In light of this environmental reality, Traditional management strategies and practices have become rather ineffective and insufficient to outperform competitors and create more value (Teece, 2007). Thus, organizations argue why some organizations succeed while others fail? Organizational Performance is considered as the most significant issue for all organizations. Moreover organizations are seeking to specify which practices should influence their Organizational Performance in order to enhance them.
It is vital to have a performance measurement system in any organization because such a performance system plays a huge role in developing strategic plans and evaluating the achievement of the organizational objectives. Usually traditional performance measurement is based on the traditional management/cost accounting system, which is no longer feasible in current business environment due to its focus on the short-term. Furthermore shortcomings of the traditional performance measures, including weak links with strategic objectives, lack of operation details quality related and customer loyalty. (Kaplan and Norton, 2001) have argued that many organizations nowadays focus on managing intangible assets (e.g. customer relationships, innovative products and services, high-quality and responsive operating processes) which are considered as non-financial perspectives, rather than managing tangible assets (e.g. fixed assets and inventory) which are considered as financial perspectives. In this regards (Kaplan and Norton, 2001) suggested using the Balanced Scorecard (BSC) as a methodology to measure organizational performance that includes traditional financial measures with non-Financial measures to provide managers with more significant and relevant information about Organizational Performance (Kaplan and Norton, 2001).
In this context, Total Quality Management (TQM) has emerged as one of the most valuable sources of enhancing organizational performance. (TQM) previous studies has divided (TQM) in to tow dimensions the first one is the managerial or Soft (TQM) practices which includes (Customer Focus, Top Management Support, Employees Training and Employees involvement), on the same way the second perspective is he technical or Hard (TQM) practices which also includes (Continuous improvement, Feedback System, Statistical Process Control and Total Quality Management Tools).
Soft and Hard (TQM) provides the organization with a competitive advantage eventually this research categorized Total Quality Management (TQM) into tow dimensions according to (Lewis et al., 2006; Gadenne and Sharma, 2009).
1.2 Research Problem and Question
Due to the important role played by the Zain Telecommunication Company in Jordan as one of the companies that contribute to its national economy, Zain Telecommunication Company need innovative solutions to improve the delivered value to the shareholders and customers, in order to gain maintain the competitive advantage of continuously satisfying the booming customer demand. (TQM) is one of the solutions that have become popular in recently. Although studies conducted in different countries found a strong direct link between (TQM) and organizational performance. No studies were conducted to investigate the impact of Soft and Hard (TQM) on the organizational performance using Balance Scorecard methodology in Zain Telecommunication Company. Due to the obvious lack of research addressing this issue, this research aims to fill this gap.
Therefore, this research aims to investigate the impact of Total Quality Management in terms of its two main dimensions (Soft and Hard TQM) on the organizational performance using Balance Scorecard Methodology in terms of main dimension “Customer Perspective, Internal Businesses Processes, Learning and Growth and Financial” Perspective “in the Zain Telecommunication Company.
According to the research problem, the main question that can be formulated in this research is “what is the impact of Soft and Hard (TQM) on the organizational four Performance in the Zain Telecommunication Company?” From this main question, four research questions were derived. Each research question had been structured to a explore the research objective which would be outlined later: The research questions are listed below:
- To what extent are Soft and Hard (TQM) practices developed in the Zain Telecommunication Company?
- What is the nature of the Zain Telecommunication Company performance according to Balance Scorecard methodology?
- What is the impact of (TQM) practices (Soft and Hard) on the Organizational Performance in the Zain Telecommunication Company?
- Which (TQM) practices (Soft and Hard) have the most significant impact on the organizational performance of the Zain Telecommunication Company according to Balance Scorecard methodology?
1.3 Research Objectives
This research aims to investigate the impact of (TQM) practices (Soft and Hard) on the organizational performance using Balanced Scorecard methodology to help in improving the Organizational Performance of the Zain Telecommunication Company. Additionally it aims to achieve the following objectives:
- Identify the context to which (TQM) practices (Soft and Hard) are clear in the Zain Telecommunication Company.
- Investigate the nature of the Zain Telecommunication Company Organizational Performance according to the Balanced Scorecard methodology
- Identify the most significant (TQM) practice (Soft and Hard) effects on the Organizational Performance of the Zain Telecommunication Company according to the Balanced Scorecard methodology.
1.4 Research Significance
Zain Telecommunication Company plays ac critical role in creating and adding value to economy and society. Therefore, the continuous improvement of Organizational Performance of the Zain Telecommunication Company has always been a priority to the government and its top management. In addition, there has been an increasing emphasis on the measurement of organizational performance of organizations using both financial and non-financial indicators. Thus, the importance of this research emanates from the fact that it is considered on of a limited number of studies that have attempted to measure the Organizational Performance according to The BSC methodology of the Zain Telecommunication Company.
The research is about Total Quality Management of its two dimensions (Soft and Hard) in the context of Zain Telecommunication Company, and as mentioned above, the researches regarding (TQM) in the context of Zain Telecommunication Company have mostly taken place in the middle east region bearing in mind that Zain Telecommunication Company is considered as one of the largest telecommunication providers. Such a research in the Arab region especially in Jordan will essentially contribute in broadening the understanding of Total Quality Management (TQM) development in the Arab region, particularly those who suffers from a noticeable lack of natural and physical resources as well as macro-economic Problems.
The literature revealed that no studies were conducted in purposes to investigate the impact of Soft and Hard Total Quality Management on the Organizational Performance using Balance Scorecard methodology in the Zain telecommunication Company. Due to the great impact of the Zain Telecommunication Company to drive Jordan to prosperity and growth in both financially and socially aspects, the expectation from this research is to provide Zain Telecommunication Company managers with guidelines that helps them in directing their own strategy.
Additionally, the importance of this research is further highlighted through using the Balanced Scorecard methodology
as a measure of Zain Telecommunication Company performance, since it is a comprehensive tool to evaluate the organization’s performance by taking into consideration both financial and non-financial measures distinguished from previous researches that used the financial measures in terms of performance.
Literature review
1.1 Total Quality Management
Since high management plays a large role for (TQM), the commitment has to be interpreted into specific strategic. These different strategies allow any organization to result in achieving supreme organization performance such as designing the quality into products and services, ensuring in-process quality by using defect prevention methods, control tools as well as accurate use of The quality information for example customer feedback, benchmarking and charts (Ahire et al.,1996). In order to implement these strategies successfully, organizations should mainly be customer focused, maintain competent, reliable and flexible suppliers as well as ensure that all the employees are participating and motivated through the methods of training and empowerment (Ahire et al. 1996; Rahman and Bullock, 2005).
According to quality Specialist (Deming, 1982) total quality management show business a crucial position in order to enhance the development of performance, several researches are conducted that there is a affirmative correlation among quality management and performance (Flynn et al., 1995; Powell, 1995; Easton and Jarrell,
1998; Kaynak, 2003; Prajogo and Sohal, 2006; Sila, 2007 and Chung et al., 2008; Tseng and Lin, 2008).
Total Quality Management is known as (TQM) practices and can be segmented into two several different groups- the first group is “management system” which consists of leadership, planning, human resources and the second group is the “Technical System” (Evans and Lindsay, 1999) or according to (Wilkinson et al., 1998), the soft and hard segments.
(Evans and Lindsay, 1999) define the hard tools of TQM as the following (tree diagrams, histograms, scatter diagrams, force-field analysis, flow charts run charts, control charts, Pareto diagrams, brainstorming, stratification, etc.), while The solid part towards (Wilkinson et al., 1998) mostly contain the invention and internal business processes monitoring and control tools which assure that the right performance of such tools counting among other things, JTT philosophy, process design, the seven essential total quality control tools. Nevertheless, the managerial practices or the TOM`s soft practices are the behavioral distinctiveness of managerial or the aspects of human for instance people management and leadership. The dimensions that are affirmed on top reveal all the obstacles that almost every manager must follow and keep in mind in order to successfully implement quality management system. Regardless of the information that there is a little bit of variety about what initiate the hard and soft practices of TOM. There is a gauge of agreement about the common distinctiveness of the hard and so practices of. Generally, the soft Total Quality Management measurements relay to the peoples characteristics for instance, employee training, customer focus and development, support, top management and employee involvement, whereas the hard Total Quality Management practices characterize the quality of the tools processes such as (feedback system, continuous improvement statistical, process control and Total Quality Management tools)
In addition to examine the connection between total quality management and the outperform as well as the effect of soft and hard TQM on the organizational performance, researches in varied countries utilize a number of total quality management and performance practices and diverse statistical methods for example tests correlations, and repressions. In terms of the investigation of total quality management as a variable, according to (Powell, 1995; Prajogo and Sohal, 2006; Sila, 2007), their researches mainly center on (TQM). Throughout the researchers that mainly center on the TQM, the variation can be drawn among those who consider (Total Quality Management) as a single assemble and those who explain it as a various set of measurements – where these measurements can be separated into both elements hard and soft (Flynn et al., 1995; Rahman, 2004).
Commonly, the aspects of the hard total quality management can be practical tools and techniques which are used in total quality management, whereas soft total quality management aspects the methods of the managerial people, leaderships and relationships. Despite the fact that numerous studies do not often use the term hard and soft, it is still possible to distinguish the differences between the impacts of these two practices When it comes to performance. Experimental Studies have tested the impact of (Total Quality Management) on the organization performance as well as the total quality management on the performance (Powell, 1995; Terziovski et al., 2003: Lai and Cheng 2005, Sila, 2007). Conferring to some of these works, the achievement of the total quality management mostly determine on practices inked to the soft practices such as managing the people within the organization and leadership (Powell, 1995: Samson and Terziovski, 1999: et al., 2003). Having this, said various studies have indicated that the practices of the hand quality management are unrelated to the performance (Powell, 1995 Dow et al., 1999), in spite of the fact that other researchers show that there is an important effect of the total quality management organizational performance (Forza and Filippini, 1998: Tari and Sabater, 2004).
1.2.1 Soft (TQM)
Soft practices are long standing practices that are linked to the processes and practice of total quality management and should be effected and embattled towards strategy and succeeding implementation of the company`s (Total Quality Management) (Lewis et al., 2006; Vouzas and Psyhogios, 2007). Generally, soft practices mainly deal and concentrate on the management issues and aspects and should be in a company’s (TQM) strategy and participate in plan implementation successfulness. Soft practices usually deals with the human resource management and primarily focuses on the behavioral aspect which includes Training he employees, management leadership, teamwork, managing the suppliers relationships, creating customer value and eventually ensuring that the customer is Well satisfied with the organizations product or service (Lewis et al., 2006; Gadenne and Sharma, 2009).
The customer focus is the quantity to which a business continuously satisfy customer needs and expectations (Zhang, 2000), and also it is connected to the long term organizational goals. On the same direction customer focus is measured as a fundamental dimension of (Total Quality Management) (Mehmood et al., 2014)
(Hackman and Wageman, 1995) One of the most frequently used (total quality management) practices are considering information of the needs and wants.
(Sila, 2007; Brah et al., 2002) say that the success of any organization in near future would determine upon the fulfillment of its customers` need professionally and successfully on constant basis (Mehmood et al., 2014)
Customer focus is the important principle of (Total Quality Management) which emphasizes on creating Value for the consumer which argue in organization development (Juran, 1988; Mele and Colurcio, 2006). Suitable achievement of total Quality management practices attains higher level of organizational performance. Customer focus is one of the major indicators of organizational performance improvement. Some scholars find that (Total Quality Management) implementation increases customer satisfaction (Lee et al., 2010, Liu et al., 2002) and develop organizational performance (Iran et al., 2004 Powell, 19
95). In total quality management settings, changing needs of the customers are predictable and the performance of the organization is measured against customer`s performance of the organization is measured against customer`s requirements (Bullington et al., 2002). (Asikhia, 2010) find that customer satisfaction is co relationally linked with organization performance.
Employees are the most important asset for any organization a as they provide a maintenance in productivity and organizational performance improvement. ln order to become viable organization, organizations must teach their employees to improve their skills and abilities which increase their performance. (Prajogo and Sohal, 2001) suggest that correct achievement of (total quality management) dimensions in firms motivate employees for improvement and organizational efficiency. Some scholars find that in total quality management System finest human resource strategies totally affects organizational performance (Mehamood et al., 2014) (Li, 2000) discover that employees training, their input in decision making and information distribution are tools that let the organization to use their resources productively which in turn develop the organizational performance. Training and improving increases employee`s loyalty and give power to them to take vital part in change process for continuous Improvement that eventually enhances organizational performance (Mehmood et al., 2014). From the above literature generated in a variety of parts of the world we imagine that employee involvement would positively relate with organizational performance.
Top management plays a very important position for total quality performance and victory of organization. (Deming, 1982) devoted and strong leadership is vital for Victorious and strong total quality programs. Top management enables it organization to help total quality management programs for successful organizational performance (Mehmood et al., 2014).
Top management support is in charge for putting the objectives organization near effective performance. (Wang et al., 2010) suggest that guide the leadership absolutely impacts the organization performance.
(Zairi and Thiagarajan, 1997), suggest ensuring highest outcome of the soft (total quality management) practices, firms should be improved by the hard (total quality management) practices. The soft practices are difficult to determine and therefore, evaluating them is a difficult matter to the management.
1.2.2 Hard (TQM)
Hard (total quality management) practices are mostly related to developed tools and systems of the total quality management, which are forecasted to improve and support the implementation of soft (total quality management) practices (Lewis et al., 2006 Vouzas and Psyhogios, 2000).
Generally, hard (total quality management) practices such as (continuous improvement, (total quality management) tools and information feedback) (Lewis et al., 2006; Gadenne and Sharma, 2009). (Gadenne and Sharma, 2009) the practices of the soft (TQM) are considered as intangible, however the hard (TQM) are more acceptable which makes it easier to measure and asses. Also, (Abdallah, 2013) indicated the importance of hard (TOM) practices and that it should not be underestimated. (Sitkin, 1994) recommended that the mutual guiding principles of (TQM) can be segmented into three areas, firstly, those who are primarily focusing on the satisfaction of, the customers secondly those, who are eager for continuous improvement and lastly, those who treat organizations total systems.
Continuous improvement is a (total quality management) practice that handle the organization on a daily basis management, in relation to the continuous effort on every stakeholder to accomplish the organizations goals of satisfying customer`s n needs, improved quality and eventually enhancing the organizations performance (Ooi et al., 2006)
Continuous dedication on the completion of (total quality management) does not have a significant positive effect on the organizational performance. Continuous improvement acceptable by organizations stimulates organizational members for new ideas and quality performance (Prajogo and Sohal, 2003). It is one of the main effective total quality management initiative to attain significant improvement on organizational performance.
Continuous improvement is the base of hard (TQM) based on the support of innovation technological progress and business success. Issues with (TQM) and its power on organizational performance have been asserted in many studies for years. Nevertheless, there is still no exclusive and widely accepted definition of (TQM). Based on the findings of quite a few different authors, (TQM) could be defined as management values of supporting constant development in customer focus, people participation, operational performance and competitive advantage at all levels of the organization (Pipan et al., 2014; Crosby; 1980; Ishikawa, 1985; Juran, 1995)
It is difficult to give a perfect list of the very large number of tools and techniques that have been utilized in implementing (TQM) programs. The variety of tools and techniques that have been practical to (TQM) programs in different industries is reflected in the relatively different list that diverse schools have recommended ended over the years (Crosby 1979, Ishikawa 1985, Imai 1986, McConnell 1989, Lemak and Montgomery 1996, Dale 1999, Evans and Lindsay 1999, Tari and Sabater 2004, Chen 2009; Chen, 2013).
One of the first lists of (TQM) tools and techniques is the so-called seven old quality control tools, which is (1) flow charts; (2) cause-and- effect diagrams; (3) Pareto charts; (4) histograms; (5) run charts and graphs: (6) X bar and R control charts and (7) scatter diagrams (Chen, 2013).
(Dale and McQuater, 1998: Tar and Sabater, 2004) consequently acknowledged a list of the tools and techniques that have been mainly and widely used by businesses in implementing (TQM) in different ways. This list included:
- The Seven old Quality Control tools (noted above).
- The seven new management tools, which is (1) affinity diagram: (2) arrow diagram: (3) matrix diagram: (4) matrix data analysis (5) process decision programmer chart: (6) relations diagram; and (7) Systematic diagram.
- Multiple other tools and techniques: control plan, benchmarking , fault-tree analysis (FTA), design of experiments (DOE), problem-solving methodology, force-field analysis, sampling, questionnaires, statistical process control (SPC), departmental purpose analysis, FMEA, flow charts, brainstorming, pokayoke, quality costing, quality function deployment (QFD), and quality-improvement teams (Chen, 2013).
Recently, (Prajogo and Sohal, 2006) proposed a different list of (total quality management) tools (1) SPC; (2) the seven old Quality Control tools (noted above); (3) QFD; and (4) FMEA. Other recommended lists of tools and techniques have come from (Lee and Ho, 2003) who integrated the seven old quality control tools, together with quality control circle (QCC), suggestion system, bench marking, business process reengineering (BPR) and Six Sigma.
According to (Dow et al., 1999; Ahire, 1996), it has been found that the measures of statistical process control also known as (SPC), the use of benchmarking and manufacturing systems do not relate to the performance. Regardless, the management literature states that in fact, the elements of the hard (TQM) have an impact on the organizational performance. For example, product and process benchmarking resulted in the best product design and process cost reduction at companies, and also elements greatly influence the organizational performance (Rahman, 2005).
1.3 Organizational Performance
Organization performance has bee
n the most significant matter for every organization. It has been very important for managers to know which practices affect organization`s performance in order for them to take suitable steps to establish them. It is the organization`s capability to achieve its goals by using resources in an efficient and effective way (Mafini and Pooe, 2013).
Performance management is the constant cycle of developing job performance with aim setting, coaching, feedback, rewards and positive support (Van-Staden, 2009).
2.4 Organizational Performance according to Balanced Scorecard (BSC)
(Kaplan and Norton, 1992), firstly introduced the balance scorecard in an article.) After that it was then recognized widely and a numerous number of companies around the globe accepted it and then started applying and using it including non-profit companies and organizations within the private sector. After balance scorecard the has been firstly published, Kaplan and Norton and a large number of others were gradually developing the balance score-card into a more complex system where it was mainly used to describe, communicate, implement and revise the strategy of the company. The vital information within the balance scorecard are possibly articles (Kaplan and Norton, 1992, 1993, 1996a, 2000, 2004a, 2005 2008), (Kaplan, 2005; Kaplan, 2010) as well as books (Kaplan and Norton, 1996b, 2001, 2004b 2006, 2008b) to determine those written by the creators of the balance scorecard, those of which denotes a large growth as well as development of the balance scorecard starting on a tool for measurement system for the multidimensional performance (improving the outdated financial dimensions with the dimensions for non-financial) particularly with the dimensions which are mainly and concerned the with the consumers, business growth within organization as well as activities than can help in learning and growth) to the completely established framework for organization the strategic management system (Petr et al., 2012).
The BSC is also known as a tool at that can help companies execute their plans on a concept into practice. (Kaplan and Norton, 1992) specified that the originality actions BSC should include a number of actions that allow the managers to get a quick an full view of the organization.
The BSC model merges the lagging and leading performance pointers to identify the performance through unified perspective and in appropriate way. When determining the performance, it is vital to ensure that the following important questions about the four different perspectives that are in the model (Kaplan and Norton, 1992; Collis, Holt and Hussey, 2012; Giannopoulos et al, 2013).
- Customer Perspective – How does the customer see us?
- Perspectives within the business internally- What must we succeed at?
- Perspectives of the innovation and learning – can we continue to progress and create value?
- Financial perspective – How do we look to according to the shareholders? (Kaplan and Norton, 1992)
Furthermore, an important theory within the balance scorecard is that it should include relationship of the cause and-effect among the actions of the financial as well as non-financial, which could include a linking from the creation of the strategy to the outcomes in a financial perspective (Kaplan and Norton, 1992; Collis, Holt and Hussey 2012; Sinha, 2006).
In order to organization to have and achieve large enhancement within the business, processes internally, it is vital that they should have an progressive learning and growth performance where consequently the customers perception will gradually increase too. Having this said, this could end up in attaining greater customer satisfaction where companies will possibly achieve greater returns financially (Collis, Holt and Hussey, 2012; Sinha, 2006; Giannopoulos et al, 2013).
As stated earlier, the balance scorecard is segmented into four different perspectives; internal business perspective innovation and learning perspective, customer perspective and lastly the financial perspective. To make sure that the BSC is getting its full importance as a management system, the four perspectives should be critically discussed and examined (Giannopoulos et al, 2013).
2.4.1 The customer perspective
The customer perspective demonstrates how well the customers are being served by the company and how it targets to achieve new situations. Typically, the organizations executive should respond to three main questions when it is developing the customer perspective for the balance scorecard. The first question is “Who is the company`s customers?” which generally the company’s customers are defined as those who have an interest of obtaining the product and service on the company (Niven, 2005; Sun, 2013).
After classifying who the customers are, the second question is simply “What do those customers expect from the company?” Regardless of whether they are purchasing food, clothes or insurance, almost all customers have expectations that should be fulfilled. The expectations of the customer play a vital role for the company who are hoping for repeat business (Niven, 2005). In order to achieve positive experiences and establishing a relationship with the customers after each and every purchase, it is important for the company to understand what motivates people to buy items, be it quality, price, the ease of purchase or various other possibilities. Also, by knowing and understanding the customers` expectations provide a logical predictor of the consumption of future (Niven, 2005; Sun, 2013). The third question when classifying the customers` perspective section of balance scorecard is basically “What is our value proposition in serving customers?” this question mainly refer to how usually an organization recommends to provide the value to their customers (Sun, 2013).
As (Norreklit, 2000) stated the customer perspective is mostly concerned on the customer thoughts of the company, and how they as a company would like their customers to see them as. Many businesses consider it as a priority to ensure that the customers are satisfied, especially over the years. The atmosphere in a company is considered to be more competitive (Kaplan and Norton, 1992), hence it could probably perform as an important indicator of the performance (KPI) on the actions that the company take to in order to be successful (Anderson and Sullivan, 1994). Usually there are four focal concerns when it concerns to it comes to products or services that the business offers; time, quality, performance as well as service and cost. Therefore, the organization has to support its goals and objectives according to the four perspectives, and these changes are these goals into precise measures (Kaplan and Norton, 1992; Giannopoulos et al, 2013).
2.4.2 Internal Business processes
The internal business processes perspectives are mainly focuses on the activities that the company uses to ensure that the customers satisfied. For instance, according to (Giannopoulos et al, 2013) he stated that usually in a manufacturing organization, one of the internal business process is the assembly of a product. When an organization serves their customers, they should accordingly start and operate various procedures that are mainly compliance orientated, ensure that the production systems are efficient and scheduled on time (Sun, 2013). The customers as well as the financial perspective usually focus on the “What” of the strategy (Niven, 2006), having this said this refers the organization to an ultimate aim to achieve in the pursuit of their strategy. When considering the internal process perspective, the organization`s outlook usually changes from “What” to “How”?’ of creating a value as achieving their strategy. The internal process perspective mainly to define exactly how an organization wan
ts to achieve customer value proposition in the customers perspective and therefore, how a company a will increase their revenue as well as their efficiency (Kaplan and Norton, 2004; Niven, 2006; Sun, 2013). In order to ensure minimum practically infinite number of possible measures for the internal process perspective to a number that can be managed more, the majority of the companies rely on a theory which classifies four ‘sets’ of processes, where all of them are relevant to that business that aims to succeed (Niven, 2005, 2006; Sun, 2013). These four ‘sets’ are stated below:
Customer Management: this set mainly concentrates on the procedures relating the how company manages as their customers as well as contains which group the company wants to target, continually communicating and stating the organization`s value proposition to try to convert the shoppers that are browsing into paying customers value (Sun, 2013).
Innovation: Nowadays, no company can afford to keep their business environment still, as they should aim to expand in a world that is filled up with innovation and the production of new technologies (Sun, 2013). Having this said, this `set’ mainly focuses on the production of new products and services that are mainly designed to meet the continuous demand of the customer base (Sun, 2013).
Operational Management: Out of the four `sets’ of processes, the operational management is considered to be the simplest since it mainly relates to the everyday operations that happens in the company which includes production and delivering the products or services to the market (Gupta, Verma and Victorino, 2009).
Regulatory and Social: this set contains the processes that are necessary for the company to remain compliant with the regulatory guidelines that are set by third parties. Furthermore, this set also gives the organization an opportunity of being a caring corporate citizen; where they h contribute to various causes and providing their voice in the community through the exercise of corporate social investments. After measuring and establishing these sets of processes, the competence, efficiency as well as effectiveness of the company`s internal processes are improved which could eventually lead to ensuring that the customers are satisfied as well as ensuring that the customers are loyal to the company which eventually could lead to generating value for the shareholders (Kaplan and Norton, 2004; Niven, 2006).
2. 4. 3 Leaning and Growth
The learning and learning perspectives mainly concerned on the skills and abilities that the commpany should excel to achieve great internal business processes that could eventually create a better value for the customers as well as the shareholders. According to (Giannopoulos et al, 2013) various performance measures that organizations could use to measure the innovation and learning could include the education and skill level of the employee, the satisfaction of the employee as well as the retention rates. If a company aims to surpass the expectations of their customers, they should perform almost flawless processes. To create a value for the stakeholders who are in charge of the financial sector, a company will have to create a solid foundation, which they would use to operate. To achieve both, the company should have a strong foundation that could be provided only by the people within the company. According to (Walker and MacDonald, 2001: Sun, 2013), it was stated that people are the vital factor which is responsible for the determination of the business`s success. Intangible assets could reach up to more than (80%) of the value created in modern organizations. This is comprehended in the education and skills of people who are associated to the company`s overall strategy (Niven, 2006). When creating objectives and measures, the learning and growth perspective has three main areas of focus.
Human Resources: This area is mainly concerned with the company`s employees ensure that they have the skills and knowledge that are required in order to excel. According to (Niven, 2006), it was stated that it is important that all the staff employed require skills and knowledge that are aligned with the strategy of the company which could ensure that the business performances better than its competitors (Sun, 2013).
Information Resource: It is something impossible to imagine any industry where technology did not greatly affect it over the last couple of years. This is called “disruptive” technology where technology has changed the way an organization produce, market, purchase and use of everything starting from items that are used in the household to entertainment devices (Christensen et al., 2008). Nowadays, the information resources serve as the raw materials that aid the transformation of data into information, which enables the growth of individual businesses. The information resource area measures the ability of the company to provide what is necessary for the company to implement it strategy that is in place. Having this said t is important for almost all companies in today’s business environment to make sure that the information they achieve is into knowledge as precise as possible which could eventually influence their success (Sun, 2013).
Organizational Capital: this area mainly signifies the hearts and brains of the company’s people and keeps an eye out on the businesses ability to evolve and grow as an organization, guaranteeing success on the short-term and long term achievable (Sun, 2013).
2. 4. 4 Financial Perspective
The last perspective of the BSC is the financial perspective. The financial perspective is mainly concerned to the financial views that the company presents to its shareholder and whether the strategy, implementation and execution of the company are playing a role for the bottom line improvement (Kaplan and Norton, 1992). Regularly, the financial performance measures provide information based on a company’s result of previous events. The objectives and the measures of the three other perspectives state earlier focus on the financial targets and objectives which could eventually lead to growth, profitability and shareholder value (Kaplan and Norton, 1996). Nevertheless, according to (Kaplan and Norton, 1992), it was stated that since the financial indicator does not affect the Customers and employees satisfaction, it should not be used as a metric to direct them to their strategic vision. As a result, businesses should not use the financial data only but should also use strategy models and measurements that stress to the total of the business’s strategy (Giannopoulos et al., 2013). Organizations that are dedicated to success should be entirely loyal to their customers and the aim to achieve their vision and fulfill their mission. Nevertheless most customer serving companies nowadays are for profit companies and they have to respond to shareholders, who need a return on investment. Managers must make sure that the focus is sited on the customers, whether through new products, special service, or an industry leading technological infrastructure, or all three of these initiatives, which must guide to enhanced financial results (Niven, 2006). It is only by performing well in financial conditions that a company has the funds to invest in the company’s people, processes, and technology to keep on serving the organization’s customers efficiently and professionally (Sun, 2013).
The financial perspective of the (BSC) analyzes the financial achievement from the view of the shareholders of the company, as well as giving the tools to follow the successes over time (Sun, 2013). The financial perspective is typically occupied with goals and objectives regarding to increased revenue. This by is usually accomplished by providing more products and services to customers or creating fresh products and services to fit into the untapped market (Niven, 2006). Th
is maximizes productivity; decreases costs and utilizes the assets that are vacant under the organization’s control as powerfully as possible (Sun, 2013).
Some companies decide to focus on either revenue growth or productivity enhancements. Therefore, if the focal point is placed on one area, the other option is relegated to insignificance. Companies do this at their own peril. In today’s highly competitive business surroundings, all businesses must balance these competing demands, continuously on the lookout for new sales opportunities while at the same time decreasing costs and enhancing value for customers. Only then will the business produce value for shareholders to please their demands, and allow further capital injections on the shareholders into the business for the growth of new initiatives to accomplish their vision and strategy (Sun, 2013).