Translating the mission into long-term goals

4.3.6 Translating the mission into long-term goals

The assessment of both the external and internal environments will indicate to management whether the mission statement is realistic. This statement has to reflect reality as it the document that guides decision making in the organisation. It also serves as the basis for performance contracting for managers at all levels in the organisation as well as for workers. However, the mission statement is a broad statement indicating the organisation’s intent. It often contains words such as `most cost- effective producer of…’ or `to be the leader’. `Most cost- effective’ and `leader’ are vague terms that lend themselves to different interpretations. The mission statement therefore still needs to be translated into measurable, long-term goals to ensure that it is clearly understood by everyone in the organisation. The Balanced Scorecard (BSC) is used by many organisations in South Africa, including Edcon, Kumba Resources, universities and government departments, for this purpose.

An organisation’s measurement system affects the behaviour of managers and employees. BSC includes financial measures to measure profitability, liquidity, cost and any other measures that focus on financial performance. Kaplan and Norton added three additional dimensions to measure namely: (1) operational measures on customer satisfaction, (2)

internal processes and (3) the organisation’s innovation activities as these drive future financial performance. This perspective must be linked to the mission statement to ensure internal processes and (3) the organisation’s innovation activities as these drive future financial performance. This perspective must be linked to the mission statement to ensure

The four BSC perspectives measure the following:  The financial perspective includes measures such as operating income, return on capital

employed, and economic value added.  The customer perspective looks at measures such as the number of new customers, customer retention, customer defection and customer satisfaction.  The third perspective of BSC, namely internal business processes, deals with continuous improvement, throughput and quality. Measures can include: number of mistakes made during a certain process (such as the registration process at a university); number of new processes incorporated into the business during the past year and productivity measures.

 The learning and growth perspective focuses on, among other things, the competency of

employees, innovative ideas generated by employees and managers and staff retention.

The four perspective of the BSC do not operate in isolation. They are closely related. For instance, if employees are competent (learning and growth perspective), they should be able to improve continuously on the processes of the organisation (internal business processes perspective). This should b of the organisation (internal business processes perspective). This should enable the organisation to improve on their customer service (customer perspective). This will eventually contribute to bottom-line improvement (financial perspective).

Although the `pure’ BSC comprises four perspectives, organisations should adapt the above perspective to reflect their own unique key drivers. Kumba Resources, for instance, is in the mining industry. Because safety, health environment are key focus areas for the organisation in this industry, they have added a further perspective to their BSC, namely: safety, health environment, risk and quality.

Web Resource

For further insight on the subject matter you can go to http://www.balancedscorecard.org

Kaplan and Norton have also created a new tool, called `strategy maps’. A strategy map visually represents how an organisation creates value. Just as you can’t manage what you

can’t measure, so too according to Kaplan and Norton, you can’t measure what you can’t describe. They argue that sustained value creation depends on managing four key internal

processes; operations, customer relationships, innovation, desired outcomes, the tool therefore allows an organisation to align processes, people, and information technology to achieve superior performance.