Introduction
The article written by Andra Gumbus and Lussier shows (2006) how different companies uses balanced scorecards in order to measure their performance and track the implementation of their strategies. This paper is aimed at discussing the way in which these businesses studied the perspective of clients. First of all, one can mention such a company as Hyde Park Electronics that attaches much importance to customers’ satisfaction and retention. It should be noted that this organization evaluates satisfaction by looking at such parameters as sales rates, the number of returned customers, and the ability of a company to meet the deadlines set by clients (Gumbus & Robert, 2006, p. 413). In the opinion of business administrators, these metrics can throw light on the experiences of customers and their assessment of the company’s performance. Additionally, it is important to look at such a company as Futura Industries. The managers of this organization also want to understand how clients perceive this company and its products, especially the degree of their satisfaction (Gumbus & Robert, 2006, p, 416).
In particular, they pay attention to such indicators as customer hassle index, on-time delivery, and the quality of the product. Apart from that, the representatives of this organization carry out surveys of clients and ask them about their experiences with the company (Gumbus & Robert, 2006, p, 416). These are the main techniques adopted in Futura Industries and one can argue that this business genuinely tries to understand the opinions of clients. Finally, one should speak about the activities of Southern Gardens Citrus. This organization also relies on balanced scorecards in order to understand their views of buyers, especially, their perception of customer service. Business administrators in this company attach importance to such measurements as the percent of shipment within specifications and loading cycle time (Gumbus & Robert, 2006, p. 421). These examples demonstrate that businesses can apply balance scorecards in different ways. However, it is necessary to determine whether their measurements are really helpful for understanding the behavior of clients.
Analysis
Certainly, one can argue that the attempts of these businesses are beneficial because they can throw some light on the views of clients; nevertheless, one should bear in mind that some of the measures described in the previous section are not necessarily customer-centric. For example, the managers of Hyde Park Electronics look at sales rates as an indicator of client’s satisfaction (Gumbus & Robert, 2006, p. 413). It seems that this approach does not help to understand clients’ opinions and attitudes because these measurements do not reflect the experiences of buyers and their reasons for buying goods or services. The problem is that customers can purchase a certain product just because it best suits them in terms of price. However, it does not mean that they are satisfied with the activities of a company or its policies. Apart from that, the changes of sales rate can in part be attributed to the strategies of their competitors, rather than the internal policies of an organization. This is one of the limitations that managers should take into account.
Additionally, such parameters as lead-time or loading cycle time are more related to the operational efficiency of a company, but they are not necessarily related to the experiences of clients. This issue is particularly important for such a company as Southern Gardens Citrus because this organization strongly relies on this metric (Gumbus & Robert, 2006, p. 421). Certainly, this organization could have designed better business processes, but these efforts do not always affect the attitudes of customers. The scholars, who support the use of balanced scorecards, believe that companies should first focus on their value proposition of a business to clients (Niven, n.d).
Therefore, companies should first determine whether they can fully meet client’s expectations. As it has been said before, sales rate do not necessarily reflect customers’ opinions about a company. Instead, one should pay attention to such aspects as responsiveness, quality of the product, ease of purchase, or the ability of a company to meet the requirements and specifications set by a client (Niven, n.d). On the whole, one can say that the improved performance of these companies cannot be explained by various factors. To a great extent, it can be attributed to the situation in the market, their operational efficiency, and the quality of their product. Nevertheless, their successes can also be attributed the better understanding of clients’ needs and their concerns. Overall, one can argue that the use of balance score cards has assisted the organizations described in the article by Gumbus and Lussier even though their techniques had certain limitations. This is the main argument that can be made.
Conclusion
Certainly, the customer perspective is of great importance for each of the companies discussed in this paper. Yet, they attached more importance to other perspectives. For example, Hyde Park Electronics focused on their efficiency of their internal operations, in particular, their manufacturing efficiency and production processes (Gumbus & Robert, 2006, p. 412). From the managers’ viewpoint, these aspects were critical for the competitiveness of the company. In turn, the management of Futura Industries concentrated on learning and growth within their organization. One of their intentions was to decrease their turnover rates and make sure that employees were committed to organizational goals (Gumbus & Robert, 2006, p. 413). Thus, these businesses chose to focus on other criteria while evaluating their strategies or performance.
Evaluation
On the whole, these companies could have used other measures in order to evaluate and improve their performance. For instance, they should focus on the responsiveness of a company and its employees (Person, 2010, p. 7). This indicator can show whether an organization strives to address clients’ concerns as quickly as possible. This information can tell whether a company should change or modify some of their business processes. Additionally, the managers of different businesses should pay attention to the flexibility of their pricing policies, and customers’ perception of their products or services. Again, these data should be considered by people who are engaged in product development. Overall, these measurements can be of great use to businesses. Additionally, Robert Kaplan (2005) believes that companies should pay more attention to customer-profitability metrics (Kaplan, 2005). In this way, they can determine which group of customers is most important for an organization in terms of their profitability (Kaplan, 2005). These are the measurements that were not adopted by the companies. It is possible to argue that business should not disregard their interaction with clients. Provided that they do not do it, the use of balanced scorecards will not yield the expected benefits.
Reference List
Gumbus, A., & Robert, N. L. (2006). Entrepreneurs use a balanced scorecard to translate strategy into performance measures. Journal of Small Business Management, 44(3), 407-425.
Kaplan, R (2005). A Balanced Scorecard Approach To Measure Customer Profitability. Web.
Niven, P. (n. d.). Customer perspective. Web.
Person, R. (2010). Balanced Scorecards and Operational Dashboards with Microsoft Excel. New York: John Wiley & Sons.