Product Details
Basic situation
DHL-Sinotrans is very satisfied with the results obtained after applying activity-based costing, and decided to continue to use this management theory to continuously improve internal procedures and provide better services to customers. At the same time, Robert Kaplan's management tool Balanced Scorecard (B) attracted the attention of DHL Sinotrans.
Coincidentally, 2019 was set as the Year of Service by DHL-Sinotrans. This was originally a project to strengthen internal service awareness, but there are 3 employees in 3 regions across the country, so that every employee’s service awareness and attitude towards customers have improved. Getting promoted is an extremely difficult task. DHL-Sinotrans realized that the balanced scorecard could cooperate with the internal organizational structure and help the company develop a model that combines management objectives and reward systems, so it decided to implement the balanced scorecard.
Implementation of the Balanced Scorecard
DHL Sinotrans first established the company’s long-term strategy, which is r (market leader), and provides the highest service to customers in the international express industry. This is DHL Sinotrans strategic goals.
They believe that balance is mainly reflected in the balance of four parts: internal and external, short-term and long-term, results and motivation, quantity and quality.
In the past, DHL-Sinotrans mainly used financial indicators to measure its branches to see whether revenue growth met the standards. It used rigid financial indicators such as profitability and collections. DHL-Sinotrans feels that it is far from enough to view the company's operations in this way. In the balanced scorecard, they not only redesigned financial indicators, such as using accounts receivable exceeding days to describe revenue and budget completion, profit and budget completion, but also covered many customer indicators, such as customer Retention rate, as well as external and soft indicators such as new customers and customer satisfaction.
These data indicators are called (r-key performance indicators). Application can play a role in controlling the process through indicators. DHL-Sinotrans has made it clear that when providing the best service to customers, the focus is on the process, not just a result.
To this end, DHL-Sinotrans has established a balanced scorecard team at its headquarters to be responsible for the company's strategy formulation, implementation, evaluation and improvement. They also invited a training consultant to design the entire course, and then trained internal trainers in the three branches, who then trained internal employees. Such an implementation is very effective. Because internal lecturers come to conduct training, the stories or models he tells are very close to employees.
The implementation of the balanced scorecard has promoted the performance growth of DHL-Sinotrans. The average annual growth rate of the company's business has been 20%, and the turnover has jumped by as much as 100%. At present, DHL-Sinotrans has established the largest joint venture express service network in China, firmly occupying the leadership position in China's air express industry, and has a market share of 3 in China.
The excellence of the balanced scorecard
DHL-Sinotrans uses the balanced scorecard as the company's strategic management system and is fully aware of the importance of the balanced scorecard. DHL-Sinotrans has clarified their long-term strategic goal to become the market leader in the global market and maintain this position. They then refined the company's strategic goals into three specific areas: finance, efficiency index and service quality. DHL-Sinotrans realizes that in order to achieve such a goal, it must set specific performance evaluation indicators from the three perspectives of customers, processes and personnel. They realize the importance of the balanced scorecard.
DHL-Sinotrans adjusts the indicators used by the headquarters according to China's national conditions, and then adjusts the indicator values according to the characteristics of the geography, humanities and economic development levels of the three regions of the North, East and South. It was adjusted again in these three regional headquarters, and then spread to a total of three lower branches.
Thanks to this set of balanced scorecard performance evaluation indicators, the management of DHL-Sinotrans can track and correct indicators in a timely manner, improving efficiency and transparency, making management more convenient and effective. There may be regional differences among the three branches of DHL-Sinotrans, but the evaluation system is the same, so they have a common language: whether in terms of service quality or service efficiency, these quantitative standards can allow them to It’s clear where you stand among all branches across the country.
DHL-Sinotrans links the balanced scorecard with floating salary. Employees will pay more attention to the performance of the company and departments. Employees can gradually develop towards the right goals and understand their own efforts in their usual invisible work. What goals will it help the company achieve?
The balanced scorecard structure is incomplete
The goals and indicators of the balanced scorecard are derived from the company's vision and strategy. These goals and indicators examine the company's performance from four levels, namely: financial, customer , internal business processes, learning and growth. These four levels form the framework of the balanced scorecard. DHL-Sinotrans’ balanced scorecard can only see three dimensions on the surface, but in fact it only involves two levels of the balanced scorecard and lacks internal process and learning and growth dimensions, which are critical to the successful execution of strategy for any company.
Indicators at the financial level are missing
Kaplan and Norton believe that measuring whether a strategy is effectively implemented requires judgment of long-term shareholder value, so they decompose long-term shareholder value into productivity strategies and growth strategies. Productivity strategies consider the achievement of short-term financial results, while growth strategies emphasize the achievement of long-term financial results. The indicators reflected in DHL-Sinotrans' balanced scorecard are not comprehensive. This is likely to be related to the environment in which DHL-Sinotrans was operating at the time and the specific conditions of the company's operations.
Areas that need to be optimized in terms of indicator classification
There are problems with improper attribution relationships in the indicator classification system. For example, the customer retention rate and new customers in the second part are actually more appropriately placed at the customer level. In addition, Employee turnover rate belongs to the level of learning and growth
Worth learning
The balanced scorecard method gives the executive level the opportunity to achieve consistency in organizational and strategic intentions
The goals of the balanced scorecard must be based on China Adjustments to specific national conditions
The balanced scorecard system can bring about essential changes in the company's performance appraisal and employee accountability. This will involve a huge cultural change in many companies and can be risky if not handled properly.
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