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PROJECT REPORT
“A STUDY ON PERCEPTIONOF EMPLOYEES ABOUT THE SYSTEM OF BALANCE SCORECARD AT
HINDUSTAN PETROLEUM CORPORATION LIMITED, HI-TECH CITY, HYDERABAD”
Report submitted by
Mr. Hareesh Kumar Reddy, MBA,
PRRM Eng College.
2009-2010
DECLARATION
I hereby declare that this project report titled “A STUDY ON PERCEPTION OF EMPLOYEES
ABOUT THE SYSTEM OF BALANCE SCORECARD ", is my original work carried out
towards partial fulfillment of my Post Graduate Diploma in Business Administration, under the
guidance my faculty guide Mr.V.Ramchandram, Professor- HR, and my corporate guide
Mr.Hemant Kulkarnir (HR Manager).
Place: HYDERBAD
Date:
ACKNOWLEDGEMENT
.
I am grateful to Mr. HEMANT KULKARNI, HR Manager, HINDUSTAN PETROLEUM
CORPORATION LIMITED, for providing me an opportunity to complete my project work in
HINDUSTAN PETROLEUM CORPORATION LIMITED, Hyderabad. I take this
opportunity to express my deep sense of gratitude to my faculty guide Mr.V.Ramchandram,
Professor HR, for the guidance and other staff of the Institute for extending their valuable
support and help in the preparation of this project report.
K.Hareesh Kumar Reddy
Roll No: 07611E0013
MBA (HR)
CONTENTS
1. Chapter I : Introduction
1.1 Balance Scorecard
1.2 Industry Profile
1.3 Company Profile
1.4 Significance of the study
1.5 Objectives of the study
1.6 Scope of the Study
1.7 Statement of Hypotheses
2. Chapter II : Review of Literature
3. Chapter III : Research Design
3.1 Research Design
3.2 Sampling
3.3 Methodology
3.4 Tools and Techniques for Data Collection
3.5 Sources of Data
3.6 Data processing and Analysis
3.7 Statistical Tests
3.8 Limitations of the Study
3.9 Presentation of the study
4. Chapter IV: Data Analysis and Interpretation
5. Chapter V : Discussion
6. Chapter VI: Findings, Implications and Conclusions
7. Chapter VII: Bibliography and References
8. Chapter VIII: Appendix
Chapter-I
Introduction
1.1 Introduction
Balance Scorecard
The Balanced Scorecard (BSC) is a performance management tool for measuring whether the
smaller-scale operational activities of a company are aligned with its larger-scale objectives in
terms of vision and strategy.
By focusing not only on financial outcomes but also on the operational, marketing and
developmental inputs to these, the Balanced Scorecard helps provide a more comprehensive
view of a business, which in turn helps organizations act in their best long-term interests. This
tool is also being used to address business response to climate change and greenhouse gas
emissions.
Organizations were encouraged to measure, in addition to financial outputs, those factors which
influenced the financial outputs. For example, process performance, market share / penetration,
long term learning and skills development, and so on.
Balanced Scorecards, when developed as strategic planning and management systems, can help
align an Organization behind a shared vision of success, and get people working on the right
things and focusing on results. A scorecard is more than a way of keeping score…..it is a system,
consisting of people, strategy, processes, and technology.
The underlying rationale is that organizations cannot directly influence financial outcomes, as
these are "lag" measures, and that the use of financial measures alone to inform the strategic
control of the firm is unwise. Organizations should instead also measure those areas where direct
management intervention is possible. In so doing, the early versions of the Balanced Scorecard
helped organizations achieve a degree of "balance" in selection of performance measures. In
practice, early Scorecards achieved this balance by encouraging managers to select measures
from three additional categories or perspectives: "Customer," "Internal Business Processes" and
"Learning and Growth."
“Balanced Scorecard” means different things to different people. At one extreme, a
measurement-based balanced scorecard is simply a performance measurement framework for
grouping existing measures into categories, and displaying the measures graphically, usually as a
dashboard. The measures in these systems are usually operational, not strategic, and are used
primarily to track production, program operations and service delivery (input, output, and
process measures). At the other extreme, the balanced scorecard is a robust organization-wide
strategic planning, management and communications system. These are strategy-based systems
that align the work people do with organization vision and strategy, communicate strategic intent
throughout the organization and to external stakeholders, and provide a basis for better aligning
strategic objectives with resources. In strategy-based scorecard systems, strategic and operational
performance measures (outcomes, outputs, process and inputs) are only one of several important
components, and the measures are used to better inform decision making at all levels in the
organization. In strategy-based systems, accomplishments and results are the main focus, based
on good strategy executed well. A planning and management scorecard system uses strategic and
operational performance information to measure and evaluate how well the organization is
performing with financial and customer results, operational efficiency, and organization capacity
building. Performance measurement balanced scorecards are not very interesting, and add little
business intelligence to help an organization chart strategic direction and measure the progress of
strategic execution. Balanced scorecards built with the goal of “organizing the measures we
have” hardly justify the energy it takes to build them.
Use of Balance Scorecards:
Implementing Balanced Scorecards typically includes four processes:
1. Translating the vision into operational goals;
2. Communicating the vision and link it to individual performance;
3. Business planning; index Setting
4. Feedback and learning, and adjusting the strategy accordingly.
The Balanced Scorecard is a framework, or what can be best characterized as a “strategic
management system” that claims to incorporate all quantitative and abstract measures of true
importance to the enterprise. According to Kaplan and Norton, “The Balanced Scorecard
provides managers with the instrumentation they need to navigate to future competitive success”.
Many books and articles referring to Balanced Scorecards confuse the design process elements
and the Balanced Scorecard itself. In particular, it is common for people to refer to a “strategic
linkage model” or “strategy map” as being a Balanced Scorecard.
Although it helps focus managers' attention on strategic issues and the management of the
implementation of strategy, it is important to remember that the Balanced Scorecard itself has no
role in the formation of strategy. In fact, Balanced Scorecards can comfortably co-exist with
strategic planning systems and other tools.
The Four perspectives of the Balance Scorecard:
The balance scorecard method of Kaplan and Norton is a strategic approach, and performance
management system, that enables organizations to translate a company’s vision and strategy into
implementation, working from four perspectives.
1. Financial perspective
2. Customer perspective
3. Business process perspective
4. Learning and growth perspective
These perspectives allows the monitoring of present performance, but the method also tries to
capture information about how well the organization is positioned to perform in the future.
1. The Financial Perspective :
Kaplan and Norton do not disregard the traditional need for financial data. Timely and
accurate funding data will always be a priority, and managers will make sure to provide it. Infact
there is often more than sufficient handling and processing of financial data. With the
implementation of corporate database, it is hoped that more of the processing can be centralized
and automated. But the point is that the current emphasis on financial issues leads to an
unbalanced situation with regard to other perspectives. There is perhaps a need to include
additional financial related data, such as risk assessment and cost-benefit data in this category.
2. The Customer Perspective :
Recent management philosophy has shown an increasing realization of the importance of
customer focus and customer satisfaction in any company. These are called Leading Indicators:
if customers are not satisfied, they will eventually find other suppliers that will meet their needs.
Poor performance from this perspective is thus a leading indicator of future decline. Even though
the current financial picture may seem still good. In developing metrics for satisfaction,
customers should be analyzed. In terms of kinds of customers, and of the kinds of processes for
which we are providing a product or service to those customer groups.
3. The Business Process Perspective :
This perspective refers to internal business processes. Measurement based on this
perspective will show the managers how well their business is running, and whether its products
and services conform to their customer requirements. These metrics have to be carefully
designed by those that know these processes most intimately.
4. Learning and Growth Perspective :
This perspective includes employee training and corporate cultural attitudes related to
both individual and corporate self-improvement. In a knowledge worker organization, people are
the main resource. In the current climate of rapid technological change, it is becoming necessary
for knowledge workers to learn continuously. Government agencies often find themselves unable
to find new technical workers and at the same time are showing a decline in training of existing
employees. Kaplan and Norton emphasize that ‘learning’ is something more than training. It also
includes things like mentors and tutors within the organization, as well as that ease of
communication among workers that allows them to readily get help on a problem when it is
needed.
The integration of these four perspectives into a one graphical appealing picture has made the
balance scorecard method very successful as a management methodology.
Objectives, Measures, Targets and Initiatives:
For each perspective of the balance scorecard four things are monitored.
Objectives: Major objectives that are to be achieved. E.g.: Profitable Growth
Measures: The observable parameters that will be used to measure progress towards
reaching the objective. For example, the objective of profitable growth might be
measured by growth in net margin.
Targets: The specific target values for the measures for example, 7% annual decline in
manufacturing disruptions
Initiatives: Projects or programmes to be initiated in order to meet the objective.
Achieving Strategic Alignment throughout the Organization:
Whereas strategy is articulated in terms meaningful to top management, to be implemented it
must be translated into objectives and measures that are actionable at lower levels in the
organization. The Balanced Scorecard can be cascaded to make the translation of strategy
possible. While top level objectives may be expressed in terms of growth and profitability, these
goals get translated into more concrete terms as they progress down the organization and each
manager at the next lower level develops objectives and measures that support the next higher
level. For example, increased profitability might get translated into lower unit cost, which then
gets translated into better calibration of the equipment by the workers on the shop floor.
Ultimately, achievement of scorecard objectives would be rewarded by the employee
compensation system. The Balanced Scorecard can be cascaded in this manner to align the
strategy though out the organization.
The Process of Building a Balanced Scorecard
While there are many ways to develop a Balanced Scorecard, Kaplan and Norton defined a four-
step process that has been used across a wide range of organizations.
1. Define the measurement architecture :
When a company initially introduces the Balanced Scorecard, it is more manageable to
apply it on the strategic business unit level rather than the corporate level. However,
interactions must be considered in order to avoid optimizing the results of one business unit
at the expense of others.
2. Specify strategic objectives:
The top three or four objectives for each perspective are agreed upon. Potential measures
are identified for each objective.
3. Choose strategic measures
Measures that are closely related to the actual performance drivers are selected for
evaluating the progress made toward achieving the objectives.
4. Develop the implementation plan
Target values are assigned to the measures. An information system is developed to link
the top level metrics to lower-level operational measures. The scorecard is integrated into
the management system.
The Balanced Scorecard and Measurement-Based Management
The balanced scorecard methodology builds on some key concepts of previous management
ideas such as Total Quality Management (TQM), including customer-defined quality, continuous
improvement, employee empowerment, and -- primarily -- measurement-based management and
feedback.
Double-Loop Feedback
In traditional industrial activity, "quality control" and "zero defects" were the watchwords. In
order to shield the customer from receiving poor quality products, aggressive efforts were
focused on inspection and testing at the end of the production line. The problem with this
approach -- as pointed out by Deming – is that the true causes of defects could never be
identified, and there would always be inefficiencies due to the rejection of defects. What Deming
saw was that variation is created at every step in a production process, and the causes of variation
need to be identified and fixed. If this can be done, then there is a way to reduce the defects and
improve product quality indefinitely. To establish such a process, Deming emphasized that all
business processes should be part of a system with feedback loops. The feedback data should be
examined by managers to determine the causes of variation, what are the processes with
significant problems, and then they can focus attention on fixing that subset of processes. The
balanced scorecard incorporates feedback around internal business process outputs, as in TQM,
but also adds a feedback loop around the outcomes of business strategies. This creates a
"double-loop feedback" process in the balanced scorecard.
Outcome Metrics
You can't improve what you can't measure. So metrics must be developed based on the priorities
of the strategic plan, which provides the key business drivers and criteria for metrics managers
most desire to watch. Processes are then designed to collect information relevant to these metrics
and reduce it to numerical form for storage, display, and analysis. Decision makers examine the
outcomes of various measured processes and strategies and track the results to guide the
company and provide feedback. So the value of metrics is in their ability to provide a factual
basis for defining:
· Strategic feedback to show the present status of the organization from many perspectives for
decision makers
· Diagnostic feedback into various processes to guide improvements on a continuous basis
· Trends in performance over time as the metrics are tracked
· Feedback around the measurement methods themselves, and which metrics should be tracked
· Quantitative inputs to forecasting methods and models for decision support Systems
Management by Fact
The goal of making measurements is to permit managers to see their company more clearly --
from many perspectives -- and hence to make wiser long-term decisions. The Baldrige Criteria
(1997) booklet reiterates this concept of fact-based management: "Modern businesses depend
upon measurement and analysis of performance. Measurements must derive from the company's
strategy and provide critical data and information about key processes, outputs and results. Data
and information needed for performance measurement and improvement are of many types,
including: customer, product and service performance, operations, market, competitive
comparisons, supplier, employee-related, and cost and financial. Analysis entails using data to
determine trends, projections, and cause and effect -- that might not be evident without analysis.
Data and analysis support a variety of company purposes, such as planning, reviewing company
performance, improving operations, and comparing company performance with competitors' or
with 'best practices' benchmarks." "A major consideration in performance improvement involves
the creation and use of performance measures or indicators. Performance measures or indicators
are measurable characteristics of products, services, processes, and operations the company uses
to track and improve performance. The measures or indicators should be selected to best
represent the factors that lead to improved customer, operational, and financial performance. A
comprehensive set of measures or indicators tied to customer and/or company performance
requirements represents a clear basis for aligning all activities with the company's goals. Through
the analysis of data from the tracking processes, the measures or indicators themselves may be
evaluated and changed to better support such goals."
The Balanced Scorecard -- Not Just another Project
Managers in many government agencies have been reared on project management. It is the way
they think about achieving their mission. In the Defense Department, project or program
management has been the framework for development of every system costing from ten
thousand dollars to ten billion dollars. There is a long-established tradition of on-the-job training
and experience for young people to learn and be mentored by experienced project managers.
Many guidebooks, manuals, software programs, and other means have been devised to aid the
project manager. Project management has been in the management culture for decades, and the
federal government has thousands of project managers who are routinely capable of amazingly
complex achievements. In fact, many project managers may have never seen or considered any
other way to get things done. Although it is not necessary here to describe project management
in detail, a simple diagram will help to show its general features.
The figure represents a time line or Gantt chart. All projects (or programs) have a definite start
time (green) and a definite stop time (red) when the final deliverables (products, services,
documents, decisions, etc.) are delivered to the customer. The goal is to meet customer
requirements. The initial stage requires establishment of a precise budget and a plan of action
and milestones (POA&M). The work is focused on the actual mission of production undertaken
for the customer. It may be broken down into a hierarchy of subtasks, called an Engineering
Schedule Work Breakdown Structure (ESWBS). Status and review meetings are scheduled at
regular intervals throughout the project. Usually some kind of final report is written as one of the
deliverables. The goal is to reach the end point on time and within budget, since there are usually
other projects that are depending on input from the deliverables of this project. So project
management is the effort to manage work within a finite, clearly scoped, hierarchically-
structured, linear development process with a definite beginning and end.
The balanced scorecard management system is not just another project.
It is fundamentally different from project management in several respects. To illustrate the
radical nature of this difference, a diagram is shown of the BSC performance measurement
process, as it would run when installed in an organization.
The first thing to notice is the topology: the balanced scorecard management process, derived
from Deming's Total Quality Management, is a continuous cyclical process. It has neither
beginning nor end. Its task is not directly concerned about the mission of the organization, but
rather with internal processes (diagnostic measures) and external outcomes (strategic measures).
The system's control is based on performance metrics or "metadata" that are tracked
continuously over time to look for trends, best and worst practices, and areas for improvement. It
delivers information to managers for guiding their decisions, but these are self-assessments, not
customer requirements or compliance data. People trained only in project management may have
difficulty in figuring out how to accomplish the BSC, simply because it is such a different kind
of management paradigm. One of the key practical difficulties is to figure out how to get the
process started in the first place. If this is not a project, where does one begin? What kind of plan
is appropriate for deployment of the balanced scorecard system? If we want to ride a rotating
merry-go-round, we had better not attempt to just hop on. We will probably get hurt -- and won't
get on. The situation is similar with the balanced scorecard. To get on the merry-go-round, we
have to accelerate in the same direction for awhile, and then hop on when our speed equals that
of the circular floor. In other words, there needs to be a ramp-up phase, where everyone "comes
up to speed." This includes training or retraining of project managers, and probably focused
deployment of pilot efforts before attempting to cover an entire large agency Sustained, patient
leadership will be needed before the payoff is attained.
Balanced Scorecard Benefits:
Some of the benefits of the Balanced Scorecard system include:
Translation of strategy into measurable parameters.
Communication of the strategy to everybody in the firm.
Alignment of individual goals with the firm's strategic objectives - the BSC recognizes
that the selected measures influence the behavior of employees.
Feedback of implementation results to the strategic planning process.
Since its beginnings as a performance measurement system, the Balanced Scorecard has evolved
into a strategy implementation system that not only measures performance but also describes,
communicates, and aligns the strategy throughout the organization.
Potential Pitfalls:
The following are potential pitfalls that should be avoided when implementing the Balanced
Scorecard:
Lack of a well-defined strategy: The Balanced Scorecard relies on a well-defined
strategy and an understanding of the linkages between strategic objectives and the
metrics. Without this foundation, the implementation of the Balanced Scorecard is
unlikely to be successful.
Using only lagging measures: Many managers believe that they will reap the benefits of
the Balanced Scorecard by using a wide range of non-financial measures. However, care
should be taken to identify not only lagging measures that describe past performance, but
also leading measures that can be used to plan for future performance.
Use of generic metrics: It usually is not sufficient simply to adopt the metrics used by
other successful firms. Each firm should put forth the effort to identify the measures that
are appropriate for its own strategy and competitive position.
1.2 Industry Profile
1.3 Petroleum Industry :
Petroleum Industry is considered to be the back bone of an economy because this is the main
source of energy till date. Any economy around the world would fail to proceed a single step in
the absence of Petroleum Industry. Thus, before using this energy source, the crude petroleum is
required to be refined in the petroleum refineries for extracting various fractions for energy
generation namely, petrol, natural gas, kerosene, asphalt and many more.
The petroleum industry includes the global processes of exploration, extraction, refining,
transporting (often by oil tankers and pipelines), and marketing petroleum products. The largest
volume products of the industry are fuel oil and gasoline (petrol). Petroleum is also the raw
material for many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides,
and plastics. The most important part of the Petroleum Industry is the Petroleum Refining
Industry which refines the crude oil to convert it to the usable fuel. It also derives many
derivative products out of the crude petroleum like natural gas, naphtha etc which can be used in
many ways.
Petroleum is basically a non-renewable form of fuel which is subject to extinction from the
world after a certain point of time. The price of petroleum is determined by the demand-supply
mechanism around the globe. Petroleum is not a domestic product and any kind of shortage in
the same has serious ramifications on all possible industries along with the economies all over
the world.
Petroleum Industry always needs to perform exploration research all over the world for finding
more petroleum sites which also become instrumental in the setting up Petroleum Industry
Trends around the world.
Petroleum Industry Trends give an overall idea to a person about the petroleum industry.
It also gives a view to the individuals about the expected future movement of the industry.
Petroleum Industry Trends may be restricted to a particular economy or may be applicable for
the entire world which is nothing but the weighted average of all the economies of the world.
This trend helps an investor or the common people in gauging the future movement of the
petroleum industry. The priorities along with the innovations associated with the petroleum
industry can only be perceived through regular tracking of the Petroleum Industry Trends.
Petroleum Industry Trends show some of the very important results that are summarized in the
following:-
a) On a global perspective, the total amount of crude petroleum reserve has increased from
105.1 billion tonnes to 123.9 billion tonnes between the period 1990 and 2005.
b) The production of crude petroleum all round the globe has also increased by more than
four hundred million tonnes within a span of 15 years from 1199 to 1626 million tonnes
during 1990 and 2005.
c) Petroleum Industry Trend is showing that the demand for petroleum has also seen an
upward slope during 1990-2005 from 3135 to 3837 million tonnes.
d) Petroleum Industry Trends give clear indication of increased demand for refined petroleum
during the 15 year period starting from 1990 and ending on 2005. This period has
evidenced a growth of above five hundred million tonnes of refined petroleum from 3728
million tonnes to 4255 million tonnes per annum.
Future of Indian petroleum industry
It has good potential but it needs developmental activities in this sector to strengthen itself.
The world at present is experiencing a lot of changes of mammoth proportions. The Petroleum
Industry in India is one of the harbingers of huge economic growth. The arena for business has
now gone global since trade boundaries are fast dissolving. These developments present India
with tremendous opportunities in the future to be one of the major players in the export of petro
chemical intermediaries.
Today, India imports more than 70% of its oil requirements. The search for more oil led India to
sift through the international markets comprising of the emerging energy-trading countries -
China, Russia, and Iran. India has made new partnerships with Venezuela, Burma, Middle East
nations, and Pakistan.
The long-term energy strategies of India have to emphasize on the methods of using energy
effectively and efficiently, and to enhance energy self-sufficiency. To lift the Indian economy to
enhanced economic standards innovation, diplomacy, creativity, and vision are the need of the
hour.
India has to compete for conventional energy sources and for that there must be developmental
activities for energy efficient buildings and vehicles. The main problems with the Petroleum
Industry in India are related to infrastructural developments. The lack of proper storage facilities,
enhancements in refining capacities, and fluctuating import prices plays important role in the
development of the sector. The target of improvement for the growth of the economy for India
should be in the area of the petrochemical sector. The need for intermediary products for the
manufacturing of the end use products is an important sector to tap in. With the per capita
consumption for the petrochemical products in India being low and the production of these
products being high, India may become one of the leading exporters of such intermediary
products.
The future of Indian petroleum industry depends on:
Demand for petroleum is growing in leaps and bounds
Shifting focus to more production of olefin - ethylene, propylene, butadiene,
Price and availability of crude oil and gas as feedstock would still be critical factors
The demand of the end products would affect the demand of the intermediary products
1.3 Company Profile
Hindustan Petroleum Corporation Limited
HPCL is a Fortune 500 company, with an annual turnover of over Rs 1,03,837 Crores ($ 25,142
Millions) during FY 2007-08, 16% Refining & Marketing share in India and a strong market
infrastructure. Corresponding figures for FY 2006-07 are: Rs 91,448 crores ($20,892 Million).
The Corporation operates 2 major refineries producing a wide variety of petroleum fuels &
specialties, one in Mumbai (West Coast) of 5.5 MMTPA capacities and the other in
Visakhapatnam, (East Coast) with a capacity of 7.5 MMTPA. HPCL holds an equity stake of
16.95% in Mangalore Refinery & Petrochemicals Limited, a state-of-the-art refinery at
Mangalore with a capacity of 9 MMTPA. In addition, HPCL is progressing towards setting up of
a refinery in the state of Punjab in the joint sector.
HPCL also owns and operates the largest Lube Refinery in the country producing Lube Base
Oils of international standards. With a capacity of 335 TMT. This Lube Refinery accounts for
over 40% of the India's total Lube Base Oil production.
The vast marketing network of the Corporation consists of Zonal offices in major cities and over
91 Regional offices facilitated by a Supply & Distribution infrastructure comprising Terminals,
Aviation Service Stations, LPG Bottling Plants, and Inland Relay Depots & Retail Outlets. The
Corporation over the years has moved from strength to strength on all fronts. The refining
capacity steadily increased from 5.5 million tones in 1984/85 to 13.70 million metric tonnes
(MMT) presently. On the financial front, the turnover grew from Rs. 2687 crores in 1984-85 to
an impressive Rs 1, 03,837 Crores in FY 2007-08.
Roots:
HPCL comes into being after merging four different organizations at different points of time.
1952: The Company was incorporated in the name of Standard Vacuum Refining Company Of
India Limited on July 5th, 1952
1962: On 31st March, 1962 the name was changed to ESSO standard Refining Company of India
Limited
1974: HPCL comes into being after the takeover and merger of erstwhile ESSO and Lube India
Undertaking
1976: Caltex Oil Refining Limited is taken over by the Government of India and subsequently
merged with HPCL in 1978.
1979: Kosan Gas Company, the concessionaries of HPCL in the domestic LPG market, is
taken over and merged with HPCL.
Mission:
“HPCL along with its joint ventures will be a fully integrated company in the hydrocarbons
sector of exploration and production, refining and marketing; focusing on enhancement on
productivity, quality and profitability; caring for customers and employees; caring for
environment protection and cultural heritage.
It will also attain scale dimensions by diversifying into other energy related fields and by taking
up transnational operations.”
Vision:
To be a World class energy company known for caring and delighting the customers with high
quality products and innovative services across domestic and International markets with
aggressive growth and delivering superior financial performance. The company will be a model
of excellence in meeting social commitment, environment, health and safety norms and in
employee welfare and relations.
Profile:
HPCL, a fortune 500 company, is regarded as one of the major integrated oil refining and
marketing companies in India. It is a Mega Public Sector Undertaking (PSU) with Navaratna
status. HPCL has achieved its market leadership through efficiency in production and
management.
HPCL accounts for about 16% of the market share and 10.3% of the nation's refining capacity
with two coastal refineries, one at Mumbai (West Coast) having a capacity of 5.5 MMTPA and
the other in Visakhapatnam (East Coast) with a capacity of 7.5 MMTPA. HPCL also holds an
equity stake of 16.95% in Mangalore Refinery & Petrochemicals Limited (MRPL), a state-of-
the-art refinery at Mangalore with a capacity of 9 MMPTA.HPCL owns the country's largest
Lube Refinery with a capacity of 335,000 metric tones which amounts to 40% of the national
capacity of Lube Oil production. HPCL has given India a firm ground in this sector with its
world class standard of Lube Base Oil.
HPCL has returned "Excellent" performance for fifteen Consecutive years up to 2005-06, since
signing of the first MOU with the Ministry of Petroleum & Natural Gas. HPCL won the
prestigious MOU Award for the year 2006-07 for Excellent Overall Performance, and for being
one of the Top Ten Public Sector Enterprises who fall under the 'Excellent' category. HPCL
performance for the year 2007-08 also qualifies for "Excellent" rating.
The Corporation over the years has moved from strength to strength on all fronts. Our refining
thru put has increased three fold between 1984/85 to 2007/08, rising from 4.47 million tones in
1984/85to 13.70 million tonnes currently.
Consistent excellent performance has been made possible by highly motivated workforce of
over10, 800 employees working all over India at its various refining and marketing locations.
HPCL continually invests in innovative technologies to enhance the effectiveness of employees
and bring qualitative changes in service. Business Process Re-Engineering exercise, creation of
Strategic Business Units, ERP implementation, Organizational Transformation, Balanced Score
Card, Competency Mapping, benchmarking of refineries and terminals for product
specifications, ISO certification of Refineries and Supply Chain Management are some of the
initiatives that broke new grounds.
HPCL has successfully integrated Information Technology in its activities at different levels. The
Enterprise Resource Planning (ERP) system is now operational on J.D.Edwards, an Oracle
product, across the Company.
Infrastructure:
HPCL’s infrastructure is at par with that of the best global corporations in the hydrocarbons
sector. For over a quarter century now, HPCL has been consistently breaking new grounds in
production and marketing. A glimpse of the vast marketing network already developed is given
below in a table
2007-08 2006-07 2005-06 2004-05
Regional Offices 91 86 85 85
Terminals/Installations/TOP’s 42 37 36 36
Depots 93 93 92 100
LPG Bottling Plants 43 42 41 40
ASFs 16 13 13 10
Retail Outlets 8329 7909 7313 6667
SKO/LDO Dealers 1648 1648 1648 1648
LPG Distributors 2232 2238 2202 2153
LPG Customers (in crores) 2.52 2.39 2.28 2.17
From the table it can be noticed how the marketing network has been strengthened over the
years. The dominance that is reflected in numbers is equally translated through the best quality of
service.
HPCL was one of the first companies to understand the nation’s energy requirements and take
necessary measures to fulfill the expectations. The corporation’s increasing growth function is
due to the successful realization of targets and sustained quality of service and customer
relations.
HPCL presently owns and operates two coastal refineries at Mumbai and Visakhapatnam along
with a joint venture refinery at Mangalore. A massive infrastructure comprising two cross
country pipelines and an extensive network of terminals, depots, bottling plants and aviation
servicing facilities contributes to India’s growth every year.
Products and Services:
HPCL products and services include:
Refineries
Aviation
Bulk fuels & Specialties
International Trade
LPG-HP Gas
Lubes-HP Lubes
Retail
Exploration & Production
Joint Ventures
Alternate Energy
Refinery:
Hindustan Petroleum Corporation Limited (HPCL) is a Global Fortune 500 company in the
Energy sector. HPCL has two refineries located in Mumbai (West Coast) and Visakh (East
Coast) with capacities of 5.5 MMTPA and 7.5 MMTPA respectively , churning out a wide range
of petroleum products, viz. LPG, MS, SKO, ATF, HSD, Bitumen etc. and over 300 grades of
lubricants, specialties and greases as per BIS standard. HPCL has successfully contributed close
to 20% of India's total refining requirements. Over the years HPCL's capacity of production has
expanded massively through various up gradation initiatives. The Refineries known for the full
utilization of capacity and world class performance are the foundations of HPCL's successful
journey towards meeting India's energy requirements.
Mumbai Refinery is a Lube based refinery with the highest lube production capacity in India.
The offsite product handling facilities of refineries at Mumbai and Visakhapatnam has been
automated and facilities upgraded to produce green fuels like unleaded petrol and low sulphur
diesel. The production of these two major refineries are going to have a long term impact on the
Indian market and HPCL is committed to upheld India's position in the global energy scenario as
a useful contributor.
The refineries are supervised as per the international benchmarks of quality. So far both the
refineries have maintained their capacity utilization above 100% of installed capacity. The
consistent maintenance of standard has fetched the two refineries numerous awards. The
refineries can claim the lion's share of HPCL's contribution in the field of energy conservation,
environment and safety. For HPCL, success is never an end in itself and hence the refineries will
go through further up gradation in future.
History:
Mumbai Refinery:
It has grown over the years as the main hub of petroleum products, particularly crude base oil.
The refinery has reached its present form through several up gradation and restructuring process.
A chronological summary of the developments is provided below.
M/s Esso commissioned in 1954 with a crude processing capacity of 1.25 MMPTA
Lube refinery, lube India Ltd, was commissioned in 1969 with a capacity of 165 TMPTA
of Lube Oil Base Stock (LOBS) productions.
Crude processing capacity increased to 3.5 MMPTA during 1969
Government of India took over ESSO and Lube India and formed HPCL in 1974.
Kosan Gas Company, the concessionaries of HPCL in the domestic LPG market, were
taken over and merged with HPCL in 1979.
Expansion of fuels block was carried out by installation of new 2 MMPTA crude units in
1985. Also, a second expansion of Lube Refinery took place to increase the capacity of
the refinery to 335 MMTPA, so far the largest in India.
The current installed capacity of the refinery is estimated at 5.5 MMTPA
Visakha Refinery:
The Visakha Refinery is also an important contributor to HPCL’s crude production. This refinery
has been instrumental in supplementing the production of the Mumbai refinery to achieve some
marketable amount of petroleum products in chosen foreign markets. The summary of
development of the refinery is given below.
The first East Coast Oil refinery was commissioned at Caltex Oil Refining India Ltd.
(CORIL) in 1957 with a crude processing capacity of 0.65 MMTPA.
The refinery was subsequently taken over by Government of India in 1976 and merged
with HPCL in 1978.
The refinery’s crude refining capacity increased to 4.5 MMTPA during the first
expansion in 1985.
The refinery’s crude refining capacity increased to a further 7.5 MMTPA during the
second expansion in 1999.
Aviation:
Hindustan Petroleum has been providing aviation refueling services at various airports in India
for more than half a century. Today, they provide fuelling services to the aviation industry
through their business unit, “HP Aviation”. Their network covers all the major airports in India
and is continuously expanding.
Clientele (Top 5 Customers)
Major Domestic Customers
NACIL
Kingfisher
Spice Jet
Indigo
Major International Customers
Delta Airlines
Lufthansa
Air France
British Airways
Virgin Atlantic
Major Corporate Customers
Reliance Commercial Dealers
GMR Aviation
Jubliant Enpro
Adani Group
Jindal Steel Groups
Major Charter Customers
United Helicharters
Global Vectra
Bjets
Major Government Customers
Indian Air Force
Indian Army
Indian Navy
Border Security Force
Coast Guard
Joint Ventures:
Crude Refining and Marketing of finished Petroleum products is the core area of the
Corporation. Opportunities are also being explored to access new revenue streams, and augment
downstream businesses. Accordingly, HPCL has ventured in upstream activities (Exploration
and Production) and piped gas distribution in major cities
Joint Ventures
HPCL-Mittal Energy Ltd. (HMEL)
Hindustan Colas (HINCOL)
Prize Petroleum Company Limited
South Asia LPG Co Pvt. Ltd. ( SALPG)
Bhagyanagar Gas Limited (BGL)
Aavantika Gas Limited
Petronet India Limited (PIL)
Petronet MHB Limited (PMHBL)
Mangalore Refineries and Petrochemicals Limited (MRPL)
Petroleum India International ( PII)
Sushrut Hospital and Research Centre
Corporate Social Responsibility:
HPCL is committed to create a positive impact on the society and contribute to socio- economic
development including measures for improving the quality of life of underprivileged classes of
the society. Since its inception, HPCL has tried to follow Corporate Social Responsibility in the
true sense. This sense of responsibility comes from a feeling that not every achievement of the
company is reflected in its balance sheets. The relevance that a company achieves by virtue of its
socio-economic participation surpasses the profit and loss measurements by far. In this respect
HPCL has proceeded in the truly corporate manner, planning investments in social causes
methodically, executing the various steps with utmost care and securing distinctive developments
for the poor and the downtrodden masses. HPCL has provided sustained value for the above
mentioned investments all the time and has contributed to the living standards of underprivileged
masses.
When it comes to social contribution our country never lacked goodwill among corporate
citizens but competent contributors were never in good numbers as far as management and
execution skills are concerned. HPCL has surely paved the way in the right direction with
exemplary contributions. HPCL's initiatives have created value in the following diverse ways :
1. HPCL's initiatives have made notable differences in fields as diverse as education,
infrastructure, welfare measures, health and hygiene, vocational training & employment
generation, training in self-reliance, amenities for the sufferers of natural disasters and
environmental protection. The most commendable feature of the support is that HPCL
has taken innovative measures to infuse self reliance in masses to secure long lasting
improvements.
2. HPCL has categorized different projects of social relevance according to national and
regional significance. The investment has been made according to solid result oriented
plans with every detail of the prospect taken into consideration.
3. The funds for different CSR projects have been consistently allocated in a transparent
manner. HPCL follows an allocation process based on complete evaluation and
benchmark standardization.
4. A Foundation has been established to take up projects of National significance. This
initiative has helped to identify the impacts of projects keeping national interest in mind.
5. HPCL has set exemplary organizational competency in carrying out complex and
demanding projects. The implementation process is supported by adequate checks and
balances including reporting, assessment and appraisal by world class professionals.
An "HPCL Foundation" is being set up to finance the CSR projects and also monitor
implementation of distinct schemes like AIDS prevention, vocational training for unemployed
youth, education of rural children, computer training, healthcare facilities, etc.
Beyond Business: Corporate Social Responsibility Initiatives touching lives:
The following CSR Initiatives have placed HPCL in a league of its own.
a. Swavalamban :
The objective of this programme is to provide free Vocational Training to beneficiaries
from low income group households. HPCL and CII have joined hands along with M/s
City & Guilds to impart training to youths and change them into able professionals.
b. Navjyot:
This project aims at increasing the health index of children who have been unfortunately
displaced from slums. The project currently accommodates 3100 slum children from
Bawana Resettlement Colony and imparts health care services. Navjyot India Foundation
is the official partner in the project.
c. Unnati:
The objective of this initiative is to provide Computer training to 3000 students at
Visakhapatnam through NIIT Limited.
d. Nanhi Kali :
The project is an initiative towards Supporting the Girl Child. Corporation has provided
Sponsorship of the quality school education of 498 renewals of Nanhi Kalis and
additional 1400 Nanhi Kalis from various Government Schools from Mehboobnagar
Dist. and Paderu region in Andhra Pradesh in collaboration with M/s KC Mahindra
Education Trust.
e. Muskan :
This project ponders into the welfare of 100 underprivileged children, many of them
living in footpaths by providing shelter at Tuglakabad and Jahangipuri in Delhi.
Education, meals, clothing, health care, vocational training etc. are provided for them
through HPCL's operating partner M/s Prayas Juvenile Aid Centre (JAC) Society.
f. Suraksha :
This is an initiative towards prevention of HIV/AIDS through training/lectures and
distribution of condoms to truckers at Highway Retail Outlets. The project operating
partner is Organization for Socially Economic and Rural Development (OSERD).
g. Global Warming :
Under this project, approximately 20000 school children are being educated on causes of
Global Warming at Delhi, Goa and Mumbai through our operating partner CSRL (Centre
for Social Responsibility & Leadership).
A Corporate approach towards Development:
The current projects bear the mark of a well thought of corporate mindset .To summarize
HPCL's approach towards social welfare we have to mention the following points-
1. Strategic approach to every issue is the key to HPCL's success.
2. HPCL has meticulously secured the input-output-outcome balance. HPCL has underlined
the social problems accurately and has taken result oriented initiatives.
3. The advanced planning regarding allocation of resource and correct evaluation of
performance against benchmark has represented organizational competence.
The success of HPCL lies in the maintenance of social responsibilities amid profit driven and
competitive business environment. Apart from directly contributing to the betterment of weaker
sections of the society, HPCL has been associated with healthcare, education, environmental
protection, agricultural development, rural reconstruction, water supply development etc. It can
be said that the corporation has touched lives qualitatively acting as a corporate social
ambassador. HPCL has always seen itself as a contributing participant in India's overall
development. The corporation has stood the test of time being true to citizen's expectations.
Organizational Hierarchy:
Ministry Of Petroleum and Natural Gas
Grades:
I: Executive Director
H: General Manager
G: Deputy General Manager
F: Chief Manager
E: Senior Manager Middle Level Mgmt
D: Manager
C: Deputy Manager
B: Senior Officer Lower Level Mgmt
A: Officer
1.4 Significance of the Study:
In the words of Robert Kaplan, Harvard Business School Professor “Good measurements are the
organization’s important asset”.
Chairman &Managing Director
Director
Marketing
Director
Refineries
Director
Finance
Director
Human Resources
BSC is one such kind of powerful measurement tool for diagnosing the recent past (how we do)
and for strategic implementation (where we go).
This study on BSC helps managers at all levels to monitor results in their key areas. This in turn
helps the organization to monitor the present performance and to estimate the future
performance.
Following are the benefits of the study using BSC:
Helps on focusing on key things that will lead to effective performance.
Helps senior management to create climate for change.
Through effective communication, it helps everyone in knowing what is happening in
the organization.
Helps in coordinating various corporate programs like quality, re-engineering and
customer support initiatives.
Helps unit manager, operators and employees to find what is required at their level to
excel in their performance.
Thus the study on BSC serves as a tool that assures achievement of the organizations strategy on
a continuous basis.
1.5 Objectives of the Study:
Nowadays most of the firms in the world actively adopt new approaches to their performance
measurement systems. A new approach to strategic management was developed in the early
1990’s by Kaplan and Norton. They named this system the “Balance Scorecard”. The BSC is one
of the major developments in management accounting in the past. Many organizations have
invested substantial resources in recent years to implement a balance scorecard of performance
metrics.
The main objectives of this study are:
To analyze and to identify the extent to which the firm uses BSC.
The factors that encourage the firm to adopt BSC
The usefulness of BSC in HPCL.
Perception of Employees about BSC
Adaptability of Employers in using the system of BSC
1.6 Scope of the study:
The scope of the project is limited to the study of Balance Scorecard System in Hindustan
Petroleum Corporation Limited Data Information Centre located In Hyderabad. Knowledge
about the Company’s structure, its various departments, their products and business units, HR
policies and programmes etc. helped in gaining a thorough understanding of the system. The
study has been confined only to the Management level. HPCL, being a Public Sector
Undertaking various intricacies have been involved and so many aspects cannot be questioned
and studied in detail.
1.7 Statement of Hypotheses:
A hypothesis is defined as a tentative conjecture explaining an observation, phenomenon,
or scientific problem that can be tested by further observation, investigation and/or
experimentation.
An assumption taken to be true for the purpose of argument or investigation.
Hypothesis I:
The involvement of Employers while designing their individual scorecards helped them in
setting and achieving their targets and goals very easily.
Hypothesis II:
The focus on both the internal and external environment paved way for the employers to link
their actions to the strategic goals of the organization.
Chapter-II
Review of Literature
Literature Review:
A literature Review is a body of text that aims to review the critical points of current knowledge
on a particular topic. It seeks to describe, summarize, evaluate, clarify and/or integrate the
content of primary reports.
This chapter includes intense study that has been carried out on Balance Scorecard that made use
of various sources like articles, journals and reports.
The Balance Scorecard: To adopt or not to adopt?
Kelvin Hendricks, Larry Menor, Christine Weidman.
The article “The Balanced Scorecard: To adopt or not to adopt?” by Kevin Hendricks, Larry
Menor and Christine Weidman discusses their belief that the BSC represents one of the most
significant developments in management accounting, and deserves rigorous research attention.
They are of the opinion that:
(1) There has been little examination of the factors associated with the adoption of the BSC,
(2) There still is the need to demonstrate that the adoption and implementation of the BSC is
associated with improved financial performance.
The following are the factors that affect the BSC measures…they are
Organizational Structure
Organization Strategies
Environmental Factors
Further research make a significant contribution by providing evidence on the contingency
variables affecting the predictive ability, adoption and performance consequences of various
non-financial measures and balanced scorecards.
The Critical factors that has to be considered while taking the adoption decision of BSC
includes:
Business Level Strategy
Firm Size
Environmental Uncertainty
Investments in intangible assets etc
Employing reliable and valid measures for each of the above contingency variables, and
controlling for industry effects and the firm's operating performance would benefit the
Organization in its adoption of BSC. Firms that follow a Prospector or Analyzer strategy would
more likely to benefit from BSC, unlike Defender or Reactor strategy which proves to be
harmful. They found that the propensity in its adoption of BSC was significantly associated with
strategy which in turn was positively related to the firm’s size. The BSC, which incorporates
both non-financial and future oriented information, would be particularly critical for firms where
environmental uncertainty is high. Therefore, the propensity to adopt the BSC was positively
related to the firm's environmental uncertainty.
Balanced scorecards-Balancing the unbalanced-Indian Perspective
Prof. R.K. Gupta
“Balanced scorecards-Balancing the unbalanced-Indian perspective” by Prof. R.K. Gupta
discusses that companies have a tendency to fixate only on a few measurements and this blinkers
their assessment of how the business is performing overall. He emphasized that "The complexity
of managing an organization today requires that managers be able to view performance in several
areas simultaneously.”
As said by Kaplan and Norton suggested there are four important elements that need to be
balanced. By focusing on all four of these dimensions of Balance score Card companies become
driven by their mission rather than by only short-term financial performance. These points are
not quite enough for a balanced score card success: Many things more are needed to be
measured. They are:
Ethics
Respect
Adequate compensation for employees and their hard work and contribution
Social responsibility
Economic value of Assets
Environmental degradation
Sustained global competitiveness.
There is need for specific systems for making sustainable growth. They are:
Competitive Corporations
Business Environment
Business Practices identifying critical success factors
critical business process
A great working team
If the above systems are nurtured constantly implementation of concepts like scorecards will
yield desired and expected results.
Sustainability Balanced Scorecard as a Framework for Eco-efficiency Analysis
Andrea M’oller and Stefan Schaltegger
“The Sustainability Balanced Scorecard as a Framework for Eco-efficiency Analysis” by
Andreas M¨oller and Stefan Schaltegger suggests that the relationship between so-called
sustainability balanced scorecards and eco-efficiency analysis.
Eco-efficiency analysis not only provides a data source for sustainability balanced scorecards in
the perspective of environmental information systems it also serves as a link between the
balanced scorecard and corporate environmental accounting systems so that eco-efficiency as a
component of an environmental information system becomes an adapter with two interfaces,
which are characterized in this article.
The main focus is on the principle of cause and effect, its different forms, and the implications
for the design of appropriate information system components. The term “balanced” refers to a
“balance between external measures for shareholders and customers, and internal measures of
critical business processes, innovation, and learning and growth. In spite of the fact that the
conventional balanced scorecard considers nonfinancial and non quantitative issues, which
characterize many ecological and sustainability aspects, it basically does not explicitly
distinguish and balance different stakeholder interests, eco-efficiency and sustainability issues,
and derived strategic goals. Fortunately, the balanced scorecard is an open system: “All
stakeholder interests, when they are vital for the success of the business unit’s strategy, can be
incorporated in a Balanced Scorecard”
From an environmental perspective, one advantage of balanced scorecards is that they show the
relationship between long-term resources and capabilities, including sustainability issues, and
short-term financial outcomes. The cause-and-effect chains with sustainability related resources,
capabilities, and activities involved should not comprise only environmentally indicated costs,
but rather all direct and indirect outcomes. The interpretation of the term “balanced” in that case
is extended to the intentions and objectives of corporate sustainability. Balanced scorecards
containing such enhancements can be referred to as sustainability balanced scorecards (SBSC).
A Comparative Analysis between the Balanced Scorecard and the French Tableau de Bord
“A Comparative Analysis between the Balanced Scorecard and the French Tableau de Bord”
Concern over the development of new performance measurement systems that that are in line of
a complex business environment has increased. Recently, interest over non-financial measures
has dramatically increased. Non-financial measures, however, are not problem-free. The issues
are to translate improvements in these non-financial indicators into improvement in the bottom
line. To overcome these problems, Kaplan and Norton have developed a new system called the
Balanced Scorecard (BSC). Some French scholars argue that the BSC is a mere reproduction of
the French Tableau de Bord (TDB) developed in the 1950s by French engineers.
This paper seeks to draw a comparison between the BSC and The TDB . Some French scholars
are not very enthusiastic about the originality of the idea underlying the BSC and argue that it is,
to a great extent, similar to the TDB measurement system devised by French engineers at the
turn of the 20th century (Mevellec, 1993).
The BSC and the TDB stem from two different perspectives. According to Bourguignon et al
(2004), these two tools “bear the marks of their original social context” . The latter is the product
of a domination of financial people and the strong role they generally play within US
organizations. Since they are rewarded on the basis of financial figures, understandably these
financial people ultimate concern is to improve the bottom line and send good signals to Wall
Street. The BSC is created within the framework of a market-oriented approach. It is no surprise
that the financial success is the ultimate perspective that springs off the other three perspectives.
In that respect, Kaplan (2006) notes that the BSC “is also grounded in the financial economist ’s
shareholder value maximization principle…”. It is puzzling that though the BSC articulates
around four perspectives, financial people are hardly rewarded on other basis than bottom line by
market demands, as is the case in the US. They were not therefore under the pressure to focus
significantly on the bottom line. They were more process oriented than profit oriented. In
contrast, the TDB is more of a production-oriented approach since all the measures are designed
to keep track of the production process with an emphasis on yield, productivity rates, and
efficiency of operations. Financial indicators while important are not as much emphasized as in
the BSC. The difference in focus could be partly attributed to that fact that, towards late 19th and
early 20th centuries, French engineers steered organizations that were shielded by government
regulations and protection. It is also important to note that the collection of information required
for the TDB is in line with a bottom-up approach. That is the information is generated from the
shop floor and made available for engineers at the top level to manage the production process
and more importantly take decisions. As such, in France, management is not a function in its
own, divorced from production
Though they are both grounded in the same philosophy emphasizing the marriage between
financial measures and non-financial measures, the BSC and the French TDB differs in many
aspects. While the BSC emphasizes the link between the devised financial and non-financial
measures with the strategic orientations of the organization, the TDB is more of an operational
tool that aims to manage and control the production process. In addition, as a bottom up
approach, the BSC reflects the power of financial people within American organizations, thus
emphasizing the bottom line. In contrast, the TDB is a tool designed by engineers to steer their
companies and emphasizes physical measures such as productivity, yields. Financial indicators
in the TDB while important are not as much emphasized as in the BSC.
Balance Scorecard – An Emerging Dimension
Manav Jindal and Sanjeev Bansal
The article “Balance Scorecard – An Emerging Dimension” by Manav Jindal and Sanjeev Bansal
have discussed to a great extent on BSC, a tool that measures the company performance. They
emphasized the importance of BSC by saying that no corporate entity can reveal its performance
through income statement and position statement which remained static over a long period of
time. These statements can reveal the tangible aspect of business but unable to reveal anything
about the intangible aspect of business- the solution for which lies in the implementation of BSC
to evaluate a company’s performance. BSC provides a framework involving critical indicators or
key business factors to balance long term and short term objectives. It links and balances
financial and non-financial indicators, tangible and intangible measures, internal and external
aspects, performance drivers and outcomes. The two authors clearly stated that BSC cannot be
considered as a project but it is a continuous technique which has neither a beginning nor an end.
Though this tool has many aspects one cannot ignore its limitations. It needs continuous review
by the companies and must be updated regularly. They are under the opinion that as far as
corporate India is concerned, there is little awareness among Organization.
Chapter -IIIResearch Design
3.1Research Design:
Research design can be thought of as the “structure” of research -- it is the "glue" that holds all of
the elements in a research project together.
The type of research design used for the study is Exploratory Research Design. This genre of
research simply allows in gaining a greater understanding of something that we know enough
about. Differing mainly from other types of research design, exploratory research is used
principally to gain a deeper understanding of subject of research.
3.2 Sampling:
Sampling is the process of selecting units (e.g., people, organizations) from a population of
interest so that by studying the sample we may fairly generalize our results back to the
population from which they were chosen.
Convenience sampling (sometimes known as grab or opportunity sampling) is a type of non-
probability sampling that is used for the study. This sampling type can be a limitation for my
study because employers at the Management Level in the Organization are chosen on the basis of
people who are convenient and readily available at hand.
The sample size is limited to 50 employers working at Management Level i.e. from Grade A to
Grade I.
3.3 Methodology
Step 1: Includes observation and interview method that has been carried with the respondents
(employers) regarding the existing system of BSC.
Step 2: After having an informal interaction with the employers the following stage included
Questionnaire method from the respondents.
Step 3: Gathering data and making a systematic analysis of the data
Step 4: Arriving at the findings based on the study with purposeful suggestions.
3.4 Tools and Techniques for Data Collection
A structured questionnaire was designed covering all the relevant aspects of BSC which entails
four different dimensions majorly consisting of three parts:
Part A: Profile of the Respondents which includes Age, Gender, Designation, Grade,
Experience.
Part B: It consists of Yes or No questions which includes the major dimension related to
awareness regarding BSC.
Part C: It includes Likert Scale rating covering three major dimensions. They are goals and
targets, benefits in using the system of BSC, incentives and reward system, perspectives of BSC.
Coefficients of alpha reliabilities of all these sub-scales are .716, .751, .607, .773 the overall
scale yielded the alpha coefficient of .869
3.5 Sources of Data :
Types of data used in this project work such as the primary data and the secondary data. The
details are given below:
Primary Data:
The primary data is collected from the respondents by the way of administering the
questionnaires pertaining to the “System of Balance Scorecard”. The primary data is more
scientific and accurate for social-science research. Without the contribution of the primary data,
the social-science research could not be accurate.
Secondary Data:
Secondary data has been obtained by referring earlier study conducting in the similar
areas. Apart from the earlier data the intraportal of the company, brochures, and other material
pertaining to the Balance Scorecard are contributed for secondary data.
.3.6 Data Processing and Analysis:
Data processing is done with the help of computer software and Statistical analysis that will
make use of SPSS (statistical package for social sciences). Firstly, the answers marked by the
respondents were coded by assigning numerical values. These values were entered into a master
sheet and later with the help of a code book these numerical values were further entered into the
spreadsheet format on the computer. And these raw data is processed with the help of the
statistical package as stated. In order to present the results and analyze them, percentage tables,
cross-tabulations and graphs were made.
3.7 Statistical Tests:
Coefficients of alpha are calculated to test the reliability of the scales used in this study. Cross-
tabulations and chi-square are computed to examine the association and relationships between
independent and dependent variables of the study while testing the hypotheses.
3.8 Limitations of the study:
1. As the project duration is limited to two months, carrying a research in the selected study
is not very feasible and so many aspects have been ignored.
2. As the system of Balance Scorecard is not implemented at all levels in the Organization
my study is limited only at the Managerial Level.
3. Sample Size can also be a limitation for my study.
3.9 Presentation of the study:
Chapter 1: Introduction, Company Profile, Significance of the study, objectives and hypotheses.
Chapter 2: Review of Literature
Chapter 3: Research design, Sampling, Method and Tools of data collection, Data processing and
Analysis, Statistical tests, Limitations of the study
Chapter 4: Data Analysis
Chapter 5: Discussion about the results
Chapter 6: Findings, Suggestions and Conclusion
Chapter 7: Bibliography/References
Chapter-IV
Data Analysis & Interpretation
1. By this system of BSC achieving set targets and goals were made easy
Strongly agree
Agree Neutral Disagree Strongly disagree
Total Sample
9 21 12 8 0 50
Inference:
From the above graph we can infer that 60% of the respondents believe that with the system of BSC achieving set goals and targets were made easy.
2. The scorecard helped in linking my actions to strategic goals
Strongly agree
Agree Neutral Disagree Strongly disagree
Total Sample
8 21 13 8 0 50
Inference:
From the above graph we can infer that only 58% of the respondents agree that their scorecard helps in linking their goals to the Organization’s strategic goals. 26% of the respondents are neutral about this statement.
3.Goals and Targets that were set at the beginning of the year were realistic, measurable and attainable
Strongly agree
Agree Neutral Disagree Strongly disagree
Total Sample
11 22 7 10 0 50
Inference:
The above graph indicates us that 66% of the respondents agree to the statement that the goals that were set at the beginning of the year were realistic and attainable.
4. I’m very much involved while designing my individual goals that are aligned with the organization goals
Strongly agree
Agree Neutral Disagree Strongly disagree
Total Sample
13 20 8 8 1 50
Inference:
For the above statement 66% of the respondents agreed that their individual goals were aligned with the organization’s goals. 16% of the respondents remained neutral and the remaining 18% disagreed to this statement.
5. Balance Scorecard helped me using my skills and capabilities in the most beneficial and effective ways
Strongly agree
Agree Neutral Disagree Strongly disagree
Total Sample
9 19 18 4 0 50
Inference:
This graph indicates us that 66% indicated that BSC helped in using their skills and capabilities in most beneficial ways.
6. This system helped me in my personal, professional and career development .
Strongly agree
Agree Neutral Disagree Strongly disagree
Total Sample
4 13 24 7 2 50
Inference:
48% of the respondents felt that BSC did not lead to any kind of personal or professional development. Only 34% of the respondents positively agreed to the statement.
7. My work satisfaction has been tremendously increased with Balance Scorecard
Strongly agree
Agree Neutral Disagree Strongly disagree
Total Sample
5 15 19 11 0 50
Inference:
40% of the respondents felt that their work satisfaction levels have been increased tremendously with BSC but 38% of the respondents remained indecisive.
8. This system provided a chance to improve my skills and competencies
Strongly agree
Agree Neutral Disagree Strongly disagree
Total Sample
4 23 13 9 1 50
Inference:
54% of the respondents felt that BSC provided them a chance in improving their skills and competencies. 26% remained neutral.
9. Linking my work with compensation payments, rewards, and incentives is fair
Strongly agree
Agree Neutral Disagree Strongly disagree
Total Sample
10 14 12 12 2 50
Inference:
Less than 50% of the population i.e 48% of respondents felt that linking rewards, incentives to the work was fair. 28% of the respondents disagreed to the statement and 24% of them remained neutral.
10. I personally feel that the rewards and benefits were adequate in motivating us to work
Strongly agree
Agree Neutral Disagree Strongly disagree
Total Sample
7 15 15 11 2 50
Inference:
44% of the respondents felt that rewards and benefits were adequate in motivating them to work.30% remained neutral and 26% of respondents disagreed to it.
11. Performance based reviews and feedbacks proved to be unbiased and effective with BSC
Strongly agree
Agree Neutral Disagree Strongly disagree
Total Sample
4 14 19 11 2 50
Inference:
38% of the respondents were neutral to the statement that performance based reviews and feedbacks proved to be unbiased and effective with BSC. But 36% of respondents agreed to the above statement.
12. There is much scope for Personal and Professional growth and recognition with this system
Strongly agree
Agree Neutral Disagree Strongly disagree
Total Sample
3 24 13 7 3 50
Inference:
From the above graph we can infer that 54% of the respondents believed that there is much scope for Personal and Professional growth and recognition with this system. 26% of the respondents remained neutral.
13. I’m more focused on organization’s internal and external environment
Strongly agree
Agree Neutral Disagree Strongly disagree
Total Sample
7 27 12 3 1 50
Inference:
From the above graph we can infer that 68% of the respondents BSC helped them in focusing on their organization’s internal and external environment. 24% of them remained neutral.
14. A thorough understanding of my work and various activities contribute to the success of overall Organization
Strongly agree
Agree Neutral Disagree Strongly disagree
Total Sample
16 21 9 4 0 50
Inference:
74% of the respondents felt that a thorough understanding of their work and various activities contribute to the success of overall Organization.
15. Realizing the targets helped me in improving customer interactions
Strongly agree
Agree Neutral Disagree Strongly disagree
Total Sample
15 20 10 5 0 50
Inference:
70% of the respondents agreed that targets set by BSC helped them in improving their interactions.
16. Though there is continuous assessment and monitoring under this system, I find the environment to be very conducive and congenial to work with
Strongly agree
Agree Neutral Disagree Strongly disagree
Total Sample
8 21 13 6 2 50
Inference:
58% of the respondents agreed that continuous assessment and monitoring under this system, proved to be very conducive and congenial to work with. 26% remained neutral and 16% disagreed to it.
Statement of Hypotheses:
Hypothesis I:
The involvement of Employers while designing their individual scorecards helped them in setting and achieving their targets and goals very easily.
Null Hypothesis:
The involvement of Employers while designing their individual scorecards does not help them in achieving their targets and goals easily.
Alternative Hypothesis:
The involvement of Employers while designing their individual scorecards helps them in setting and achieving their targets and goals very easily.
I’m very much involved while designing my individual goals that are aligned with the organization goals * By this system of BSC achieving set targets and goals were made easy Cross tabulation
By this system of BSC achieving set targets and
goals were made easy Total
Disagree Neutral AgreeStrongly Agree
I’m very much involved while designing my individual goals that are aligned with the organization goals
Strongly Disagree Count
1 0 0 0 1
% of Total 2.0% .0% .0% .0% 2.0% Disagree Count 1 3 4 0 8 % of Total
2.0% 6.0% 8.0% .0%16.0
% Neutral Count 2 2 4 0 8 % of Total
4.0% 4.0% 8.0% .0%16.0
% Agree Count 3 7 6 4 20 % of Total
6.0% 14.0% 12.0% 8.0%40.0
% Strongly Agree Count 1 0 7 5 13 % of Total
2.0% .0% 14.0% 10.0%26.0
%Total Count 8 12 21 9 50 % of Total
16.0% 24.0% 42.0% 18.0%100.0%
Chi-Square Value: .106
Degrees of freedom: 12
Level of Significance: 1%
Strongly Disagree
Disagree Neutral Agree Strongly Agree
I’m very much involved while designing my individual goals that are aligned with the
organization goals
0
1
2
3
4
5
6
7
Co
un
t
By this system of
BSC achieving set
targets and goals
were made easy
Disagree
Neutral
Agree
Strongly Agree
Bar Chart
Hypothesis II:
The focus on both the internal and external environment paved way for the employers to link their actions to the strategic goals of the organization.
Null Hypothesis:
The focus on both the internal and external environment does not help the employers to link their actions to the strategic goals of the organization
Alternative Hypothesis:
The focus on both the internal and external environment paves way for the employers to link their actions to the strategic goals of the organization.
I’m more focused on organization’s internal and external environment * the scorecard helped in linking my actions to strategic goals Cross tabulation
The scorecard helped in linking my actions to
strategic goals Total
Disagree Neutral AgreeStrongly Agree
I’m more focused on organization’s internal and external environment
Strongly Disagree Count
1 0 0 0 1
% of Total 2.0% .0% .0% .0% 2.0% Disagree Count 2 0 1 0 3 % of Total 4.0% .0% 2.0% .0% 6.0% Neutral Count 2 6 3 1 12 % of Total
4.0% 12.0% 6.0% 2.0%24.0
% Agree Count 3 6 15 3 27 % of Total
6.0% 12.0% 30.0% 6.0%54.0
% Strongly Agree Count 0 1 2 4 7 % of Total
.0% 2.0% 4.0% 8.0%14.0
%Total Count 8 13 21 8 50 % of Total
16.0% 26.0% 42.0% 16.0%100.0
%
Chi-Square Value: .009 Degrees Of Freedom: 12
Level of Significance: 1%
Strongly Disagree
Disagree Neutral Agree Strongly Agree
I’m more focused on organization’s internal and external environment
0
3
6
9
12
15
Co
un
t
The scorecard
helped in linking my
actions to strategic
goals
Disagree
Neutral
Agree
Strongly Agree
Bar Chart
Hypothesis Chi-Square Value
Degrees of freedom
Level of Significance
Relation
Employers’ involvement helps in
achieving targets easily.
.106 12 1% Significant Relation
Focus on internal and external
environment links to the strategic goals of
organization
.009 12 1% No Significant Relation
Inferences:
From the hypotheses formulated and tested above we can draw certain inferences like:
As for Hypothesis I and II the chi-square value is greater than 0.01 so accept Alternative hypothesis and reject null hypothesis. As we have rejected the null hypothesis we conclude saying that the variables chosen for testing are dependant and so there exists significant relation between them.
As far as hypothesis I is concerned we can draw the conclusion that when the employers are more involved in designing of their goals and targets it definitely helps them in accelerating their performance which in turn drives them towards achieving their goals very easily.
When we consider hypothesis II we can infer that when the employers are more focused on their internal and external environment, their actions always do not link to the organization’s strategic goals
The above two hypotheses definitely indicates us that: when employers are more involved and when they are more focused on the whereabouts of their organization it leads better results like enhanced performance, high levels of satisfaction, more clarity in their work and motivated to look beyond.
Chapter-V
Findings and Suggestions
5.1 Findings:
Based on the sample size awareness of the respondents regarding system of BSC and its performance is found to be minimal.
Implementation of this system in stages can prove to be effective but the uniformity has to be established.
The competencies and skills of the individual are not thoroughly identified before setting certain targets.
As it’s a government sector certain favoritism does prevail. But this in no way should hamper the performance of those individuals who really does well.
Employees are not very much satisfied with the feedback system that is used as a part of the BSC. A genuine feedback is been expected by them based on their performance.
Quarterly based reviews proved to be ineffective because an immediate feedback is not given.
Recognition for their work, Reward system, Incentives proved to be unfair and inadequate and no where it is linked to the efficiency and competency o the individual.
5.2 Suggestions:
More number of awareness programmes has to be conducted so that the employers can feel comfortable with the system.
A unified approach has to be maintained
Training programmes has to be conducted in order to enhance the competencies and skills of the individual so that he/she fits into the job entrusted.
Transparency in the system(Appraisals) has to be maintained
Subjective biasedness must be reduced to the extent that the competencies of the individual can be identified.
The appraisal timelines should be met without fail
Rating System should be well defined and well implemented
Chapter-VI
Bibliography and References
References:
Robert S Kaplan and David P Norton, September (1996), Harvard Business School Press, The Balance Scorecard: Translating Strategy into Action.
Irani, JJ (2003), Tata Search, Business Excellence for Corporate Sustainability.
Robert Lawton, January (2004), HRM Review: Balance your Balance Scorecard.
Chris Aston, February (2004), HRM Review: Transforming strategic performance through the Balance Scorecard.
I.M.Pandey, Vikalpa, Volume-30, January-March (2005), Balance Scorecard: Myth and Reality.
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