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Table of Contents
Summary of the Following Four Measurement Areas in the Balanced Scorecard of Qantas.
Usefulness of Balanced Scorecard as a Performance Measurement and Management Tool for Qantas
Recommendations and Best Practises for Utilising Balanced Scorecards.
Summary of the Following Four Measurement Areas in the Balanced Scorecard of Qantas
As mentioned in Qantas (2015), the objectives set by Qantas as demonstrated in their balanced scorecard include both financial and non-financial areas. The financial areas include the enhancement of group profitability and the agenda relating to the cost and transformation of Qantas; both of these measures aim at improving the underlying efficiency of the company’s operations so that the company could become sustainable and profitable and is able to satisfy their shareholders.
Shared ActivitiesAlso, in the Qantas cost and transformation agenda, the company aims to reduce their cost per unit by transforming their operations. Furthermore, among the non-financial objectives, the company aims for the safety of its operations and people and regards it as their foremost priority so that employee injuries and occurrences of damaging and dangerous operational incidents are lowered significantly. Next is the objective of customer services being rated favorably as compared to Qantas’s competitors by customers, especially with regard to timely flights. Finally, the company aims to work and develop strategic initiatives taken by the company with regards to improving customer loyalty and flourishing its new businesses (Qantas, 2015).
Measures
Shared Activities: The measure used for group profitability is underlying profit before tax excluding any abnormal activities such as impairment. The measure of underlying profit before tax allows the company to meaningfully evaluate with consistency the actual performance of the organization. Next, the cost and transformation agenda is measured by the total benefits generated by controlling and setting targets for total expenditures, unit costs and yields; the cost element excludes the fuel cost so that the operational efficiency could solely be reflected (Qantas, 2015). Furthermore, the company measures people’s safety by using the measures of the rate of frequency of total recorded injury, rate of repetition of lost work case and rate of duration; on the other hand, the operation safety is measured by the frequency of events that could potentially threaten the safety of employees and customers and by lead indicators that are risk-based. Furthermore, the objective related to customers is measured by a survey method to find out the promotion of the organization’s services as compared to the promotion of the services of the competitors. Also, the objective of timely flights is measured by comparing flights that departed on time against the total number of flights. Lastly, measures to follow the growth and development of strategic initiatives have been produced by the company in form of Earnings before Interest and Tax and milestone targets for different business initiatives (Qantas, 2015).
Targets
Shared Activities: The company has not revealed its targets for group profitability due to reasons of commercial-sensitivity but has provided with the scorecard weighting of 50% and that the company was able to exceed the target by making $975 million, giving us some idea on the target set. Furthermore, the scorecard weighting of transformation and cost agenda of Qantas was 20%, where the target was to meet a cumulative amount of benefits of 800 million dollars, which was updated to a target of 875 million dollars later in the year. Moreover, the weighting allotted to people and operational safety, customers and strategic initiatives were 10%, 10%, and 10% respectively, where the Earnings before Interest and Tax were targeted to be around $480 million and membership targets around 0.7 million (Qantas, 2015).
Initiatives
The company was able to turn a negative underlying figure for profit before tax into a high positive one; this was primarily due to the company’s initiatives relating to the reduction of expenses incurred from operations and by using fuel more efficiently. Also, the transformation programme initiated by the company delivered benefits of 2 billion dollars in revenue. The transformation programme of Qantas included the introduction in Los Angeles of business lounges, the introduction of a new programme for reconfiguration and ‘Business Suites’ that had beds to lie flat on in the aircraft for family (Qantas, 2015). Moreover, around 10,000 employees of the company were given training in the area of customer service so that not only could the customer service be improved but the company could also provide timely services. Also, innovative initiatives in digital arena that were taken by the company gave the customers the speed and convenience, where Qantas developed a check-in system through mobile phones that were automatic and retailing and boarding online systems were developed…
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