Sustainability Balance Scorecard Analysis

Sustainability Balanced Scorecard The balanced scorecard is a tool for management that supports the positive execution of strategies instigated by the corporation. This report makes the aim to assist Wave Master Limited Company (WML) with the further analysis of sustainability. In particular, the report comes up with a strategic map for the company's objectives and thereafter creates a scheme for the formation of a sustainable balanced score card (SBSC). These strategic objectives are categorized in accordance to the perspectives of the SBSC that is suggested.

The study goes on to further offer justification as to why such strategic objectives were classified and categorized in that particular manner. In concurrence with assignment two, we make the assumption that the sustainability reports and analysis made previously are appropriate and suitable to be used for this study. In developing the sustainable balance score card, the approach used in this study is that of adding a fifth perspective to the prevailing four perspectives of a balanced scorecard (BSC). The fifth perspective encompasses environmental and social aspects.

The findings of the study are aimed to provide directions in which the company can take suggested practices in order to utilize sustainable methods in the business procedures with respect to production and can ensure its accountability towards environmental safety. Introduction The balanced scorecard is a component for management that enables successful execution of strategies initiated by the company. This is a tool that has been considered comprehensively both in research and practically as well.

By connecting company activities that are non-financial and operational with fundamental chains to the company's long-standing approach, the Balanced Scorecard backs the placement and management of all business activities in line with their strategic significance (Figge et al., 2002). Theoretically, value-based sustainability management makes an attempt to take into account the issue of corporate offerings and influences to sustainability in an integrative manner.

It postulates that for corporations to add to sustainable development, appropriate corporate performance advances in all three magnitudes of sustainability - social, economic, and environmental in a synchronized manner (Figge et al., 2002). This particular study is aimed at developing for Wave Master Ltd. Company a Sustainability Balanced Scorecard (SBSC). This will explicitly translate its strategy into a set of financial and non-financial measures, covering a range of perspectives. The findings of the study are aimed to provide the directions in which the company can take suggested practices.

This will enable them to utilize sustainable practices in their business procedures with respect to production; the approach can also ensure its accountability towards environment safety. This particular discussion demonstrates a strategic map and places distinct focus on the company's sustainability with reference to the case study prompts. The limitations with respect to the sustainable balance score card exist for the reason that this study only considers one approach out of the three approaches for the SBSC.

The other three approaches might shed a different light on the strategic map of the company and the indicators to be used by the company. However, the three approaches were analyzed and the one selected for the study was deemed to be the most suitable and appropriate. Another limitation is that the study uses non-financial indicators for the most part.

These indicators are lagging measures and in as much as they offer a great deal of insight with regards to the previous periods, they offer minimal to no ways to approach the impending future periods. It has been assumed that the sustainability reports offered from previous studies are appropriate and have analyzed the company comprehensively.

Discussion SBSC Approaches From the time a company has determined its approach to sustainable practices and operations, the managing team subsequently ought to make decisions on the manner in which sustainable practices and operations will be given assessments and reported by making use of the Balanced Score Card (BSC). There are three different approaches for integration of sustainability into the BSC. The first approach is the inclusion of an additional perspective to the BSC.

Including a fifth perspective in the BSC can be deemed to be the best strategy for companies that want to give emphasis to sustainability as a major corporate value or an integral approach (Butler, Henderson and Raiborn, 2011). The sustainability perspective encompasses social and environmental performance indicators that connect and work in tandem with the other four BSC perspectives and focus the significance of social, environmental, and economic accountability as a company objective. The second approach is establishing a separate sustainable balanced score card (SBSC).

This particular method largely depends on the design and execution of a distinct sustainability balanced scorecard (Butler, Henderson and Raiborn, 2011). A SBSC that is separate and distinct is deemed suitable for numerous corporations. An example would be corporations devoid of prevailing BSCs, who wish to measure or incorporate sustainability minus the interruption and expenses that come along with in espousing a full-scale BSC. The third approach is incorporating the measures all through the four perspectives.

Integrating the new measures into the prevailing perspectives has the additional benefit of permitting the measures to be perceived as important to everyday processes. They are thus seen as being significant to the company's economic welfare, even as much as consumer satisfaction, work cycle efficacy, and patent-creating research and development. The integrated approach is suitable for corporations that have a BSC in position and are enthusiastic to advance that scorecard to replicate sustainability approaches.

The measures for sustainability can be added to prevailing measures or substitute them; no significant changes to the BSC system or reporting are expected to be required (Butler, Henderson and Raiborn, 2011). Strategic Map Strategy mapping is an influential and significant tool employed in business. Strategy maps display in detail how organizations generate value for consumers and stakeholders.

Proper and appropriate strategy maps interconnect strategic aims and objective both in an internal and external way, and are one of the most efficacious and productive communication implements an organization can employ to construct placement, accountability, and a concentration on outcomes (Armitage and Scholey, 2006). Strategy mapping begins with the conception of different strategic objectives which function as the stepping stones of the business strategy of the corporation. Subsequently, these strategic objectives are then interconnected in cause-effect relations to generate a strategy map.

The following diagram illustrates the strategic map of WML Company: ProfitFinancial Perspective Saving costs in transport and logistics Increase in Market Share Customer Perspective Large number of customers Environment Friendly Image Quality Skateboards Labor Abuse Internal Process Perspective Employee Satisfaction Employee Health and Safety Health Transportation Natural Resource Efficiency Quality Control Purchasing Learning and Growth Perspective There are a number of strategic objectives of WML Company in the strategic map that has specific focus on its sustainability.

To start from the bottom working its way to the top, the first strategic objective to consider is employee health and safety. Companies which are in compliance with Social Accountability International (SA8000) have espoused procedures which ensure the protection of the basic human rights of the employees; these encompass health and safety, hours of working, payment, and also system of management. The main strategic objective of WML Company is to ensure that its employees are well protected and taken care of particularly in terms of worker safety.

This in turn builds and fosters a healthy relationship on the supply chain of the company and increases its standards (SAI, 2015). Employee satisfaction is a strategic objective that the company needs to consider in order to thrive. Efficiency and level of productivity of the company all rely on the level of satisfaction of the workers. The health and safety of the workers is an important aspect. In addition, the efficiency and preservation also plays a vital role and therefore is a strategic objective for the company.

Considering the fact that the products manufactured by Wave Master Limited Company are reliant on timber, it is imperative for the company to ensure that it is mindful of the forests which are natural resources. This plays a vital role in the social perception of the company which can act as a boost or an adverse aspect to the company. The company's objective is to ensure that it undertakes sustainable procedures.

Company image should be based on a strong and clear mission and the vision statement of WML should support its sustainable development focus. These objectives can be used as an incentive for the company to operate in a more responsible way. Having a proper company image is what propels a company to have an increase in its consumer base and ultimately be able to increase its market share (Shakil, 2014; Esau and Malone, 2013).

Sustainable Balance Score Card As earlier stated there are three main approaches in establishing a sustainable balance score card. The main approach chosen for the WML Company is the inclusion of an additional perspective to the BSC. The social and environmental aspects of WML Company ought to be incorporated in accordance to the strategic significance. Centered on these requirements, the procedure and practice of formulating a sustainable balance score card can be categorized into three major phases. The first one is the selection of the strategic business unit.

Secondly, the social aspects as well as the environmental aspects of concern have to be determined. Lastly, there has to be the determination of the relevance of these aspects for the strategy of the business unit. The main reason why this particular approach is selected for WML Company is because the social and environmental aims or objectives are strategically pertinent and it is quite hard to encompass them in the four prevailing perspectives.

It is challenging and difficult to place environmental and social aspects into the prevailing financial perspective, consumer perspective, internal process perspective, and the learning and growth perspective. It is for this reason that this particular approach is selected and an additional perspective created. From the strategic map mentioned above, it is possible to now generate a sustainable balance score card with the strategic objectives being categorized into the different perspectives.

The following diagram below will illustrate the suggested sustainable balance score card for WML Company taking into account the strategic objectives that it plans to implement. It will also include the action plans on how to undertake such objectives and the indicators that will enable the measurement of performance. Balanced Scorecard Action Plan Objective Measurement Target Initiative Budget Financial Perspective 1. Increase in market Share 2. Savings in Transport and Logistics 3.

Revenue growth Increased value of company Accumulated Benefits -- Accumulated Costs Revenue of present year divided by revenue of past year More than 10% increase in the annual revenue Analysis of the company cost structure Customer Perspective 1. Consumer Increase 2. Quality in Skateboards 3. Environmental friendly view Number of consumers Ranking by the consumers Rates of compliance Reviews from consumers after product use To be ranked number 1 More than 95% compliance rate Customer Loyalty program Public Relations Campaigns Improve Quality Management Internal Process Perspective 1. Quality Control Purchasing 2.

Natural Resource Efficiency The rate of productive usage Level of Deviation from the actual plan Increase Maintenance Efficiency Create preservation policies Learning and Growth Perspective 1. Employee Satisfaction 2. Health Transportation 3.

Employee Safety and Health Employee Training and qualifications Number of Workshops Number of Seminars and Programmes of Safety and Health Availability of Information System Workshops all throughout the year Implement project Analysis System Employee Trainings Employee Packages Improve Employee Communication Consider Organizational Culture Justification of Indicators The indicators considered in this discussion are those that will be perceived in the action plan that is demonstrated in the balanced score card.

The customer loyalty program is a good indicator to show the level of satisfaction of the consumers in a certain time frame or with regards to a certain product. This is a form of a satisfied customer survey from the loyal consumer base of the company to ascertain the positives and the negatives as well. Revenue growth is also a proper indication of the achievement of the company's revenue objectives.

The company is able to ascertain whether it has improved its level of returns and also whether its revenue mix has improved from the previous year. In addition, it makes it possible for the company to make projections for the subsequent year (Kaplan and Norton, 1996). As Kaplan and Norton (1996) point out, the balance score card would not be deemed to be meaningful and impactful if there is no use of industry specific measures such as the analysis of the cost structure.

It is imperative to note that these indicators on their own would not be sufficient to indicate the factors that would bring about superior levels of performance within the industry that the company is set in. This is for the reason that the indicator might signal a positive return for the company yet when compared to returns within the industry, the company might be lagging behind.

Eventual Impacts of the Indicators Assessments of the performance assist to show whether the actual performance has been undertaken in accordance to the plan that had been set. It is imperative for there to be transparency of the advancement of processes so as to do away with backlogs. The positive impact of constantly comparing the actual performances, together with the planned performances, plays a vital role in the ensuring that projects that WML Company undertakes are completed on good time.

As well, it is imperative not to incur any losses in the form of penalties. To be more precise, the managers of the company will perceive the benefits of transparency in terms of costs. Any issues with regards to the operations of the company are usually seen or detected in a quick manner. Therefore, it is imperative for actions to be undertaken as fast as possible in order to evade any losses in revenue and ultimately losses in profit (Rausch, Sheta and Ayesh, 2013).

The change in the organizational culture as suggested in the indicators can also have both a positive and a negative outcome. Organizational culture refers to the manner in which an organization operates in terms of the coordination individual work and also team work in an organization. Employee satisfaction for most corporations always goes down to the kind of organizational culture that has been.