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The left side of the figure below illustrates a possible cause-and-effect relationship between the perspectives in a for-profit organization.Note that Financial reigns supreme – although Kaplan and Norton demonstrated the importance of all perspectives, Financial still represents the final “end” – because a company’s overriding responsibility is to its shareholders.Improvement efforts, such as Six Sigma projects, completed by government agencies therefore can carry a double impact.
In fact, there is frequently tension between these two aims.
On one hand, government agencies want to provide comprehensive services.
The following example from a government agency illustrates this type of regulation.
In Australia, heavy vehicle transport companies are required by law to gain permits for their vehicles to travel along routes not designated in a published “gazette.” The reason: Certain roads, bridges or structures along a route may present a level of risk.
Looking at this red tape reduction in terms of the Balanced Scorecard shows an opportunity to refocus the scorecard for government environments.
When Robert Kaplan and David Norton first proposed the scorecard with its four perspectives –, Financial, Customer, Internal Business Processes, and Learning and Growth – they were primarily looking through the lens of a profit-making entity.Hence, improvement efforts ultimately center on improving the bottom line of the organization.A Cause-and-effect Relationship for Profit and Not-for-profit Organizations – Source: The Balanced Scorecard (Harvard Business School Press, 1996); Balanced Scorecard Step by Step for Government and Nonprofit Agencies (Wiley, 2003)(Wiley, 2003), proposed a different cause-and-effect relationship for government and nonprofits. Rather, the entity exists “to serve” and Customer is elevated to top billing.On the other, they want to be seen as lean and efficient, using tax payers’ money wisely.Likewise, the public and other stakeholders want – and indeed demand – effective services from government agencies; however, tax increases are always unpopular, even when they are used to expand service levels.Far from being unable to plan and implement improvement methodologies, government agencies have a unique opportunity to benefit from doing so.While it is true that improvement efforts can be frustrated by changes in administration and that processes are subject to change, there are still many opportunities for those with an eye for improving customer relations.These regulations potentially affect the behavior of the private sector – the customers.In some cases and often for good reasons, companies must comply with acts and regulations that add to their operating costs.Government agencies must make efforts to avoid over-regulation.Likewise, agencies need to ensure that their administration of required regulations is as efficient as possible.