Acta Technica Corviniensis

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ACTA TECHNICA CORVINIENSIS – BULLETIN of ENGINEERINGheading the activities in the direction oforganization development.The following ten assertions come to support theargumentation of using the Balanced Scorecardmethod:1. Cost reduction, productivity increase;2. Such a valuable measurement systemenables an organization to align its activityto the suggested strategy. With this system,the organization can receive the desiredanswer so as to guide its future actions.3. The measurement of process efficiencyenables a rational settlement of the processfulfillment order.4. Enables managers to identify the bestpractices for activity performance.5. The information obtained based on thesystem allow quicker and better budgetdecisions, and also offer control on theprocesses made in the organization. It canalso reduce the risk.6. The accountancy and the financialdepartment are working with concrete data.7. Performance indicatives are obtained,which can be compared with the financialresults of the competition, thus setting theorganization situation and position.8. The estimation of future costs can be donewith great accuracy, all this due to theexperience gained in previous projects.9. The method allows the measurement ofperformances and initiatives following thestrategy.10. The system makes it possible to measure theindicatives and to determine the likelihoodof their increase in value.Since its first appearance in 1992, the BalancedScorecard concept has been adopted as a newapproach of the control management both inbusiness and by governments.It is used to describe the ambitions andachievements of the organization. It has provenuseful for [2]:Communicating the strategy of both theemployees and managers;Fulfilling the activities that follow thestrategy before the fulfillment of theactivities whose end is to meet currentneeds;Monitoring and awarding these activities;The Balanced Scorecard is based on thefollowing principle: “doing the things that arenecessary, doing them properly, rewards will beobtained in the future”.The benefits of using this method can besynthesized as follows:The Balanced Scorecard contributes toaligning the performance indicatives withthe strategy at all organization levels;Offers management a full business image;The method facilitates communication andunderstanding the business goals as well asthe strategy at all organization levels;Some authors state that the system is not a newmethod of measuring and interpreting a firm’ssituation, but rather a logical presentation ofwhat has to be done so as to follow the chosenstrategy. The Balanced Scorecard is an organizedsplit work frame which enables the strategyimplementation and fulfillment at all the levelsof an enterprise by binding the initiative with theobjectives and actions. The system offers a fullimage of the enterprise performance, combiningthe financial indicatives with other importantperformance indicatives within the relationshipswith customers, internal processes, research anddevelopment.As any other method, the Balanced Scorecardhas certain disadvantages:This approach is not fix, it takes a lot of timeto define a set of scorecards;The implementation of a BalancedScorecard system in an organization impliesthe detailed study of all the existingproblems, then defining an action plan, allthese involving a long period of time.For example, Kalpan and Norton divide the lifecycle of a business in three stages: growth,maturity and decline. Three financial themes arealso usually set: income growth, cost reduction /productivity increase, and resource user. In fact,instead of wishing to increase the level of theperformance indicatives, a lot of companiesconcentrate on the risk of not fulfilling theseindicatives.Then, when it is strategically important, theseorganizations will want to incorporate themanagement risks within the financialperspective. In conclusion, it is important for allobjectives and indicatives set in the otherperspectives to be tied to one or more objectivesof the financial perspective.The creation of a Balanced Scorecard involves aconsiderable period of time for everybodywhose performances are being measured.602008/ACTA TECHNICA CORVINIENSIS/Tome I
ACTA TECHNICA CORVINIENSIS – BULLETIN of ENGINEERINGSetting the strategy is time-consuming, but itdoes not use so much time as finding anddefining the performance measurementindicatives for each perspective does. Usually,people hardly agree on what and how is beingmeasured.Moreover, a large number of people areinvolved in building a BSC, and these people’sapproval is very important both for building andimplementing the instrument. It can happenthat a Balanced Scorecard is well-built, but itsdisapproval by the employees, as well as theirlack of involvement will make the modeluseless. There is also the risk of too manyindicatives being selected. This is a problembecause it is very difficult to use and interprettoo many results.Before the described perspective, we need toolsto describe the intangible assts, the BalancedScorecard by means of elaborating an strategicmap, relates and transforms these intangiblesassets into tangibles, as money. The BalancedScorecard through his four perspectives, usesindicators to describe the intangible assets,therefore we can monitor and control theintangible activities which add value to thecompany.Fig. 2. The BSC strategic maps and the organizationsassets [4]The intangible assets are the most importantsources of the organization that grantcompetitive advantages to other companies. Theorganization that has an excellent operativeprocess, knows their segment in the market andpossess the knowledge to develop a uniqueproduct, and has the ability of motivating theiremployers, will have a guaranteed success.The tangible assets are considered the goods ofmaterial nature they can be perceived by senseslike :Row material and stocksThe furnitureThe machinesThe landsThe moneyThe intangible assets are considered the goods ofimmaterial nature:The science of knowing what to doOur relations with the clientsOur operative processesThe technology of information anddatabases.Capacities, abilities and innovations ofthe employers.Certain indicatives can by objective, otherssubjective. The subjective indicatives, bydefinition, involve the judgment of a person, sothere are chances for them to be wrong. There isalways a question, namely “must the indicativesset subjectively be used”?The Balanced Scorecard is a managementsystem, not only a measurement one whichallows the organization to set its strategy andvision and to put them into practice. Theinstrument offers the feedback of the businessinternal process and external indicatives, insteadof wishing to continuously increase the strategicperformances and results. After being fullydeveloped, the Balanced Scorecard instrumenttransforms the strategic planning from anacademic exercise into a nervous center of theorganization.In terms of Customer Satisfaction, the approachanalyzes the organization’s ability to providequality goods and services and their effectivedelivery, while the financial perspective of theBalanced Scorecard generally represents theclear long-range targets. Now in order to lead tothe success of the above two mentionedperspectives, the internal business indicatorprovides data regarding the internal businessresults against its measures. The fourth and thelast major perspective concerns with learningand growth, which aims to align all of the abovetoward an overall organization’s success.2008/ACTA TECHNICA CORVINIENSIS/Tome I 61
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Acta Technica Corviniensis

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