Balanced Scorecard In Hsbc Bank Accounting Essay

fit wag In Hsbc Bank Accounting EssayCHAPTER 1In the medieval decades, many a(prenominal) brass instruments were facing intensive pressures for changes in strategies and structures without a proper human resource annihilatement and murder management model (Weng, 2011). It has been a ch eitherenge to many managers to measure and appraise their human capital with an increasing and constantly changing volume of employees across the organization at different levels as well as across different geographic locations with risque consistency and standards. Therefore, it is crucial that organizations gull a strategic management mother fucker. Much debate has been taken to find the nigh effective agentity of measuring not only a companys fiscal surgical process but also how the company satisfies its clients and employees (Kocakulah and Austill, 2007). Then in 1992, Ka envision and Norton introduced a BSC model. Their opinion of BSC has opened a new field in the literature of mana gement control (Franco and Bourne, 2003). Since so, BSC has been an interesting topic that many academic fountains choose to write. The reasons why the investigateer is interested to write about BSC ar as following.First, it is essential that process bill be of great signifi lotce to an organization, playing as a tool in conveying the companys strategies to individuals objectives (Smith and Kim, 2005). Drucker (1954) also highlighted that all employees, from a big boss to a junior clerk, should watch personal cognitive process objectives that aligns strongly to the companys strategy. Therefore, the application of BSC truly helps organizations to depict such objectives evidently. harmonise to Kocakulah and Austill (2007), when structural changes and job specifications become to a greater extent complex, it is required to develop a methodology and formula that piece of tail align the organisational strategies and main principles with performance metre and management ind icators. Kaplan and Norton (1992, cited in Kaplan, 2010) recognized that any comprehensive measuring and management system has to link operational performance improvements to customer and financial performance.Second, BSC was presented as the most practical and comprehensive performance measurement model and has wherefore become a popular strategic tool amongst managers all over the world (Sanayei et al., 2011). In recent years, the BSC has been a comprehensive model when looking at management issues for financial and non-financial purposes and has been very popular as it attracts a lot of attention (Norreklit, 2000). It has been widely consumptiond by many companies and has gained ecumenic acceptance as a useful tool for management. From 1992 to 2000, more than 200 companies adoptive the BSC method (Kaplan and Norton, 2001 cited in Kocakulah and Austill, 2007). In 2001, David Norton estimated that about 50 percent of large organizations in the United States were using the BSC, about 45 percent in europium and about a third of the large organizations in Australia used the BSC (Weber et al., 2001 cited in Kocakulah and Austill, 2007). Another recent study by Bain Company indicated that 57 percent of firms worldwide use the balanced score elevator card, including 75 percent of large firms and 64 percent of firms in North America (Rigby and Bilodeau, 2005). The Harvard Business Review in 1997 listed it as unitary of the 75 most influential ideas of the 20th century (Bible et al., 2006).Appargonntly, BSChas become the leading strategic management system of the 21st century. Organizations use the scorecard to shape an only if new performance management framework that mystifys strategy at the centre of key management processes and systems (Kaplan and Norton, 2001).Third, BSC has been chosen by many financial and banking institutions as a key to achieving a victoryful exertion of their strategic plans (Frigo et al., 2000), whereas Aranda and arllano (2 010) stated that it is for strategic development and performance measurement. As a result, BSC was chosen by HSBC Bank to put into use in its early stage of starting business in Vietnam. Throughout all these stages, BSC has always been used at all levels as (i) a strategic tool to connect organisational goals with 1500-employees targets and (ii) a standard performance measurement system to drive individual performance, evaluate their achievements and create values (HSBC Vietnam, 2011).HSBC Bank, a member of HSBC Holdings Group, is unrivalled of the worlds largest financial institutions and the biggest foreign bank in Vietnam. It established the first full-service branch in Ho chi Minh City in 1995 and then expanded to 17 branches and offices across the nation. It strategically focuses on Premier nubbles with a purpose of delivering world-class international services to high-profile customers. Currently there ar one Premier Centre in Hanoi (the North) and one in Ho Chi Minh City (the South) (HSBC Vietnam, 2012) serving a depend of 6,000 Premier customers.Forth, the role of BSC in HSBC has been strongly recognized by either employees or managers at all levels. At Group and business level, it supports the implementation of the business strategy, ensuring that all aspects that contribute to its success are taken into account. At a team level, it helps managers align their objectives with those of the business and focus their efforts and resources on what is most relevant. Individually, it helps an employee understand how her/his work links with and affects the success of the organization (HSBC Vietnam, 2011).The effects of performance measurement and management at HSBC Vietnam have been evaluated by means of surveys conducted bank-wide to collect employees feedback and response. Such surveys then supported managements strategic analysis and improvement plan (HSBC Vietnam, 2011). However, there has been little empirical investigate into whether the balanced scorecard actually works in practice (Neely, 2008). Moreover, as pointed out by Hung-Yi Wu (2012), most of the BSC- tie in studies have focused mainly on performance measures rather than the causal relationships between key performance indicators for the purpose of strategy implementation. This is the first time a seek is conducted in HSBC (Vietnam) Ltd. at a more focused level with specific attributes directly related to individual BSCs perspectives and potential relationships as well as their impacts. Accordingly, the author chooses to study on the below topicBALANCED SCORECARD IN HSBC BANK (VIETNAM) LTD.PREMIER CENTERS POSITIVE AND NEGATIVE EFFECTS1.2. SIGNIFICANCE OF STUDYThe sign purpose of this study is to gain further understanding of BSC and its role as a performance management tool in an organization. Many studies by render (1999), Lingle and Schiemann (1996) suggested that organizations managed through balanced performance measurement systems perform better than those t hat are not. Therefore, the search can help figure out positive results on a specific organization using the scorecard to support those ideas.Besides, it forget serve as a guide to business strategy planning. According to Davis and Albright (2004) and Littler et al. (2000), banks can save an enormous amount of time and money if they understand which measures, financial or non-financial, are best suited to their needs. As such, it is expected that the study can indicate whether the current BSC applied in HSBC is ideal in a way that an appropriate mix of performance drivers and outcome measures has been tailored to the business units strategy (Frigo et al., 2000).In addition, the study reemphasizes the important role and positive effects of BSC on an organizations strategy implementation. As mentioned by Hung-Yi Wu in his 2012 work, banking institutions must develop an effective way to align their strategies with corporate goals based on performance analyses if they are to sustain t heir competitive advantages. Such effective way is recommended to be the BSC model, which is proved to be a useful and efficient tool in communicating organizations goals and targets to all bank staff and in performance measurement (Bible, et al., 2006). Moreover, the explore is to identify good points related to BSC in both academic publications and real-world experiences of an organization.Apart from that, the research helps the author and readers poll the difference of BSC from theoretical to practical perspectives based upon feedback of surveyed employees. Accordingly, it is good to understand how BSC has been adapted and enforced in the context of HSBC in Vietnam, which is, as pointed out by Burney and Swanson (2010), integral to the development of systems that leave behind effectively obtain organizational goals. The research will definitely give more insights of the banks BSC implementation process and effectiveness.Furthermore, the research will reveal HSBC employees sa tisfaction level and specific feedback on the banks BSC system and increase understanding of its strategic link and potential relationships between BSC measures in practice. It allows the business to stay competitive and profitable (Zeng and Zhao, 2005) in sustainable development.However, apart from the positive effects of BSC on HSBCs execution of strategy, the research also helps to figure out some gaps and areas for attention and improvement that will be analyzed in the following chapters. In case its results are appreciated and draw the attention of higher management then it can make further contribution to the development and acknowledged effectiveness of BSC in HSBC Vietnam. This condition may help the management to focus on the need to complete the implementation of BSC system to maximize its benefits and minimize the negative effects. The disclosure of the shortcomings, if any, is crucial as it will entice organizations to search for measurement systems that support them be tter in the challenging business environment (de Waal and Counet, 2009).With these above reasons, the author strongly believes that the topic Balanced notice in HSBC Bank (Vietnam) Ltd. Premier Centers positive and negative effects will help the readers get more into the research.1.3 RESEARCH OBJECTIVES AND QUESTIONSAccording to Varkevisser, Pathmanathan Brownlee (2003), the objectives of a research project summarize what is to be achieved by the study. It is advised by Ababa (2005) that if specific objectives are properly formulated, they will facilitate the development of research methodology and will help to orient the collection, analysis, interpretation and utilization of data. Therefore, these objectives should be closely related to the research problem (Saunders et al., 2009). Furthermore, objectives should be logical, coherent, feasible, realistic and considering local conditions as well as being defined in operational terms that can be measured and phrased to clearly mee t the purpose of the study (Ababa, 2005). With the topic Balanced Scorecard in HSBC Vietnam Ltd. Premier Centers positive and negative effects, six objectives of the study are determined as following.To understand the concept of BSC and its perspectives as a performance measurement tool,To identify positive and negative effects of BSC in HSBC Vietnam,To measure if HSBC BSC model is different compared to an ideal model,To evaluate the relationship between employee understanding of the organizations objectives with a well-performing organization,To analyze the causal relationships (if any) amongst four perspectives of BSC, andTo identify the weakest one of the four perspectives to improve.With these research objectives, the study is to be conducted to clearly answer the questions relevant to the topic as below.What is the Balanced Scorecard and its four components?What are HSBC BSC positive and negative effects?What is an ideal BSC model and what is HSBC BSC compared to it?How do HSB C employees understand the organizations objectives and its relationship with a well performing organization?Are there any relationships amongst four perspectives?Which one among the four perspectives needs more focus?1.4 BOUNDARY OF THE STUDYDue to the limitation of time and mount of work, this research only focuses on a small group of employees, hereinafter mentioned as those working at two Premier Centers in Hanoi and Ho Chi Minh City, but not extended to the entire number of about 1500 employees bank-wide. Two Premier Centers have a number of 60 staff including Premier Center Managers, Sales Managers, Relationship Officers, Services Managers, Services Assistants, Counter Officers and tellers. As such, the findings and results are only voice of part of the real figures and possibly not completely accurate.In addition, the research is only conducted at employees level or a single group of employees point of view rather than on the senior managements stand point, then there will be some imbalanced justifications and explanation after the survey.It is hoped that once the research methodology is proved to be trustworthy enough to the representative sample, it will be supported to apply to the whole bank with full participation of employees at all levels including senior managers to get a broader view and more precise results.1.5 OUTLINE STRUCTUREThis paper consists of five main chapters.Chapter 1 IntroductionThis 2389-word section is an introduction to the research, serving as an explanatory background to what leads the author to the chosen topic and why to choose the topic. In addition, it is followed by a brief summary of significance of the study and key issues that the research work intends to address. The scope of study is also included in the first chapter in order to narrow the boundary and put the focus on the research area.Chapter 2 literature ReviewThis 4836-word chapter is the theoretical background of the study focusing on the relevant literature and theories on performance measurement, balanced scorecard and its perspectives. It helps to demonstrate an understanding of the research topic and its surrounding content. At this stage, it is important to critically review many academic authors points of view on the research topic and related issues. From those literatures, specific hypotheses are developed as a foundation to start the research.Chapter 3 MethodologyIn this part, the research philosophy, strategy, method and approach used in this study are described. It also presents the process of gathering data, sampling method, implementation of questionnaires and techniques of analysis. Some ethical issues when conducting this research in a banking organization like HSBC are also mentioned. 3836 is the number of words in this chapter.Chapter 4 Data Analysis and DiscussionThis section outlines the findings and results of development collection at HSBC as conducted in chapter 3. Feedback from its employees will be revealed thr ough a list of figures and tables. The proposed hypotheses will be further discussed based on the results. There are 3897 words for this chapter.Chapter 5 Conclusions and RecommendationsThis is a summary of the main conclusions of this research and feasible recommendations to the research issues. Some limitations and suggestions for next researches are also included.CHAPTER 2LITERATURE REVIEW2.1 IntroductionThis chapter will cover the literature on performance measurement, strategy map, balance scorecard and its role in aligning organizational goals to the strategy. By studying related literature on BSC, it is seen that BSC really plays a evidentiary role in the success of an organization and that it helps to measure the success of the strategy (Kaplan and Norton, 2001). Schneiderman (1999) stated that balanced scorecards that did not have a sound foundation would fail. Therefore, this chapter will summarize the positive and negative effects of BSC collected from many studies and e laborate hypotheses to predict the effects of BSC in practice of a specific organization. Additionally, it is learnt from this chapter that the four perspectives of BSC are inter-related, and that even though financial results are very important, delivering long term value and success will require a focus on non-financial factors including high performing people, efficient processes and effective customer services (Kaplan and Norton, 1996). The following part is related conceptualization on the research content.2.2 surgical process Measurement2.2.1 DefinitionPerformance measurement is defined by Lebas (1995) as a system by which a company monitors its daily operations and evaluates whether it is attaining its objectives. Meanwhile, Lichiello and Turnock (1999) define it as the selection and use of quantitative measures of capacities, processes, and outcomes to develop information about critical aspects of activities, including their effect on the public. Basically, it is considered part of a performance management system (Sanayei et al., 2011) and is set aligned with the organizations strategy.According to Hronec (1993), performance measurement system is a tool for balancing multiple measures (cost, quality, and time) across multiple levels (organization, processes and people). While it was suggested by Green et al. (1991) to target the value-added activities of the company, Kaplan (1991) suggested that an effective performance measurement system should provide timely, accurate feedback on the efficiency and effectiveness of operations. In fact, organizations always plan to build an effective tool to help them manage the performance and well achieve the targets.2.2.2 The role of performance measurementAccording to Christian C. Johnson (2007), it is important to understand why measuring an organizations performance is both inevitable and vital. An organization operating without a performance measurement system is like an airplane flying without a compass, a F ormula One race car driver guiding his car blindfolded, or a CEO operating a company without a strategic planThe purpose of measuring performance is not only to know how a business is performing but also to enable it to perform better. The ultimate aim of implementing a performance measurement system is to improve the performance of an organization so that it may better serve its customers, employees, owners, and stakeholders.Basically, a performance measurement system enables an enterprise to plan, measure, and control its performance according to a pre-defined strategy (Johnson, 2007). Many authors including Atkinson and McCrindell (1997), De Toni and Tonchia (2001), as cited in Pongatichat and Johnston (2008), have identified its benefits as a tool to (i) communicate the organizations strategic direction, strategic priorities, (ii) create a shared understanding, (iii) monitor and track the implementation of strategy, (iv) align short-term actions with long-term strategy, (v) make clear the links between performance of individuals and sub-units, and sub-units and overall organizational performance, (vi) promote integration among various organizational processes, (vii) focus change efforts, and (viii) facilitate organizational learning.2.2.3 Different performance measurement modelsMany researches on banking performance measurement used traditional measures like statistical analysis (Arshadi Lawrence, 1987 Devlin Gerrard, 2005), structural equation models (SEM) (Collier, 1995), multi-criteria classification methodology (PARCLAS) (Kosmidou et al., 2006) and DEA (Giokas, 2008). In the meantime, Wu et al. (2011), Chen et al. (2008), and Meyer and Markiewicz (1997) chose to adopt the four BSC perspectives, including both financial and non-financial indicators. In their 1992 work, Kaplan and Norton also described performance measurement as a way to review an organizations financial and non-financial goals. Figure 2.1 summarizes the selection indicators of banking performance measurement that have been investigated in several important studies, along with their main analytical methods (Wu et al., 2011).According to Weber et al. (2001) and Bible et al. (2006), traditional measures no longer worked effectively because those measures relied so strongly on financial indicators and did not sufficiently cover other critical factors like skills, competencies, and motivation of employees customer and supplier relationships innovative product development databases and information technologies efficient and responsive operating processes innovation in products and services customer loyalty and relationships and political, regulatory, and societal approval. Meanwhile, the BSC can cover all these measures in a more specific and appropriate way that supports management in implementing organizational goals.