should also consider the fact that employees are the key instrument for the success
of the organization and hence, employee satisfaction should be prioritized keeping in mind the
long-term value proposition of the firm (Al-Hosaini and Sofian, 2015). It has been observed that
the employees are provided with sufficient scope for training and development with financial
benefits that may boost up their confidence and morale.
Performance Measurement
The aforesaid discussion shows that the proposed BSC of the organization may need to consider
several aspects of those 4 CSFs of the BSC framework. The table below shows the performance
measurement of those CSFs along with the assignment of corresponding responsibilities in brief,
on the basis of which the strategy map has been designed in the subsequent sections of the paper.
However, in this context, it may be stated that the actual result herein has been taken as an
estimate so that the variance analysis responsibility may need to be assigned to conceptual
framework of the performance measurement with respect to the BSC may be created
accordingly.
Perspecti Measures Targets Initiatives Responsibil Actual Varianc Priori
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ve ity Result e ty
Client
client
satisfactio
n
5% p.a. follow up
C&F
Director
5% p.a. Nil
support
servicing
2.5%
p.a. interview C&F
Director
3.0%
p.a.
+0.5%
p.a.
governmen
t
accreditati
on
5% p.a. follow up
C&F
Director
6% p.a. +1%
p.a.
Financial
cost
reduction
10%
p.a.
process
reengineeri
ng
Financial
Director
8% p.a. -2%
p.a.
funding
sourcing 5% p.a. negotiation
and tie up
Financial
Director
5% p.a. Nil
variance
analysis
2.5%
p.a.
effective
control
Financial
Director
3.5%
p.a.
+1.0%
p.a.
Internal
Process
efficiency
score
more
than 7
planning
and
monitoring
Operation
Director
Around
6
More
than 1
internal
control
and
monitoring
checklist
minimu
m 8
planning
and
monitoring
Operation
Director
Around
5
More
than 2.5
timely
resolution
of the
query
the
varianc
e of less
than
10%
planning
and
monitoring
Operation
Director
15%
varianc
e
Almost
6%
Workfor
ce
deploymen
t rate
the
varianc
e of less
than
10%
technology
access
HR
Director
16 % 6.2%
training
and
developme
nt
program
at least
2
progra
m p.a.
training
module
developme
nt
HR
Director
2
progra
ms p.a.
Less
than 1
progra
ms p.a.
workforce
hygiene
varianc
e of less
than
10%
policy
developme
nt
HR
Director
Less
than
10%
Nil
Page 14 of 19

5.0 Proposed Strategy Map
Based on the discussion in the previous sections of the paper, the author aims to draw a strategy
map that shows the relevant CSFs for devising a BSC for GPI in the given context.
Perspectiv
e
Objective/ Strategy
Map Measures Targets Initiatives
Client enhanced client
service/ satisfaction
client satisfaction 5% p.a. follow up
support servicing 2.5% p.a. interview
government
accreditation 5% p.a. follow up
Financial increased profit/
surplus
cost reduction 10% p.a. process
reengineering
funding sourcing 5% p.a. negotiation and tie
up
variance analysis 2.5% p.a. effective control
Internal
Process increased efficiency
efficiency score more than 7 planning and
monitoring
internal control and
monitoring checklist minimum 8 planning and
monitoring
timely resolution of the
query
the variance of
less than 10%
planning and
monitoring
Workforce improved quality
deployment rate the variance of
less than 10% technology access
training and
development program
at least 2 program
p.a.
training module
development
workforce hygiene variance of less
than 10%
policy
development
The given table shows that the strategy map provides holistic guidance as to the organization's
initiatives and measures relating to the successful implementation of BSC in the given context.
The strategies have been developed keeping in mind the long-term goals of the organization in
most cost and time efficient way.
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6.0 Conclusion
Based on the discussion and analysis performed in the preceding sections of the report, it may be
construed that the strategic management initiatives are key to the success of a business and
hence, the management must consider the same in implementing the same in the operations
accordingly. BSC is a widely used and applied the tool for the managers in their strategic
decision-making purposes (Hansen and Schaltegger, 2016). The instant paper has shown the
process of how the BSC may be prepared on the basis of the given information and critical
success factors (CSFs) of the business. The business herein has been facing certain challenges
with respect to its strategic positioning and which the stakeholders, primarily the Board, have
been worried about. As a result, the need for creating a BSC has been felt by the management.
The instant report has shown that the proposed BSC has been instrumental to the management
for their decision-making purposes. Though there have been certain challenges with respect to
the implementation of BSC in a business organizational setup, the management may need to
adopt the necessary measures that may nullify the flaws associated with such implementation
(Akkermans and Van Oorschot, 2018).
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References
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scorecard development using system dynamics. In System Dynamics (pp. 107-132). Palgrave
Macmillan, London.
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education institution (HEIs). International Review of Management and Marketing, 5(1), pp.26-
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Boateng, A., Akamavi, R.K. and Ndoro, G., (2016). Measuring performance of non‐profit
organisations: evidence from large charities. Business Ethics: A European Review, 25(1), pp.59-
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Cooper, D.J., Ezzamel, M. and Qu, S.Q., (2017). Popularizing a management accounting idea:
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Gibbons, R. and Kaplan, R.S., (2015). Formal measures in informal management: can a balance
scorecard change a culture?. American Economic Review, 105(5), pp.447-51.
Hansen, E.G. and Schaltegger, S., (2016). The sustainability balance scorecard: A systematic
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Hansen, E.G. and Schaltegger, S., (2017). Sustainability balance scorecards and their
architectures: Irrelevant or misunderstood?. Journal of Business Ethics, pp.1-16.
Kalender, Z.T. and Vayvay, Ö., (2016). The fifth pillar of the balance scorecard:
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Kaplan, R.S. and Norton, D.P., (2015). Balance Scorecard Success: The Kaplan-Norton
Collection (4 Books). Harvard Business Review Press.
Martello, M., Watson, J.G. and Fischer, M.J., (2016). Implementing a balance scorecard in a not-
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Moullin, M., (2017). Improving and evaluating performance with the Public Sector
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458.
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Appendices
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