ÓÄÊ 004.896
S.Tupkalo, V.Tupkalo
The methods of the synthesis of the system of balanced indicators of assessment of achievability of business-purposes of enterprise management
This article was published in the magazine «Systems of management, navigation and communication»- Kiev. – 2008. – Issue 1(5). – p. 109-114.
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This article covers the elements of scientific-methods mechanism of current trend of general theory of enterprise management – the theory of process management.
process management, balanced scorecard, strategic management, the tree of strategic tasks, BSC, KPI, SBI |
Introduction
The key task of the building of efficient management system of any enterprise is the assessment of the indicators of quantitative estimation of the results of its operation (if there is no quantitative estimation – there is no management!). The most often approach to the solution of this task is the estimation of operation based on financial indicators. Since the end of the 90-th of the last century the approach of Balanced Scorecard (BSC) has become popular [1]. Despite the fact that the idea of BSC appeared rather long time ago (This idea is known since 1932 as the French «tableau de bord» [2]), its qualitative development and bringing to efficient practical methods are far from completing. The prove to that fact is the great number of the published examples of forming the tree of strategic purposes, thus the set of indicators of their achievement [3 - 12]. The analysis of the publications shows that their authors avoid answering the question: what is the tendency of the development of management paradigm that the trees of strategic purposes, offered by them, corresponds to?
The aim of this article is to explain the empiric data and methods of synthesis of system of balanced indicators of the assessment of efficiency of management of process-oriented enterprises. These methods were proved by the authors of this article while performing several consulting projects on establishment of process management on native enterprises [www.tupkalo.com.ua].
Setting the task of the synthesis of the system of balanced indicators
The key elements of solving the task of the synthesis of the system of balanced indicators [13]:
The Definition 1. The pyramid of process management of enterprise is the system of interconnected PDCA – cycles (Plan-Do-Check-Act) of the owners of managerial and technological business-processes, which is synthesized according to established BSC-graph of management, requirements of norms of controllability, rules of pointing out and composition of managerial and technological business-processes.
The general view of the pyramid of process management (the pyramid of process management by Tupkalo [13]) is on fig.1.
The Definition 2. The owner of the managerial business-process is the chief executive officer who is performing the full annual business-cycle PDCA (Plan-Do-Check-Act) of his level of enterprise management relating the objects of management, who are subordinate owners of business-processes.
The Definition 3. The owner of the technological business-process is the chief executive officer who is performing the full annual business-cycle PDCA (Plan-Do-Check-Act) relating the objects of management, who are subordinate performers of technological process of products manufacturing or partial manufacturing which are for consumer.
The practice of the authors of this article on the implementation of process management on native enterprises [ www.tupkalo.com.ua ] shows that both types of business-process owners must:
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Receive all the necessary resources of business-process;
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Have the full set of management directive on regulation of business-process (instructions, methods, standards of the enterprise etc.);
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Build the system of gathering of objective information on development of business-process, parameters of the results of outlet of business-process and satisfaction of the Consumers (inner suppliers within the enterprise and outside Client of the product (service);
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Develop the system of the indicators for assessment of business-process efficiency. The system must be built according to the signs of adequacy of the development of the business-process, fullness of their set, optimal quantity by working hours for gathering and processing of information;
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Set the algorithm of the main managerial decision making (he works out the criteria «when interruption is necessary», puts the typical solutions in the regulations of his subordinates);
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Have the document of the description of his business-process according to the requirements of “The standard of description, regulation and audit of business-processes” which is confirmed on the enterprise.
The Definition 4. BSC-graph of management is the model of communication graph which displays the upper part of hierarchy of the interconnected business-process owners who are responsible for achievement of strategic purposes of the enterprise development.
The general view of the model of BSC-graph of the management (BSC-graph of management by Tupkalo [13]) with its metrics of interconnection is displayed on fig.2. The purpose of creation of BSC-graph when synthesizing the process system of management is optimization of processes of interconnection among top-managers (fig.3) according to the tree of strategic purposes of enterprise relating BSC-perspective (business–metrics of enterprise management) [1].
The Definition 5. Business–metrics of enterprise management (BSC–metrics) is decomposed according to the second level of top of BSC-graph of management strategy of enterprise development.
In [1] the strategy of management is reduced only to 4 perspectives: finance, environment, inside processes (production), development of the infrastructure and staff. Though, as the practice of process management shows, the other perspectives can also exist (business–metrics of management). It mainly depends on specific character of cooperation of enterprise and environment, necessity of performing the strategy of corporative management, for example, when uniting the enterprises into corporations and holdings (fig.4 BSC-graph of real holding).
The Definition 6. The System of balanced indicators (SBI) of achievability of business-purposes of enterprise management is the system which is related to the BSC-graph of enterprise management of BSC-cones of SBI achievability of business-ideas of management of the owners of business–processes, the tops of which (each graph) are BSC–indicators.
The Definition 7. BSC-cone of SBI (the cone of SBI by Tupkalo [13]) is the system of interconnected indicators of achievability of business-purposes of management of the owner of business-process (KPI), the top of which is BSC–indicator (the top BSC –indicator).
The Definition 8. The business-purpose of management of the owner of business-process is the formulated intention on the particular type of operation activity of the company, which has adequate estimating numeral characteristic of its achievability.
In BSC-cone of SBI non-financial indicators (relatively non-financial indicators) must be in cause-effect connection with monetary indicators of quality. This statement by authors of this article is based on the fact that the commercial enterprise can earn money firstly, by selling more and secondly, by wasting less. The rest is just “the musical background”. Any program, either confidential relationship with the client, quality according to "six sigmas", knowledge management, modern technologies or in time delivery of the product, creates the cost only if it leads to the increase of sales volume or to the reduction of expenses.
Using the formulated definitions we can state the following:
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the final number of BSC-cones of SBI, which is connected through its top BSC–indicators to the tree (graph) of strategic purposes of the enterprise development, it represents the system of balanced indicators (SBI) of assessment of efficiency of enterprise business. Based on the example of BSC-graph of holding (fig.4) this statement has the graphical interpretation of model fig.5;
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each BSC-cone is the local SBI relating the particular top BSC–indicator;
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the quantity of BSC-cones is determined by the significance of the basis BSC-graph of enterprise management;
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the significance of the basis BSC-graph of management is determined by the quantity of business-metrics of enterprise management (BSC–metrics) in the BSC–card of the company.
The methods of the synthesis of the system of balanced indicators of the assessment of the efficiency of management of process-oriented enterprise
The initial data for synthesis are:
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The Subject of enterprise operation (the general detailed characteristics).
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The structure and characteristics of separate business-directions of operation and their detailed characteristics (if there are separate business-directions).
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The organizational structure at the present moment (the structure «AS IT IS»).
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The view of the senior management on the development of the business object and business-directions of enterprise (the strategy of life cycle).
The core of the methods of the synthesis of the system of balanced indicators of the assessment of the efficiency of management of process-oriented enterprise is represented in the following sequence of actions:
STEP 1. BSC-card of enterprise for the coming period of strategic development is created[1].
STEP 2. The variant of BSC-graph according to the tree of purposes of the created BSC-card is chosen.
STEP 3. The development of PDCA–diagram of the first executive of enterprise.
The Definition 9. PDCA-diagram is the structured description of cooperation through functions of cycle PDCA of the owner of the managerial business-process with his objects of management and direct executive (example is on the fig.6).
STEP 4. The determination and analysis of correspondence «FUNCTIONS – PRODUCTS - STAFF» of the centers of responsibility - the objects of management of the first executive on enterprise.
STEP 5. The analysis of business-purposes of cooperation of the centers of responsibility - the objects of management of the first executive on enterprise.
STEP 6. The creation of BSC–graph of enterprise management (model «AS IT MUST BE»).
STEP 7. The development of the system of interconnected PDCA-diagram of centers of responsibility - the objects of management of the first executive on enterprise according to the BSC–graph of enterprise management.
STEP 8. The development of the pyramid of the process management of enterprise.
STEP 9. The development of the process-oriented financial structure of enterprise.
The Definition 10. Process-oriented financial structure of the enterprise (the financial structure of the process-oriented enterprise) is the pyramid of the process management enterprise with the representation of the system of consolidation of the financial-economic responsibility as through particular budget items as through the operating budgets taking into account the principle «one business-process within one structural subdivision – one budget».
STEP 10. The development of the classifier of the centers of financial-economic responsibility of enterprise according to the process-oriented financial structure.
STEP 11. The spread of the types of managed (relevant) expenses and profits through the centers of financial-economic responsibility.
STEP 12. The determination of financial-economic status of the centers of responsibility according to the established classifier of managed (relevant) expenses and profits.
STEP 13. The setting of the business-purposes of management of the centers of financial-economic responsibility (owners of business-processes) and determination of the system of indicators of their achievability.
The conclusion
The analysis of the existing resources of information on the theme of the process management (the informational data bank of the doctoral and master’s thesis on qualifications 08.06.01 - economics, the organization and management of enterprise (up to 2007), 08.00.04 – economics and management of enterprises (after 2007) showed that the developed by the authors the empiric data and the methods of the synthesis of the system of balanced indicators of efficiency of management of process-oriented enterprises have the scientific novelty. This methods was practically approved in the consulting projects performed by the authors on native enterprises [ www.tupkalo.com.ua]. The results received by the authors can be viewed as the contribution into the scientific–methodological mechanism of the developing theory of process management.
Fig.1. The pyramid of the process management (the pyramid of the process management by Tupkalo [13]): CR – owners of the business-processes; RE – responsible executives
Fig.2. BSC-graph of management and its metrics of cooperation (general view)
Fig.3. The pyramid of business-purposes of BSC-graph of management (the example of 4-top BSC-graph)
Fig.4. BSC-graph of holding (the quantity of BSC–metrics of management is seven)
Fig.5. The system of balanced indicators (SBI) of assessment of efficiency of business management of holding
Fig.6. PDCA-diagram – the structured description of cooperation by the functions of cycle PDCA of the owner of managerial business-process (MP) with the objects of management and the direct management
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