Advanced Social Humanities and Management 1(4) 2014:35-40 www.ashm-journal.com Developing Balance Score card in Managing Corporate Social Responsibility 1 Amin Navasery, 2 Bita Farhoudnia, 3Moein Ahmadi, 4Maliheh Dorostkar, 1 Department of Information Technology and Management (DITM), Faculty of Computer Science, Bharati Vidyapeeth University, Pune, India (Corresponding Author)Email: [email protected] 2 Department of management, Islamic Azad University, Science and Research branch, Sirjan, Iran 3 Bharati Vidyapeeth University, Yashwantrao Mohite College, Pune, India 4 Research and entrepreneurship Center, Payam Noor University, Hormozgan, Iran Abstract The corporate social responsibility movement has been gathering momentum for the past ten years. Balanced Scorecard is "a focused set of key financial and non-financial indicators. The balanced scorecard (BSC) is a strategy performance management tool - a semi-standard structured report, supported by design methods and automation tools that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions. We can divide the accounting in two parts. The first one is financial accounting and the second is cost accounting. Nowadays in globalization world we think about managerial strategic decision making and how we can reduce the cost of production and finally increase the profit. This paper will try to demonstrate corporate social report (CSR) which is one part of financial reports,than the paper talks about balance score card (BSC) as a new cost method which is more useful for managerial strategic decision making. It means the paper try to find a linkage between cost accounting and financial accounting by emphasis on CSR and BSC. Key words: balanced scorecard, corporate social report, strategic decision making Introduction Organizations have used systems consisting of a mix of financial and non-financial measures to track progress for quite some time. One example of a such a system was created by Art Schneiderman in 1987, a mid-sized semi-conductor company; the Analog Devices Balanced Scorecard was similar to what is now recognised as a "First Generation" Balanced Scorecard design. Subsequently Art Schneiderman participated in an unrelated research study in 1990 led by Dr. Robert S. Kaplan in conjunction with US management consultancy NolanNorton, and during this study described his work on performance measurement. Subsequently, Kaplan and David P. Norton included anonymous details of this use of balanced scorecard in a 1992 article. Kaplan and Norton's article wasn't the only paper on the topic published in early 1992 but the 1992 Kaplan and Norton paper was a popular success, and was quickly followed by a second in 1993. In 1996, they published the book The Balanced Scorecard. These articles and the first book spread knowledge of the concept of balanced scorecard widely, and has led to Kaplan and Norton being seen as the creators of the concept. The main role of annual reports is to provide useful information to shareholders and other stakeholders about the financial position and performance of the business as well as its future prospects to help them make decisions. Corporate social report is one of the financial reports but it is not compulsory for the company to publish their social report cause there is no special standard for that and still there are some problem for preparing the report but we should now what is social report and second we want to know more about balanced scorecard and how this to report can help the management for decision making. In the days to come CSR will go on to gain further importance for a number of reasons including the competitive advantage to be garnered by the companies. Even now, companies in Europe and North America are waking up to the strategic possibilities and competitive advantages offered by being an environment friendly company. Customers might be willing to pay more for environment friendliness and for healthy food. Environment friendly and cheaper automobiles, for instance, have attracted public attention. In other words, CSR activities can create value addition. 35 Advanced Social Humanities and Management 1(4) 2014:35-40 www.ashm-journal.com Corporate Social Responsibility Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business/ Responsible Business) is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance within the spirit of the law, ethical standards, and international norms. CSR is a process with the aim to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere who may also be considered as stakeholders. The term "corporate social responsibility" came into common use in the late 1960s and early 1970s after many multinational corporations formed the term stakeholders, meaning those on whom an organization's activities have an impact. It was used to describe corporate owners beyond stakeholders as a result of an influential book by R. Edward Freeman, Strategic management: a stakeholder approach in 1984. Proponents argue that corporations make more long term profits by operating with a perspective, while critics argue that CSR distracts from the economic role of businesses. Others argue CSR is merely window-dressing, or an attempt to pre-empt the role of governments as a watchdog over powerful Multinational Corporation. Accounting researchers have recently increased their studies on non-financial aspect of disclosure, such as theoretical approach of social and environmental accounting, analysis of social and environmental issues, impact on managerial accounting, and implication of social and environmental requirements upon corporate entity‘s performance, the variables that affect social and environmental disclosures in annual reports. Corporate social reporting also known as Social accounting, social and environmental accounting, corporate social responsibility reporting, non-financial reporting, sustainability accounting etc. is the process of communicating the social and environmental effects of organizations, economic action to particular interest group within society and to society at large. The corporate reporting is total communication system between a company and its users. Social and environmental reporting (SER) is a fast growing area of modern corporate reporting (Gray, 2000; Jahanshahi et al, 2011;Khaksar et al, 2011). CSR-Asia defined Corporate Social Responsibility as a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. Many companies all over the world are now starting to see the benefit of practicing CSR in their bottom lines. European countries are now seriously engaged in this concept on different levels and even in interpretation of how the concept works. Recent years have witnessed an increase in the number of companies reporting publicly on various aspects of their environmental and social performance (Kolk, 2003; CSR Network, 2003; Nawaser et al, 2011). The most consistent reporters have predominantly, but not exclusively, been large companies operating in ‗sensitive‘ industrial sectors. These companies primarily produce a substantial stand-alone paper and/or web based report. Since 1993, KPMG‘s tri-annual survey of reporting practice has charted a steady growth in the number of reporters. In the latest (2002) survey, for example, it is noted that 45% of the top 250 companies of the Global Fortune 500 (GFT250) now issue an environmental, social or ‗sustainability‘ report compared to 35% in 1999 (KPMG, 2002). The recent increase in social, environmental and ‗sustainability‘ reporting has not been universally acclaimed. Many academic researchers have been critical of key features of emerging practice, given its tendencies towards managerialism at the expense of accountability and transparency to stakeholder groups (Belal, 2002; Eizi et al, 2013; Gray and Milne, 2002; Owen et al., 2000). Social accounting put emphasis the notion of corporate accountability. It is an approach to reporting firm‘s activities which stresses the need for the identification of socially relevant behavior, the determination of those to whom the company is accountable for its social performance and the development of appropriate measures and reporting techniques. The intensity with which corporate social responsibility impacts a firm's competitive field is not a constant. Actually most of the time social issues hit businesses in a short burst followed by a phase of relative peace. (Hashemzadeh et al, 2011)Looking beyond the ethical scandal of the day one can identify several longer waves consisting of a group of similar social issues. These longer waves are usually driven by a particular stakeholder group. A first wave of social transformation started in the U.S. at the end of the 19 th century as a response to the largely unchecked industrial capitalism. Protest was mainly fuelled by concern about nonexistent workers' rights and the robber barons' quasi monopoly positions. Eventually the arrival of labor unions completely transformed the competitive field and also the lives of many workers. 36 Advanced Social Humanities and Management 1(4) 2014:35-40 www.ashm-journal.com Balance Score Card as Strategic Management System Although many companies have performance measurement system that incorporate financial and non-financial measures, they use them mainly for the feedback and control of short-term operations according to Kaplan and Norton, the objectives of the balanced scorecard are more than just collection of financial and non-financial performance measures; they are derived from a top-down Process driven by the mission and strategy of the business unit. In particular, the balanced scorecard should translate a business unit‘s mission and strategy in to a linked set of measures that define both thelong-term strategic objectives, as well as the mechanisms for achieving those objectives.(Dehkory et al, 2013; Hakkak et al 2014) The measures incorporate a balance between external measures relating to customers and internal measuresrelatingto critical business processes and innovation and learning. They also incorporate a balance between outcome measures (the result from past efforts) and the measures that drive future performance. Kaplan and Norton (1992) developed an innovative multi-dimensional corporate performance scorecard known as the Balanced Scorecard. It provides a framework for selecting multiple key performance indicators that supplement traditional financial measures with operating measures of customer satisfaction, internal business processes, and learning and growth activities. It is a step towards linking ‗short-term operational controls‘ to the ‗long-term vision and strategy‘ of the business. The focus is on the strategy and vision. It compels the firm to align its performance measurement and controls with the customers‘ internal business processes and learning and growth perspectives and investigate their impact on the financial indicators.Kaplan and Norton (1996) describe how innovative companies are using the measurement focus of the score card to accomplish the following critical management processes: 1) Clarifying and translating vision and strategy into specific strategic objectives and identifying the critical drivers of the strategic objectives. 2) Communicating and linking strategic objectives and measures. Ideally, once all the employees understand the high level objectives and measures, they should establish local objectives that support the business unit‘s global strategy. 3) Planning, setting targets, and aligning strategic initiatives. Such target should be over a 3- 5 year period broken down on a yearly basis so that progression targets can be set for assessing the progress that is being made towards achieving the longer-term targets. 4) Enhancing strategic feedback and learning so that managers can monitor and adjust the implementation of their strategy, and, if necessary, make fundamental changes to the strategy itself. Implementation of balanced scorecard The implementation of the Balanced Scorecard is an innovative way to create strategic awareness in the organization. It is a top-down communication which when embedded in on-going management processes results in the replacement of formal communication programme. Kaplan and Norton (2001) have documented the experiences of Mobil, Motorola, and Sears with the Balanced Scorecard in communicating with their employees on the goals and mission of the company and, in turn, influencing this behavior and performance. Mendoza and Zrihen (2001) observed that the French management control tool called the ‗tableau de bord‘— best translated as performance scorecard — is identical to the Balanced Scorecard developed by Kaplan and Norton. The firms have used these contemporary performance management tools to overcome the limitations of traditional budget and planning system. They have documented the rich experience of implementing the Balanced Scorecard in a French affiliate of an English holding company most of whose shareholders are US pension fund beneficiaries. The scorecard measures an organizations performance from four perspectives: 1. The financial perspective It is all about financial performance – at least for the profit maximizing business. The objectives should be defined in order to excite the owners or sponsors to ensure continued funding of the organization. Some examples: ―increase shareholder value‖,‖ boost shareholder confidence‖. 2. The customer perspective 37 Advanced Social Humanities and Management 1(4) 2014:35-40 www.ashm-journal.com Looking at the organization using the customer perspective is about how the customers perceive the value offered. The objectives should closely define how customers should perceive the proposal in order for them to reward the organization with the financial results hey expect. Some examples: ―perceived as a low-cost supplier‖, ―perceived as flexible and adjustable ―,‖perceived as a high–quality furniture store‖, etc. 3. The internal business process perspective The internal process perspective of balanced scorecard focuses on the deliveries the internal organization must make in order to perceived by customers according to its customer objectives. Some examples: ―the lowest prices in the bay area‖ , ―customization of services in less than a week‖,‖ only quality brand furniture‖, ―convincing market communication‖, etc. The internal business process perspective comprises three sub-processes, namely i. The innovative process, ii. The operations process and iii. Post sales services. 4. The learning and growth perspective The learning and growth perspective of balanced scorecard focus on the competencies and resources needed in order to make the deliveries defined in the internal processes objectives. Some examples:‖ highly flexible material management system‖, ―top project management skills‖, ―strategic alliance with quality furniture markers‖, etc. The learning and growth perspective of a company emphasizes three capabilities: A. The employee capabilities, measured using employee education and risk levels B. Information system capabilities, measured by percentage or manufacturing processes with real-time feedback and C. Motivation, measured by employee satisfaction and percentage of manufacturing and sales employee empowered to manage processes. A company‘s strategy influences the measures it uses to track performance in each of these perspectives. Conclusion The study was an opportunity to review the concepts of corporate social responsibility and management tools, the BSC.We need to try to complete the corporate social report which is can more helpful for society and also balanced scorecard as a tool for using in managerial strategic decision making. When we know that how the balanced scorecard can help the management and we know there is related to complete the information and data for BSC and CSR than we can concentrate more on this two item and work on them to gather. When the accountant want to collect their information for BSC they can define their plan that how their balanced scorecard can be useful in their CSR and vice versa. It can also save a time to prepare some kinds of reports. 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