The balanced scorecard as performance measurement and personal development tool in a steel organisation

Abstract

The Balanced Scorecard (BSC) is a strategic management tool that provides the manager with a clear and concise picture of the business's health and progress in reaching the goals of the business (Norton & Kaplan, 1992: 71-79). The BSC is a set of financial and non-financial measures relating to a company's critical success factors. Of late the BSC was also used as a personal development tool - measuring the individual's performance towards set personal growth targets. The BSC process has been part of ArcelorMittal, Vanderbijlpark Works for many years. This process can add great value to a company if managed effectively- the question is thus: is the BSC effectively implemented in ArcelorMittal, Vanderbijlpark Works? It was decided to conduct a study to determine the status of the BSC with one main objective and two secondary objectives, namely to -

- establish whether ArcelorMittal, Vanderbijlpark Works is effectively using the BSC tool as a performance measurement and a personal development tool (main objective); - determine if there is a difference between the effective implementation of the BSC as a performance management and personal development tool within the different business units within ArcelorMittal, Vanderbijlpark Works. These units are Iron Making, Steel Making, Rolling, Engineering and Staff (Secondary objective 1): and - determine if there is a difference between the effective implementation of the BSC as a performance management and personal development tool between different role gradings (these roles are defined as E, F and G roles) in ArcelorMittal, Vanderbijlpark Works (Secondary objective 2). An empirical study was conducted in ArcelorMittal, Vanderbijlpark Works. A questionnaire was used as the measuring instrument and was issued via the HR Department to a target group of 724 employees. The questionnaires consisted of 25 questions divided into 2 sections to test both the effectiveness of the BSC as a performance management tool and a personal development tool. To analyse the data, descriptive statistics and frequency distributions were used and calculated in Microsoft PHStat. From these results the following conclusions were drawn. - The BSC process is well entrenched in ArcelorMittal, Vanderbijlpark Works, but lacks overall effectiveness; - The BSC does encourage people to self-develop, but development plans are lacking, not enough time for training is given and managers must show a real intent to develop their people. From the study and the conclusions drawn, the following recommendations were made. - Address the issue of mistrust between the employees and their supervisory management. - Managers should make allowance for individuals to make mistakes. - Encourage innovation in the organisation. - More effort should be applied to translate the company strategic objectives into workable (and measurable) KPI 's at the lower levels of the organisation. - ArcelorMittal should make a concerned effort to allow more time for training and self-development during normal working hours. - Revisit all KPI's for weight allocation. All the departments and all the levels in the organisation see this as a drawback of the BSC system. - Test the applicability of the KPis. Ensure that the KPis on the BSC are clear and that these reflect the effort the company requires form the individual. - Allow more participation of the individual during the compilation of the BSC (this will improve buy-in). - The E-role level communicates very well downwards to the lower levels in the organisation. Take key learning aspects from this group, and skill the F-role and G-role levels to the same extent.