balanced scorecard case study, dissertation

3. Case studySince BSC was recognized widely by business circles, a lot of scholars did a large amount of deep researches in implementation of BSC in commercial companies (Kaplan and Nortan 1996). Most of them strongly believe that there is an outweigh benefits than the cost of company for using BSC (Wilson, Hagarty & Gauthier 2003; Chan2004). However, in last years of the twentieth century, there was increasing evidences supports the suitability for government sector using BSC. (Atkinson & McCrindell 1997; Silk, 1998; Irwin, 2002; Kloot & Martin, 2000; Ho& Chan, 2002; Wisniewski & Olafsson, 2004; Chan; 2004) Indeed, there were plenty of experiences of implementing BSC in municipalities, especially, applied BSC to hospital and healthcare services (Chan& Ho 2000; Aidemark 2001; Protti 2002; Amaratunga, Haigh, Sarshar and Baldry 2002;) police services ( Elefalk, 2001) and high education services. (Chang & Chow 199; Stewart & Carpenter-Hubin，2001), however, there are few literatures which focus on the explicit analysis of BSC in the implementation process in public sectors. This chapter presents a discussion of applying BSC to sport services in public sector entities by a case study of the municipal sports agency in Granada (Spain).3.1 Public SectorAt the end of twentieth century, the environment of the public sector underwent a significant change. Perspectives like, decentralization, privatization, outsourcing, performance measuring and a great emphasis on consumer orientation (Aberbach &Christensen, 2005) are the major changes (Hood, 1991; Peters, 1997; Lane, 2000; Barzelay, 2001) These kinds of reforms tend to increase organization’s efficiency and effectiveness. In a fact, performance evaluation is becoming more and more important in public entities’ management control. (Ittner & Larcker, 1998; Pollitt & Bouckaert,2000) Furthermore, the directors pay attention on long-term strategic planning for managing the municipality. (Ter Bogt, 2001) To regard these aims, public sector requires a strategic management tool for planning, controlling and reporting on their performance. Based on this requirement, some academicians have presented kinds of business improvement methodologies and techniques to help public organisations improve their service quality and simulate the effective use of their resources. For example, Business Excellence Model (European Foundation of Quality Management, 1999), Balanced Scorecard (Kaplan and Norton 1992, 1996) and other Total quality Management (Massey 1999; McAdam & Walker ,2003)BSC and Local AuthoritiesSome authors have commented that BSC is an invaluable instrument for public organization when dealing with the quality and efficiency challenges. (Smith, 2000; Quilivan, 2000; Niven, 2003; Chang, 2006) However, some scholars are concerning the traditional BSC (Kaplan and Norton 1992, 1996) may not be directly implemented in public organization, they argue that the external stakeholders to public sector may different from commercial organization (Wisniewski & Olafsson, 2004), other authors believe that it may be more difficult for public organizations measure performance than in commercial organizations (Estis & Hyatt, 1998). However, some authors suggest that public sector entities should reanalyse and redefine the relevant indicators and the four perspectives in order to find a better framework suitable for public entities. (Estis & Hyatt, 1998; Maata & Ojala, 1999, Kaplan & Norton 2001, Wisniewski & Olafsson, 2004)As a result, there are many practises prove that BSC approach is adapted to apply in public entities (Wilson, Hagarty & Gauthier 2003), such as in healthcare services (Baldry, 2002), higher education (Stewart & Carpenter-Hubin, 2001) and police services (Elefalk, 2001). The implementation of BSC in these public entities appearssome similar strengths and barriers as the application in Commercial organizations. For example, as the experience in a public health care organization, the managers presented that BSC promotes initiatives for people making discussion about the organization’s visions and goals in future and developing strategies and measures. (Aidemark, 2001) Furthermore, Johnsen (2001) commented that the BSC can assist public entities to develop, discuss, and determine the major decision- making and performance indicators in a complicated environment such as political bodies. In addition, BSC gives the managers a idea for organization to However, on the other hand, Aidemark (2001) presented that there is high cost of human resources and time for implementing BSC by a top-down control model.The implementation of BSC should be customized according to the particular features and requirements of local authorities because of the complex environment. Wisniewski & Olafsson presented six important considerations for company designing and implementing BSC. (1) Managers should focus on the whole process of developing and implementing BSC rather than simply pay attention on designing BSC, BSC should not only exists on papers or minds. (2) It is essential for organization making a clear strategy map before implementing BSC. (3) The traditional four perspectives may appropriate for the public entity, however it is important for organization re-analysis and re-define the relevant perspectives.(4) BSC is a both time and resources consuming progress for councils, especially in some entities which allocate most of their resources to frontline service delivery rather than back-office activities. (5) BSC as a management tool should be performed like a needle which runs through from the senior managers to junior staffs, link their benefits and goals together, there must be with visible and direct benefits given to those staffs who take part in the BSC approach. (6) The strategic map could help with the coordination of activities from different departments of a council.The paper below would present a case study which describes the whole process of designing and developing the implementation of BSC in a municipal agency inGranada. The learning objectives of this case is that，1) help to understand the explicit process of designing and implementing a BSC in public entities, 2) find the differences while BSC applied in public entities, comparing with its application in commercial organizations.3.3. Characterization of the entity and its contextual situationMunicipal Agency of Sports which short for MAS is accredited a public entity with a legal identity, its financial income depends on the annually grants from Granada City Hall, partly from the receipts of sport services it provided. The main function and responsibility of the organization is that, 1) the management of municipal sport centers and facilities 2) promote and help to create local sport culture in Granada, 3) the promotion of sport associations 4) it is responsible for the maintenance, repair and management of sport infrastructures in Granada.The mainly contradiction of the organization it faced is that the increasing population and increased sporting demands in Granada against the limited financial income of MAS, MAS do not have enough financial resources to provide proportionate level sport service in Granada comparing with its increasing sporting demand of citizens. The figure below which gives the growth rate of population and sport infrastructures in Granada shows the conflict:In this context, the efficient use of limited funds and improving efficiency of sportservice is the strategic focus the MAS, BSC could provide the indicators such as performance drivers (Delay drivers and Lead drivers) that simulate the achievement of the strategic goal of the organization. Thus, BSC is also an efficient managerial tool to reach the statutory objective of MAS, the expectation of BSC applied in MAS is that contribute to providing municipal sport service which are lower in cost, higher in quality.Before implementation of BSC, it is critical to determine the stakeholders of who relate to BSC, in general, these primary users of BSC are the managers and in particular, the top managers and administrators of the organization. Others like professional staff, graduates in law studies or physical education studies are potential users of BSC. BSC is an information system focus on the critical activities that related to the organization’s strategy, the staffs that are taking part in those activities, are all potential users of BSC.3.4. Present status of MAS and SWOT analysisA pre-analysis has been done by the consultants from Granada University with the help of MAS managers in order to diagnosing the current status of MAS, and doing a SWOT analysis of MAS, the pre-analysis contained three key areas that need to be identified before the design and implementation of BSC, which were, financial information, the quality of services, and procedures.Financial information: as the financial report provided by MAS, the MAS annual budget contained investment in sport infrastructures and also include the estimation of the expected revenue for the period, the problem is that most of the annual expense which account for about 65% of the total budgetary expense for 2007 and 2008, is wage paid for their staffs, the investment in new sport infrastructure was only occupying 3% of the total budget for the year 2007 and 2008. The primary revenue of MAS is the funds grants received from the local authorities (Granada City Hall), thosegrants represent around 70% of its total budgetary revenue for the period of 2007 and 2008.The quality of services: obviously, from the previous financial information of MAS, it shows that there is not enough investment in sport infrastructures in Granada, and there is a need for greater equity received from Granada City Hall to cover this situation. Furthermore, MAS lacks of a mature system to measure the quality of the sport service, and also lack of quality control system of their provision. In fact, MAS has not emphasized sport service improvement as their main goal in the past, however, this aspect must be one of the key areas that needed to be controlled.Procedure: the procedures used in MAS seem to be a decentralized system; managers control the organization by diverse procedures. Spreadsheet is used to record such as the users of sport services, the sport activities undertaken and staffing. Computer program takes the main function of monitoring staff, utilization of sport facilities, and the programming of local sport events. The major problem of current digital systems is that they are not interconnected and there are some problems of analysis data and establishing the level of satisfaction of users; furthermore, a complaints system is necessary, but MAS do not own one. The decentralized information system cannot provide an entire view of MAS’s activities, a new centralized information system which shares information across each department could decrease the response time for dealing with customers’ request, to avoid data dispersion, and help to integrate the different activities of the organization to achieve the strategic goal.3.5. SWOT analysisSWOT analysis is a tool used to analyze the strength, weakness, threat and opportunity of the organization, the SWOT in MAS analysis, gives a reference to point out the long-term strategies for MAS, following the SWOT analysis, organization could know their competence, limitations, their potential opportunities,according to the SWOT, MAS could design and produce an organization strategy map by the premise fully understand the current status of the whole organization. The SOWT analysis table is depicted in the following table, the analysis is produced by the managers of the organization.3.6. Establishing MAS goals and strategic objectives. The strategy mapWhile setting the strategic objectives for the different perspectives of BSC and long term strategic goal for or the different perspectives of BSC, it is critical to take into account the SWOT analysis of the company and know its current situation, to think about ‘what is the core competence of the company?’, ‘what is the weakness of the company’. In this case, the managers set their strategic objective as ‘the promotion of high quality sport services, the universalization of sporting practice and the creationof a sport culture in the population of Granada, in order to improve the agency’s financial situation and its economic profitability’, this is somewhat similar with mission, version, objective of commercial companies. Meanwhile strategic line was also designed in accordance with these objectives; also managers launched their guideline for the four perspectives of the BSC, that is, the learning and growth perspective, the internal perspective, the customer perspective and the financial perspective.3.7. The learning and growth perspectiveFor the learning and growth perspective, there are two critical things should be fully considered, first, the continuous improvement of employee training, with the help of experienced trainers and exhaustive pre-study of theory, the training could be on the best performance and enable staff to obtain the best possible qualifications to perform their work. Secondly, based on the past experience of MAS customer survey, the satisfactory of users of MAS service is highly linked with the level of how qualified staffs involved in providing services.In order to continuously improve the professional qualifications of the organization’s personnel, a policy guideline was made based on the following fundamentals:‘-Employee training should be driven to achieve the objectives and to improve the performance of MAS services. All the departments of MAS should define their human resources needs periodically and define the employees’ capabilities and skills, as well as the technology and corporate climate needed to support the organization’s strategy.-The quality of employee training must be a mainstay in employee training policies. Itshould be aimed at the satisfactory performance of MAS services and at encouraging all employees, including managers, to participate in continuous training. Training must reward the efforts made by staff and managers to improve their professional qualification, and thus increase employee satisfaction.– Employee training must be continuous and it must take place in a climate that favours organizational change, innovation and growth. Also, it must ensure the continuous training of all staff and the most effective use of economic resources in employee training programmes.– Evaluation of results and stewardship will provide justification for the programme of continuous employee training in the organization. Evidence of the results achieved will encourage the establishment of future training programmes.– Employee training must serve as a too l for employees’ professional development and, therefore, be linked with systems of employee promotion. In this regard, the continuous employee-training programme in MAS will be related with processes of internal promotion and administrative career advancement.’Secondly, in order to build a formal strategic management organization and keep monitoring the strategic implementation in the organization, MAS managers considered to assign strategic activities throughout the organization, that makes the personal activities of staff align with the strategic purpose of the organization.MAS managers recommend to design a innovative information system which could monitor the implementation of organization’s strategy, such an information system are expected to integrate all the information required to control the implementation of the strategy, it would replace of the old information system of the organization. The newly information system are required to interpret the cause-and effect relationships and show the daily performance of strategy application. Meanwhile, the financialperspective of a strategic structure should be reformed; the new structure of financial system should distinguish the operative budget and the strategic budget, with respectively linked with organization’s short-term and long-term financial objectives. Employee’s incentive system should also be build based on e mployee’s productivity. This measure would incent employee to achieve their best performance, consequently promote the provision of high quality sport services.3.8. Internal process perspectiveHigh quality sport service provision can support to create positive intangible value for organizations, such as business reputation, increased brand recognition and so on, it not only works in these aspects, moreover it also be active in physical and organizational aspects. Business consultants proposed four main strategic objectives to improve sport service based on the past documentation available and interviews with MAS managers. 1) Actively cooperate with other public administrations for the purpose of holding more sport events, lead to the increased facility utilization. 2) Continuously investment for maintenances and improvement of sport facilities. 3) Synergies among MAS’s current and potential future activities. 4) Continuously improvement for the organization’s management skill f or administrative, technical, cooperative, economic perspective.In this case, the internal process perspective and the learning and growth perspective are considered to be the critical success factors to achieve the excellence sport service provision in Granada. MAS should fully take advantage of this circumstance and implement two strategic lines, on the one hand, it should increase user satisfactions, on the other, it create a positive public image of the organization and help to create the brand in Granada.3.9. Customer perspectiveFor customer perspective, there are basically two main goals: 1) increase the number of sport facility users, by offering high quality sport service; 2) create the image of high quality sport service provided.The foundation of a positive public image of MAS could firm its strategic market position and have a positive effect of increasing the future numbers of athletes coming from other regions, and make a free advertisement of their sport products and services. Moreover, MAS will be able to enlarge their business with the expected future financial growth with the possibility of improving sport facilities and diversifying their new sport activities.3.10. Financial perspectiveIn traditional performance measurement, financial perspective is of course the most important part, but in BSC theory, the performance of sport service in MAS is more important than financial measures. The strategic goal in financial perspective, is aimed at improving the economic profitability of investment and ensure the continuously increase of financial resources for future investment, and funds provision for employee training, for more diversified business activities.Under financial perspective, it is necessary to consider two constituent parts of MAS Budgetary resources, as remarked upon in the section on the learning and growth perspective. One part of the budget should be dedicated to the operating activities of the organization, and thus linked to the short-term strategy. In addition, a strategic budget should be designed and implemented, as an application of the long-term strategy. This strategic budget should be dedicated to the undertakings making up the future strategic planning of the organization.By successfully managing these elements of the objectives of the financial perspective, namely improving economic profitability and increasing financial resources, togetherwith achieving the objectives of the customer perspective, MAS should be able to achieve its strategic goals.3.11. The strategy mapAccording to the above strategic objectives to be achieved for the four perspectives, a strategy map has been designed to provide a bird view of the entire strategic goal, together with the financial resources needed to support it (see Figure 1). From the beginning of the initial proposal for building a strategy map, MAS managers make suggestions and take part in a great deal of meetings. Those suggestions have been fully considered in designing the organization’s strategy map.In the case, it adopted a special model which is different from that many other models pursued in public sector recommended by Kaplan & Norton and other academicians, it put the financial perspective as the upper level, but the learning and growth perspective and the internal perspective in a lower level. The model was considered and designed for the special case of MAS, which is a public organization but one needs to improve their financial situation as the highest priority in agenda setting.Therefore we see that the strategic objectives adopted in the learning and growth perspective and in the internal perspective forming the basis of MAS long-term strategy.（加东西）The expected improvement of the performance of those two perspectives would create substantial benefits in the provision of municipal sport services and enable the achievement of an outstanding degree of excellence.Due to the great achievement of above two perspectives, customer satisfaction will increase and MAS will receive a positive image from public, associated with high quality sport services it provided. The increased satisfaction of customers in the organization’s public image will possibly result in generating increased numbers of customers and the possibility of offering additional beneficial services such as consulting services in medical-sport activities.Increased customer numbers and customer potential, a high quality image of the organization and the offer of additional services will lead to an increase in the financial resources and its economic profitability, which will generate the high utilization of sport facilities and also the efficient use organization’s human resources.Finally, the integration of the financial perspective and the customer perspective will help the organization to achieve its strategic goal which is ‘ The promotion of high quality sport services, the universalization of sport practice, and the creation of a sport culture in the population of Granada, in order to improve entity’s financial situationand its economic profitability’.3.12. Strategic lines and performance indicatorsThe strategic indicators of the balanced scorecard of each perspective is decided by the performance drivers and the interrelationship among them, when MSA manager select the indicators, they have analyzed the cause and effect relation between activities and outcomes, and explored the performance drivers, then creating unique indicators to fit the organization’s strategic goal and activities in line. Finally, performance indicators were established in accordance with the relations of the performance drivers to evaluate the situation of MAS. Tables 3, 4, 5 and 6 depict the strategic objectives, strategic lines, strategic drivers and performance indicators in each perspective. Figure 2 presents the interrelationship among the performance drivers designed with the consensus of the managers.。