Opinion towards the Important Perspectives of Balanced Scorecard - A Study with Special Reference IT & ITEs Employees of Coimbatore District

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1 ISSN (ONLINE): 50058, ISSN (PRINT): 9696 Volume5, Issue, February05 International Journal of Engineering and Management Research Page Number: 6 Opinion towards the Important Perspectives of Balanced Scorecard A Study with Special Reference IT & ITEs Employees of Coimbatore District Shyam Umasankar K K, Dr. Shani J Research Scholar, Karpagam University, Coimbatore, INDIA Research Supervisor, Karpagam University, Coimbatore, INDIA ABSTRACT Indian IT Services is valued at US $ 50 billion sector, BPM valued at USD 0 billion sector, Engineering crossed US $ 0 billion and Software products, Internet & Mobility are emerging sectors in the country. Today, existing and new companies are expanding their IT services to build India as the hub for analytics, mobility, and social collaboration verticals across the healthcare and medical devices sector. The concept of Balanced Scorecard (BSC) is too much relevant in the present era of emerging intense global competition, where the organizations are facing increasingly knowledgeable, demanding customers and activist shareholders. This article aims to analyse opinion of IT & ITES employees towards the important perspectives of balanced scorecard (Information Technology Enabled Services) employees, working in Coimbatore district. Keywords BPM,Balance Score Card,.Information technology, Information Technology Enabled Services I. INTRODUCTION Information Technology/ Information Technology Enterprises (IT/ITES), is an arched type of a knowledge economy. IT firms in India, contributes around SIX per cent to nations GDP and earn around 5per cent of export revenues for the Indian economy. Unlike traditional manufacturing and service firms, these firms are characterized by low capital intensity, low Research & Development (R&D) intensity, high knowledge intensity and high human capital intensity. Thus, managing IT/ITES firm poses a gamut of challenges distinct from the challenges that the traditional Managers faced. Moreover, knowledge intensive services employ technical specialists (for example IT engineers in IT firms). Although these specialists have a technical orientation, they rarely have an orientation towards management of IT/ITES businesses. Lack of managerial inefficiencies demands timely implantation of Balanced Score Card by the IT & ITES firms.it must be a clearly established fact that the objective of any measurement system should be to motivate all managers and employees to implement successfully the business units strategy. Those companies that can translate their strategy into measurement system will be able to execute their strategies more effectively because they communicate their objectives and their target groups in a meaning manner. The communication, makes managers and employees focus on the critical drivers enabling them to align investments, initiatives and actions accomplishing strategic goals. Balanced Score Card is a management concept, which can be interpreted, enacted and implemented in various ways for the successful performance of an organization as balanced score card is based on management by objective (MBO) concept. Employees behavioral aspects and positive attitudes toward the balanced scorecard (BSC) are very essential for the successful of implementation BSC. Copyright 05. Vandana Publications. All Rights Reserved. II. METHODOLOGY The study included 50 sample subjects surveyed in 06 IT & ITES companies. At the end of data collection, five interview schedules were found incomplete and these five schedules were deducted, thus the study consists of 55 respondents. The study covers both primary and secondary data. For the purpose of collection the primary data of wellstructured interview schedule had been framed. The interview schedule covered information on: demographic, socioeconomic status and senior officials perceptions on BSC practices, its dimensions, benefits, and problemsfaced its impact, success rate and senior officials level of satisfaction towards BSC implementation.

2 ISSN (ONLINE): 50058, ISSN (PRINT): 9696 III. OBJECTIVE AND ANALYSIS This article will prove helpful to the IT & ITEs company s employees, experts and research scholars in understandingit & ITES employees opinion towards the important perspectives of balanced scorecard.so the primary objective of the study is as follows:. To analyse the IT & ITES employees opinion towards the important perspectives of balanced scorecard implemented in the organisation by using KMO test and Factor analysis IV. STATISTICAL TOOL USED Factor analysis technique has been applied to find the underlying dimension (factors) that exists in the 6 variables relating to the IT & ITES employees opinion towards the important perspectives considered in the balanced scorecard of their organization In the present study, KaiserMeyerOklin (KMO) Measure of Sampling Adequacy (MSA) and Bartlett s test of Sphericity were applied to verify the adequacy or appropriateness of data for factor analysis. In this study, the value of KMO for overall matrix was found to be excellent (0.5) and Bartlett s test of Sphericity was highly significant (p<0.05). Bartlett s Sphericity test was effective, as the chisquare value draws significance at five per cent level. The results thus indicated that, the sample taken was appropriate to proceed with a factor analysis procedure. Besides the Bartlett s Test of Sphericity and the KMO Measure of sampling Adequacy, Communality values of all variables were also observed. Table. KMO AND BARTLETT'S TEST KaiserMeyerOlkin Measure of Sampling Adequacy.5 Bartlett's Test of Sphericity Approx. Chi Square DF 06 Sig.000 Level of Significance: 5 per cent In order to provide a more parsimonious interpretation of the results, 6item scale was then Factor analyzed, using the Principal Component method, with Equamax rotation. Factor analysis attempts to identify underlying variables or factors that explain the pattern of correlations within a set of observed variables. Factor analysis is often used in data reduction to identify a small number of factors that explain most of the variance observed in a much larger number of manifest variables. In the current study, rotation factor analysis is performed to measure the IT & ITES employees opinion towards the important perspectives considered in the balanced scorecard of their organization is depicted in Table:. to.. Five factors extracted together account for 69.0 per cent of the total variance (information contained in the original 6 variables). This is pretty good, because the researchers are able to economize on the number of variables (from 6 researchers have reduced them to five underlying factors), while the data lost only about 0.9 per cent of the information content (69.0 per cent is retained by the five factors extracted out of the 6 original variables). Since the idea of factor analysis is to identify the factors that meaningfully summarize the sets of closely related variables, the rotation phase of the factor analysis attempts to transfer initial matrix into one that is easier to interpret. Equamax rotation method is used to extract meaningful factors. TABLE. CUMULATIVE Variables Initial Extraction Customers Perspective Customer satisfaction in terms of quality.000 Ontime delivery Customer satisfaction in terms of service Image, reputation, and brand Percentage of sales from new products (as a % of.000 total sales) Responsive aftersales service.000 Number of customer.000. Internal Business Perspective Unit cost.000 Number of defects per million.000. Cycle time Wastage and scrap as a.000. Distribution reach New product introduction interval.000. Number of training hours Copyright 05. Vandana Publications. All Rights Reserved.

3 ISSN (ONLINE): 50058, ISSN (PRINT): 9696 Stockout percentage Percentage of components outsourced.000. Ratio of number of skilled employees to total employees Innovation and Growth Perspective Market share Growth in market share Percentage of sales from new products.000 Percentage of sales from new customers Raw material substitutes Number of employee Vendor development Reduction in cycle time.000 Growth rate in knowledge assets Financial Perspective Return on investment.000. Day s working capital Cash flow return on investment (CFRO) EVA Current ratio Growth rate in tangible assets.000 Investors/ Shareholders Perspective EVA Market value added (MVA).000 Cash value added (CVA) Dividend per share Real asset value enhancr (RAVE) Five factors were identified as being maximum percentage variance accounted. The variable X8, X9, X0, X, X, X5, X6, X, X8, X5, X6 and X constitute the factor I and it accounts for.8 per cent of the total variance. The variable X8, X9, X0, X and X5 constitute the factor II and it accounts for.855 per cent of the total variance. The variable X56, X5, X60, X6, X6, X6 and X6 constitute the factor III and it accounts for.958 per cent of the total variance. The variable X9, X, X, X5, X6 and X constitute the factor IV and it accounts for.85 per cent of the total variance. The variable X9, X0, X, X, X, X8, X9 and X50 is grouped as factor V and it accounts for per cent of the total variance. TABLE. Variables Initial Extraction Suppliers Perspective Inbound logistics cost as a Average payment period to suppliers Supplier performance in terms of time and quality Fill rate Number of suppliers.000 Number of duplicated functions minimized.000 Number of product improvements with supplier partnerships Supplier performance in terms of reduction in variance in time and quality Inventory carried (in terms of no of days & amount) by supplier Employees Perspective Sales per employee Employee cost as a Attrition rate Value added per employee Competitive Perspective Market share.000 Company cost visàvis industry average New product development Number of brands visàvis total brands in the market Availability/development of raw material substitutes Environmental and Social Perspective Efficiency in material and energy use Water/Air quality monitoring Number of environmental incidents/accidents Ecoperformance of Copyright 05. Vandana Publications. All Rights Reserved.

4 ISSN (ONLINE): 50058, ISSN (PRINT): 9696 products Green procurement Investment in environment protection Waste produced per quantity of finished.000 product Specific pollutant quantities, e.g., Nox,.000 Sox, CO, Pb, CFCs Percentage of waste recycled TABLE. ROTATED COMPONENT MATRIX Perspectives F F F F F5 Customers Perspective X Customer satisfaction in terms of quality X Ontime delivery X Customer satisfaction in terms of service X Image, reputation, and brand X 5 Percentage of sales from new products (as a % of total sales) X 6 Responsive aftersales service X Number of customer Internal Business Perspective X 8 Unit cost X 9 Number of defects per. million X 0 Cycle time 8 6 X Wastage and scrap as a. X Distribution reach X New product introduction interval X Number of training 9 hours X 5 Stockout percentage. X 6 Percentage of components outsourced. 8 X Ratio of number of skilled employees to total employees X 8 Market share 5 Innovation and Growth Perspective 6 X 9 Growth in market share. X 0 Percentage of sales from new products X Percentage of sales from new customers X Raw material substitutes X Number of employee 5 5 X Vendor development 0 5 X 5 Reduction in cycle time.0 0 X 6 Growth rate in 0 knowledge assets F F F Financial Perspective X Return on investment F F5 9 X 8 Day s working capital X 9 Cash flow return on investment (CFROI) X 0 EVA X Current ratio 0 X Growth rate in 8 tangible assets Investors/ Shareholders Perspective X EVA X Market value added (MVA) X 5 Cash value added (CVA) 6 X 6 Dividend per share 69 X Real asset value enhancer (RAVE) 5 Suppliers Perspective X 8 Inbound logistics cost as a 9 X 9 Average payment period to suppliers 8 X 0 Supplier performance in terms of time & quality 8 Copyright 05. Vandana Publications. All Rights Reserved.

5 ISSN (ONLINE): 50058, ISSN (PRINT): 9696 X Fill rate X Number of suppliers X Number of duplicated functions minimized X Number of product improvements with supplier partnerships X 5 Supplier performance in terms of reduction in variance in time and 5 quality X 6 Inventory carried (in terms of no of days & amount) by supplier Employees Perspective X Sales per employee 6 X 8 Employee cost as a X 9 Attrition rate X 50 Value added per employee F F F F 6 6 F5 Competitive Perspective X 5 Market share X 5 Company cost visàvis industry average X 5 New product development X 5 Number of brands visàvis total brands in the market X 55 Availability/development of raw material substitutes Environmental and Social Perspective X 56 Efficiency in material and energy use X 5 Water/Air quality monitoring X 58 Number of environmental incidents/accidents X 59 Ecoperformance of products X 60 Green procurement 06 X 6 Investment in environment protection 8 X 6 Waste produced per quantity of finished product 5 X 6 Specific pollutant quantities, e.g., Nox, Sox, CO, Pb, CFCs 5 X 6 Percentage of waste recycled 09 Eigen value % of Variance Cumulative 5 Copyright 05. Vandana Publications. All Rights Reserved Level of Significance: 5 per cent TABLE SUMMARY OF ROTATION FACTOR ANALYSIS AND CRONBACH ALPHA Fact ors Variables included in the factors Unit cost, Number of defects per million, Cycle time, Wastage and scrap as a percentage of sales, Number of training hours, Stockout percentage, F Percentage of components outsourced, Ratio of number of.80 skilled employees to total employees, Market share, Cash value added (CVA), Dividend per share and Real asset value enhancer (RAVE). Inbound logistics cost as a, Average payment period to suppliers, Supplier performance in terms of F time & quality, Number of.86 duplicated functions minimized and Supplier performance in terms of reduction in variance in time and quality. Cronbach s Alpha F Efficiency in material and energy use, Water/Air quality monitoring, Green procurement, Investment in environment protection, Waste produced per quantity of finished product, Specific pollutant quantities,

6 ISSN (ONLINE): 50058, ISSN (PRINT): 9696 e.g., Nox, Sox, CO, Pb, CFCs and Percentage of waste recycled. F Growth in market share, Number of employee, Vendor development, Reduction in cycle time, Growth rate in.8 knowledge assets and Return on investment. F5 Cash flow return on investment (CFROI), EVA, Current ratio, Growth rate in tangible assets, Sales per employee, Employee cost as a, Attrition rate and Value added per employee.. Factor analysis is used to find out the association between IT & ITES workers level of awareness towards the functioning of balances Score. The Cronbach s reliability values (.80,.86,.85,.8 and.) indicate significant correlation between the IT & ITES employees opinion towards the important perspectives, considered in the balanced scorecard of their organization.. [] Bindu Nair and DR. AshishPareek (0), A study of the various performance management systems adopted by select Indian private sector Organizations, Volume No., Issue No. 6, ISSN 0968, PP.6, June [5] Hoque, Z. and James, W (000),Linking Balanced Scorecard Measures to Size and Market : Impact on Organizational Performance, Journal of Management Accounting Research, Volume No.,PP.. [6] Iqra Abdullah, Iqra Abdullah, TahiraUmair, Yahya Rashid and BasharatNaeem (0), Developments on Balanced Scorecard: A Historical Review, World Applied Sciences Journal, Volume No., Issue No., PP., ISSN 8895 [] Taiji, A. (006), The Role of the Balanced Scorecard for Improvement of Management Systems in Japanese Companies, Massachusetts Institute of Technology. [8] Thompson, K. R. and Mathys, N. J., (008), the aligned balanced scorecard: An improved tool for building high performance organizations, Organizational Dynamics, Volume No., Issue No., PP. 89. V. CONCLUSION From the study it is clear that the 6 variables are reduced to five factors namely F to F 5.. for example factor includes Unit cost, Number of defects per million, Cycle time, Wastage and scrap as a, Number of training hours, Stockout percentage, Percentage of components outsourced, Ratio of number of skilled employees to total employees, Market share, Cash value added (CVA), Dividend per share and Real asset value enhancer (RAVE ) that has the reliability value of 8%. and in the same way remaining factors have been rotated and the t & ites employees opinion towards the important perspectives of balanced scorecard has been studied REFERENCES [] Asa Romeo Asa, NavneelShalendra Prasad, Maw MawHtay (0), Balanced Scorecard: A Paradigm Measure Of Business Strategy and Firm Performance, International Journal of Scientific and Technology Research, Volume., IssueNo., ISSN 866,April. [] Ayesha Farooq and ZareenHussain (0), Balanced Scorecard Perspective on Change and Performance: A Study of Selected Indian Companies, Journal of Global Strategic Management, IssueNo.0, PP. 8, December. [] Banker, R.D., H. Chang and M.J. Pizzini, (00), The Balanced Scorecard: Judgmental effect of performance Measures linked to Strategy, The Accounting Review, PP.. 6 Copyright 05. Vandana Publications. All Rights Reserved.