Phase 2: Qualitative Study
III. Performance and Engagement Appraisal and Feedback
7.2 BALANCED SCORECARD AND EMPLOYEE PERFORMANCE
7.2.5 Customer Service
A one-way between-groups analysis of the variance indicated that there was a significant difference of customer service [F (3, 252) = 2.833, p < 0.05] (see Table 3), where there is
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significant positive impact on customer service only after the third quarter. Customer service plays a role in the retail industry. The underlying philosophy at Retek is to attract, delight and retain customers through its exceptional products and customer service. The retention of customers was very important to Retek. The belief embedded in the culture of the organisation was that if customers are excited by the products and services provided, then they will return to the store. According to McGregor (2014), many retailers are so focused on bringing in new customers, that they neglect their current customers. McGregor (2014) believed that this was a major failing for retailers as it would be easier for retailer to sell their products to an existing customer base than to entice new customers.
Retek contracts an external service provider to measure its customer service delivery. This service provider randomly conducts an assessments of the store’s customer friendliness and service every quarter through the use of a ‘mystery shopper’. A ‘mystery shopper’ is a person that enters a store as a customer, and assess the service given to him or her. The mystery shopper assessment focused on the sales competency of the store manager, as well as the overall look of the store. According to Daniels (2008), the way a store manages their customer’s emotions and perceptions in their store is as imperative to retail differentiation and revenue growth as any other facet of their supply chain. Daniels (2008) believed that store managers played a pivotal role in creating a customer experience, and therefore it was important that they were engaged and excited about encouraging the customer experience.
Customer service is one of the main KPI’s used to performance manage the store managers.
The BSC ranked all the managers according to their customer service scores, and various customer service programmes were initiated to assist managers in improving their overall customer service delivery. Managers were provided training on staff friendliness, product knowledge, promotions, store house-keeping, store layouts and overall customer service principles. According to Awasthi (2012), customers are more likely to spend more time in a store and thus buy more merchandise, if the store layout is customer friendly. This resulted in store managers being upskilled, and thus increasing their overall customer service ratings.
The one-way between-groups analysis of the variance for sales, inventory loss, and other expense and customer service showed a significant difference between these variables and the
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BSC. Therefore, we can conclude that the answer to research question 1 has been answered i.e.
the use of the BSC as a performance management system leads to an increase in employee performance. It must be noted that the impact of stock integrity was not consistent across all quarters.
The qualitative findings indicate that most of the managers felt that BSC was successfully implemented in the organisation. According to Kaplan and Norton (2001, p.147-148), there are five conditions that need to be met for the BSC to be successful, “namely, (1) the support of top management; (2) the central role played by the BSC for developing the strategy and setting strategic priorities (3) the development of the BSC to align the processes, the services and the competencies of the organisation; (4) the degree of implication of everyone in the development of the BSC; and (5) the extent to which the BSC influences management practices, processes and systems on a continuous basis”. The interviewees in the study highlighted management support and a proper communication plan as key influencers in helping them improve their business processes, practices and systems. Therefore, we can postulate that the successful implementation of the BSC led to an increase in sales and customer service, and a decrease in inventory loss and manageable expenses.
One of the most prominent themes to emerge from the interviews is that Managerial Support is essential. This support not only extended to the store managers’ direct line managers, but also to the support from executive managers and the human resource departments. Store managers indicated that they were provided with constant support regarding the purpose and objectives of the BSC. Many highlighted the positive role their direct managers played driving the BSC in their businesses, especially highlighting the role of the human resource department, who played a critical role in ensuring the successful implementation of the BSC. The management at Retek had a clear strategy regarding the implementation of the BSC. It ensured that all senior managers had a clear and precise understanding of the purpose and outcomes expected of the BSC. This was done through numerous workshops held over a three month period across the country. At these workshops, an understanding of the purpose BSC was discussed, and managers were encouraged to voice their opinions and concerns regarding the BSC. The focus of the workshops was also to highlight the alignment of the BSC to their personal goals, and to create a clear understanding of the importance of the five KPI’s that
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would form the BSC, namely sales, inventory loss, manageable expenses, customer service and stock integrity. However, these workshops only included senior managers, who were then given the responsibility to cascade the purpose and objectives of the BSC to their direct reports, namely the store managers. Hence, there was some inconsistency in the way the purpose and objectives of the BSC was cascaded to the store managers in the study. The qualitative analysis indicates that there was a better ‘buy-in’ of the BSC by those managers who felt that their senior managers properly explained the role and purpose of the BSC in their business. And this translated into those managers improving their business practices, processes and systems, which has a direct impact on sales, inventory loss, manageable expenses, customer service and stock integrity.
Another prominent theme to emerge from the qualitative analysis was the impact of the communication plan, which had a positive impact on the implementation of the BSC. The participants interviewed indicated that many of the store managers felt that they received good communication from the organisation prior to the implementation of the BSC. These managers indicated that the organisation had a very comprehensive communication plan, which resulted in the BSC been properly cascaded to them by their managers. The constant feedback sessions with their direct managers was also highlighted, where managers felt that certain issues or concerns regarding the BSC implementation and purpose were properly dealt with at these sessions. Prior to the implementation of the BSC, the top management at Retek tasked the human resource department to design a comprehensive communication plan. The purpose of the communication plan was to ensure that all employees at Edcon, regardless of seniority and position, were provided with the purpose and objectives of the BSC. Various mediums were used to deliver the communication plan, with the senior managers playing a critical role in cascading the plan to their reports. The qualitative analysis indicates that most of the managers who felt that the BSC improved their business practices, processes and systems, were also complementary of the organisations communication plan. These managers highlighted the importance of the communication plan, and felt that the continuous communication around the purpose and expectations of the BSC to their employees contributed to them improving their business processes, practices and systems.
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The qualitative study also revealed that the BSC KPI’s were aligned to their employee goals.
However, it was noted that there was an inconsistent alignment of the BSC to the organisational goals. This will be discussed in the next section. The interviews indicated that the store manager’s main goals were to increase sales and decrease costs. The BSC’s five KPI’s were aligned to these goals, with sales and customer service focused on increasing sales, and inventory loss, manageable costs and stock integrity focused on decreasing costs. The managers indicated that by focusing on only five KPI’s, as opposed to numerous irrelevant performance indicators, their staff had more time and desire to drive sales and reduce costs.
The managers also felt that the BSC provided them with a holistic view of their business through its focus on the financial and non-financial aspects of the store. This resulted, as indicated by the quantitative findings, in an increase in sales and customer service and a decrease in inventory loss and manageable expenses.
Finally, the qualitative findings once again correlates to the quantitative results that the BSC has a positive impact on employee performance by indicating that the BSC positively influences business practices, processes and systems. As indicated previously, business practices, processes and systems directly impacts on sales, inventory loss, manageable expenses, customer service and stock integrity. The interviews reveals that many of the store managers felt that the BSC was effective in improving the effectiveness and efficiency in the way they worked. The interviewees revealed that by focusing on the BSC KPI’s, they were able to identify certain opportunity areas to improve customer service and thus sales. The BSC also assisted them in changing some of the controls they had in place for inventory loss and stock integrity. The managers felt that the metrics provided by the BSC KPI’s on a weekly basis, gave them direction to better focus their staff on the areas they were underperforming, and thus enabled them to provide more focused and meaningful training initiatives.
The qualitative findings support the quantitative finding by indicating that the successful implementation of the BSC, through management support, a proper communication plan and the strategic alignment of the BSC to the employee goals, led to managers improving their business practices, processes and systems.
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7.3 THE BALANCED SCORECARD AND ORGANISATIONAL PERFORMANCE