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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