This paper develops a Sustainability Balanced Scorecard (SBSC) for Wave Master Limited Company (WML), a skateboard manufacturer. It begins by evaluating three approaches for integrating sustainability into the traditional Balanced Scorecard (BSC) framework and selects the addition of a fifth perspective encompassing social and environmental dimensions. The paper then constructs a strategic map linking the company's sustainability objectives across financial, customer, internal process, learning and growth, and environmental/social perspectives. Key objectives include employee health and safety, natural resource efficiency, quality management, and public image. The paper justifies the chosen indicators, outlines action plans for each perspective, and discusses the potential positive and negative impacts of implementation on organizational performance, culture, and market position.
The balanced scorecard is a management tool that supports the successful execution of strategies initiated by a corporation. This report aims to assist Wave Master Limited Company (WML) with further analysis of sustainability. In particular, the report develops a strategic map for the company's objectives and thereafter creates a framework for a Sustainable Balanced Scorecard (SBSC). The strategic objectives are categorized in accordance with the perspectives of the proposed SBSC. The study also provides justification for why such strategic objectives were classified in that particular manner. In accordance with prior assignment work, it is assumed that the sustainability reports and analysis previously completed are appropriate and suitable for use in this study. In developing the SBSC, this study adopts the approach of adding a fifth perspective to the existing four perspectives of a traditional Balanced Scorecard (BSC). The fifth perspective encompasses environmental and social aspects. The findings of the study are intended to provide directions in which the company can adopt suggested practices in order to utilize sustainable methods in its business procedures with respect to production, and to ensure its accountability towards environmental safety.
The balanced scorecard is a management component that enables the successful execution of strategies initiated by a company. It has been considered comprehensively both in research and in practice. By connecting non-financial and operational company activities with fundamental links to the company's long-term strategy, the Balanced Scorecard supports the alignment and management of all business activities in line with their strategic significance (Figge et al., 2002). Theoretically, value-based sustainability management attempts to account for corporate contributions and influences on sustainability in an integrative manner. It postulates that for corporations to contribute to sustainable development, appropriate corporate performance advances must occur across all three dimensions of sustainability — social, economic, and environmental — in a synchronized manner (Figge et al., 2002).
This study aims to develop a Sustainability Balanced Scorecard (SBSC) for Wave Master Ltd. that will explicitly translate its strategy into a set of financial and non-financial measures covering a range of perspectives. The findings are intended to provide directions in which the company can adopt suggested practices to utilize sustainable methods in its business procedures with respect to production, and to ensure accountability towards environmental safety. The discussion demonstrates a strategic map with distinct focus on the company's sustainability with reference to the case study.
There are limitations with respect to the SBSC developed here. This study considers only one of the three approaches available for constructing an SBSC. The other approaches might shed a different light on the company's strategic map and the indicators to be used. However, all three approaches were analyzed and the one selected was deemed the most suitable. A further limitation is that the study relies predominantly on non-financial indicators. These are lagging measures and, while they offer considerable insight into previous periods, they provide minimal guidance for approaching future periods. It is assumed that the sustainability reports from prior studies are appropriate and have analyzed the company comprehensively.
Once a company has determined its approach to sustainable practices and operations, the management team must decide how those practices will be assessed and reported using the Balanced Scorecard. There are three different approaches for integrating sustainability into the BSC.
The first approach is the inclusion of an additional perspective to the BSC. Adding a fifth perspective can be considered the best strategy for companies that wish to emphasize sustainability as a core corporate value or an integral strategy (Butler, Henderson and Raiborn, 2011). The sustainability perspective encompasses social and environmental performance indicators that work in tandem with the other four BSC perspectives, and highlights the significance of social, environmental, and economic accountability as a company objective.
The second approach is establishing a separate Sustainable Balanced Scorecard. This method depends on the design and execution of a distinct SBSC (Butler, Henderson and Raiborn, 2011). A separate SBSC is considered suitable for many corporations — particularly those without an existing BSC that wish to measure and incorporate sustainability without the disruption and expense of adopting a full-scale BSC.
The third approach is incorporating sustainability measures throughout the existing four perspectives. Integrating new measures into the prevailing perspectives has the added benefit of allowing those measures to be perceived as integral to everyday processes, and as significant to the company's economic welfare alongside consumer satisfaction, operational cycle efficiency, and research and development. This integrated approach is suitable for corporations that already have a BSC and are eager to advance it to reflect sustainability priorities. Sustainability measures can be added to or can replace existing measures, and no significant changes to the BSC system or reporting are expected to be required (Butler, Henderson and Raiborn, 2011).
Strategy mapping is an influential tool used in business. Strategy maps display in detail how organizations generate value for consumers and stakeholders. Effective strategy maps interconnect strategic aims and objectives both internally and externally, and are among the most productive communication tools an organization can employ to build alignment, accountability, and a focus on outcomes (Armitage and Scholey, 2006). Strategy mapping begins with the identification of different strategic objectives, which serve as the building blocks of the corporation's business strategy. These objectives are then interconnected through cause-and-effect relationships to produce a strategy map.
The strategic map for WML Company is organized across five perspectives: Financial, Customer, Internal Process, Learning and Growth, and Environmental/Social. At the financial level, key objectives include profit, savings in transport and logistics, and an increase in market share. At the customer level, the objectives include growing the customer base, cultivating an environment-friendly image, and producing quality skateboards. At the internal process level, objectives include addressing labor practices, employee health and safety, healthy transportation, natural resource efficiency, and quality control purchasing. At the learning and growth level, the focus is on employee satisfaction.
Working from the bottom of the strategic map upward, the first objective to consider is employee health and safety. Companies compliant with Social Accountability International (SA8000) have adopted procedures that protect the basic human rights of employees, encompassing health and safety, working hours, remuneration, and management systems. WML's core objective is to ensure that its employees are well protected, which in turn builds a healthy supply chain relationship and raises the company's standards (SAI, 2015).
Employee satisfaction is a further strategic objective the company must consider. Efficiency and productivity rely heavily on worker satisfaction, of which health and safety is a key component. Given that Wave Master Limited Company's products depend on timber, it is essential that the company remains mindful of forests as natural resources. This consideration plays a vital role in the company's social perception and can act either as a boost or a liability. The company's objective is therefore to pursue sustainable procedures. A strong and clear mission and vision statement supporting sustainable development can serve as an incentive for WML to operate more responsibly. A positive company image drives consumer base growth and ultimately increases market share (Shakil, 2014; Esau and Malone, 2013).
"Fifth-perspective SBSC with action plans and targets"
"Rationale for chosen performance measurement indicators"
"Positive and negative implementation outcomes for WML"
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