Learning and Growth Perspective, Essay Example

Abstract

The paper discusses and analyzes the use of the BSC at Futura Industries. The paper evaluates the company’s use of the Learning, Growth and Innovation perspective of the BSC. Recommendations are provided to help Futura enhance the quality of its learning and innovation functions.

Introduction

In their striving for better profitability and efficiency, more and more companies choose to apply to the Balanced Scorecard. The BSC provides businesses with a unique opportunity to systematize their learning and knowledge and to use this knowledge as the source of their competitive advantage. In Futura Industries, the use of the BSC became the turning point in the company’s way to better performance. Nevertheless, Futura must be more attentive to the learning and growth quadrant of the BSC, to ensure that it captures the full dimension of the company’s evolution and growth in short and long run.

Futura is an international company specializing in aluminium extruding, finishing, fabrication, machining, and design (Gumbus & Johnson, 2003). All internal processes in the company are focused on quality (Gumbus & Johnson, 2003). Personnel at Futura Industries were always the central element of its business success. Employees differentiate Futura from other similar companies (Gumbus & Johnson, 2003). The learning, innovation and growth quadrant of the BSC is the most important because respected and challenged to grow people are the foundation of Futura (Gumbus & Johnson, 2003).

Futura uses two critical weapons of business excellence and enhancement – hiring and retaining the most talented people and being devoted to customers (Gumbus & Johnson, 2003). The company puts employees first and gives them an opportunity to thrive (Gumbus & Johnson, 2003). To meet these goals, Futura must continually improve employee competencies, provide a safe and challenging workplace, and hire people who can align their goals with the company values; that is why the learning, innovation and growth perspective of the BSC is the most important at Futura. It allows the company to hire and retain the best people and to develop and improve their competencies (Gumbus & Johnson, 2003).

Analysis

To measure and monitor its learning, innovation and growth, the company applies to a complex system of measurements. The company measures its turnover: since 1998, turnover at Futura has decreased by 33% (Gumbus & Johnson, 2003). The company utilizes a series of surveys: in this way, the company tries to treat employees as individuals, family, and community members (Gumbus & Johnson, 2003). Futura goes straight to employees to find out how it can become a better company and a better employer (Gumbus & Johnson, 2003). Every year, employees complete the “Employee Friendly Initiatives at Futura”, which lists 60 benefits and asks to choose the most important ones (Gumbus & Johnson, 2003). The survey covers both material and non-material benefits – in this way, the company identifies the learning and growth needs of employees that are unsatisfied. “Birthday Review takes place during the month of the employee’s birthday and interviews the employee about communication, work climate, and achievement opportunities” (Gumbus & Johnson, 2003). Leadership survey asks employees about how their managers and supervisors can improve their leadership and management skills (Gumbus & Johnson, 2003). Certification and Training Matrix is used to analyze employee certification levels and employee opportunities for career progression (Gumbus & Johnson, 2003).

Annual Performance and Personal Development Review is used to recognize capabilities and accomplishments, to identify areas for improvement, and to evaluate its performance results objectively (Gumbus & Johnson, 2003). Futura also measures customer service: every month, the company calls 10 randomly selected customers and asks them a series of questions regarding their relationship with Futura (Gumbus & Johnson, 2003). The company holds a monthly meeting to discuss the results of every review (Gumbus & Johnson, 2003).

Conclusion

That Futura uses the BSC and emphasizes the importance of the learning, innovation, and growth dimension of the BSC is natural, given the company’s commitment to employee excellence. Learning and innovation have proved to be the two critical dimensions of the company’s continuous business success. However, Futura does not catch the full dimension of its learning and innovation. With its emphasis on people (human capital), the company fails to use the benefits of its informational and organization capital. Niven (n.d.) writes that informational, organization, and human capital are the three key areas of focus whenever companies develop objectives and measures for the Learning and Growth perspective of the BSC. Informational Capital measures how well the company’s IT infrastructure supports its internal processes, while organization capital is a complex set of intangible resources, which Futura could use to enhance its learning and growth in short and long run, e.g., culture (Kaplan & Norton, 2004). Futura must be able to identify the specific information capital needs for each internal process (Kaplan & Norton, 2004). The company must decide whether and how it can mobilize and sustain the strategic change as a part of its strategy (Kaplan & Norton, 2004). Futura must evaluate the state of its culture, leadership, and communications (Kaplan & Norton, 2004), to ensure that they support its learning and innovation strivings.

Evaluation

I believe that the use of the learning, innovation and growth perspective of the BSC at Futura is extremely beneficial and has proved to be an excellent instrument of positive change in the company. It helps the company to hire and retain the best personnel and to meet the most sophisticated customer needs. However, the company does not catch the full dimension of its learning and growth opportunities: Futura focuses on human capital and does not use its organization and informational resources to the fullest. I think that by involving informational and organization capital and resources, Futura will raise the efficiency of its learning and growth processes and will contribute to the success of its innovation strategies.

References

Gumbus, A. & Johnson, S.D. (2003). The balanced scorecard at Futura Industries. Strategic  Finance, 85(1): 36-41.

Kaplan, R.S. & Norton, D.P. (2004). Measuring the strategic readiness of intangible assets.

Harvard Business Review, February. Retrieved fromhttp://www.cmaslp.com/onlinelibrary/OL_English/Strategy%20Implementation/Management%20Accounting/MeasuringTheStrategicReadinessofIntangibleAssets.pdf

Niven, P. (n.d.). Learning and growth perspective. EPM Review. Retrieved from http://www.epmreview.com/Resources/Articles/Learning-and-Growth-Perspective.html