A Study of the Balanced Scorecard： The Rockwater Case

馬赫

Abstract：Over the past decades，various performance appraisal methods have been raised and developed by many scholars and managers for years.It seems that each kind of performance appraisal techniques has its strengths and limitations and none of them is able to avoid all of the pitfalls.Today，driven by the power of innovation，dozens of new companies are trying to reinvent the performance management tools market.This paper analyzes how the Balanced Scorecard （BSC） implemented to provide line managers with a performance appraisal system in the private sector companies through the case study of Rockwater，and critically identify its main strengths and limitations，and then make some recommendations for improvement.

Key Words： Performance Management，Performance Appraisal，Balanced Scorecard

A recent global study by Bain & Co listed the BSC fifth on its top ten most widely used management tools around the world，a list that includes closely-related strategic planning at number one.BSC has also been selected by the editors of Harvard Business Review as one of the most influential business ideas of the past 75 years.

Various evidences show that BSC does improve performance.Successful examples include AT&T，Hilton Hotels，Apple Computer，and United Parcel Service.From the case study of NHS，questionnaires among clinicians and healthcare managers indicated that 82% of them gave a positive response to the use of BSC.Moreover，a survey of over 1000 member organizations of the Institute of Management Accountants suggested that 23% of organizations were using BSC in their operating divisions，while 88% of them believed BSC has improved their performance，and 66% achieved an increase in profits.

Rockwater，headquartered in Aberdeen，Scotland，is an underwater engineering and construction company.It starts to implement BSC from 1992.The strategic objectives of organizations were translated into tangible goals and actions，by transforming into four performance perspectives within Balanced Scorecard.

The first two measures of financial perspective show short-term business results，which help Rockwater to realize whether corporate parents desire were achievable and to reduce uncertainty or unexpected factors in performance.As for customer perspective，Rockwater prefers to establish long-term partnering relationships with its value-seeking customers rather than price-sensitive customers.To evaluate its success to meet this strategy，the company selected measures of market share and customer satisfaction.Company adopted the form of monthly feedback to assess the satisfaction level of each customer，emphasized on specific performance criteria.endprint

Moreover，to develop measures of internal business perspective，Rockwater encouraged its employees to acknowledge customers needs in order to improving innovation process.In addition，Rockwater is necessary to focus on the measures of safety and labor productivity to boost technology and increase outputs.At last，the objectives in the learning and growth perspective are derived from innovation of products and services as well as continuous development in internal business processes.Employee motivation was necessary for driving innovation of product and service as well as operational improvements，which is measured by the employee attitude survey.

The Balanced Scorecard has successfully helped Rockwater with operational processes，employee motivation，as well as the integration of customer feedback with internal business process performance.

Although BSC is really successful through the implementation in many cases，it is still considered to be risky.The breakdown to communicate and the difficulty to translate the strategy into action are common reasons for failure.Meanwhile，some companies implement BSC as their performance appraisal system only due to its universal appeal and applicability，without considering their particular needs and strategies.Furthermore，to link BSC measures to compensation is hard and have some risk.The difficulties involve in how to identify “relative weights” of different kinds of performance measures on the scorecard.

These factors lead to failure is considered not the problem of BSC itself.The implementation of BSC within organizations is a continuous activity that numbers of specific measures should be revised regularly to correspond with the changing strategy.In addition，to link the operating process and individual employee performance with the overall strategy also need senior executives to communicate the specific goals with lower levels and link rewards to performance measures.

項目來源：2014年遼寧省高等學校科學研究一般項目，項目名稱：基于P-CMM與柔性學習的異質性人力資源開發endprint