Amanco Developing The Sustainability Scorecard Case Solution

The balanced scorecard is a method of communicating the multiple and linked objectives that companies must gain to compete based on their intangible capabilities and innovations. It is a phenomenon of translating missions and strategy into well-defined and logical goals and measures. According to balanced scorecard theory, these goals and measures are basically organized into four major perspectives: financial, customers, internal business process, and learning and growth. These four step sequence is followed by managers to build a balanced scorecard. The performance of the company in these objectives is measured by different key metrics. Operating profit, ROCE and EVA are used to evaluate the performance of financial objectives. The performance of the objective related to customers can be measured by market research tools such as customer response cards and questionnaires and by measuring the average duration of the customer relationship. Customer loyalty can be measured by calculating the number of new customers referred by existing customers. Similarly, the performance in internal business process and learning and growth perspectives can be measured through a variety of ways. The balanced scorecard should make the relationship between the critical variables that describe the trajectory of the company’s mission. In other words, the integrated system of balanced scorecard measures should include the complex set of cause and effect relationship between goals and measures explicit so they can be managed and validated. A good balanced scorecard should have a mix of performance drivers and result measures Performance drivers are based on inputs and processes alone that enable the units to get a midterm operational goal. However, these performance measures are failing to reveal whether these operational improvements have been translated into value creation of the firm. Thus, a good balanced scorecard should have an appropriate mix of outcome measures and performance measures.

The Amanco is applying the balanced scorecard theory in a quite similar way. Main strategy or mission for Amanco is to gain economic, social and environmental sustainability. However, this strategy is translated into five main perspectives of measures as mentioned earlier. First two perspectives related to financial and customer dimension are same. Three perspectives in Amanco’s balanced scorecard; process and technology, human resource, social and environmental management, seem to cover last two measure perspective of balanced scorecard theory. In order to evaluate the performance of these objectives, Amanco Co. has used different key metrics. The financial performance of the company is evaluated through EVA (economic value added) and ROCE. Amanco’s goal is to link all the elements in the integrated balanced scorecard to balance conflicting objectives. With the intention of linking all the variables or objectives, Amanco is creating a direct connection between the corporate value creation and individual performance and contribution of different variables. Amanco Company is using EVA to create this connection. Within the process and technology dimension the performance of extrusion machines is measured by contribution/minute produced per dollar invested. This is a better way of evaluating a performance that clearly linked the individual performance to value creation. Under the social and environmental perspective, a key metric for health and safety performance was time lost due to injuries and environmental performance is measured by a reduction in per-unit's inputs and wastes from its products and processes.