Designing a new performance evaluation system based on balanced score card for divisions of Indian railways

Abstract

"Measurement Matters" and "What is measured gets done" are generally acceptedmanagement principles. However, not all that matters can be measured and not all that ismeasured really matters. This reality is perhaps what has made the task of performancemeasurement, an extremely difficult and challenging task.The revolutionary concept of Balanced Score Card developed by Robert S Kaplan andDavid P Norton represents a giant step forward in the field of performance evaluation.The introduction of performance evaluation systems based on Balanced Score Card - bothin private and public enterprises including Governments at all levels (Federal, State andCounty) in some of the developed countries like United States and United Kingdom haveyielded truly spectacular results. The concept of Balanced Score Card is fast gainingacceptability as a powerful tool for productivity enhancement.The tool holds tremendous promise for Indian Railways, the one hundred and fifty yearold and one of the most important institutions of modern India. Indian Railways is todayin the midst of a watershed period of its history. It is delicately poised and can eithercontinue to play its role as an economic catalyst while remaining financially andoperationally viable or accelerate its present decline to the ultimate downfall.To address the present woes of Indian Railways The Rakesh Mohan Committee (RMC)appointed by Ministry of Railways has recommended far reaching structural and policychanges in the way rail business is carried out in this country. The present dissertationpresents an alternative and yet compatible strategy with RMC recommendations - tosignificantly enhance productivity level? of Indian Railways by introducing a newperformance evaluation system based on Balanced Score Card for Divisions - the frontendorganizational tier of Indian Railways.Although it may appear to be surprising to disbelievers, the present study amplydemonstrates the fact that Railway Employees - both officers and staff have stronglyvoted for introduction of a new and effective performance evaluation system based onBalanced Score Card on divisions of Indian Railways. The Railway Employees, bothOfficers and Staff have overwhelming agreed that a good performance evaluation systemresults in better performance and that the existing performance evaluation system on theIndian Railways needs a lot to be desired.The introduction of a performance evaluation system based on Balanced Score Cardshould ideally start from tfie top end of the organization where the vision and strategy forthe organization as a whole is developed and finalized. Each subsequent tier of theorganization then derives its Score Card from the layer above. However, though desirableto follow the tops down approach, individual units can also build their Score Cards bydirectly basing it on the organization's vision's and strategy. What is perhapsindispensable is the involvement of all key stakeholders in development of individualobjectives, measures, targets and initiatives in the different perspectives of Score Card.Since the Balanced Score Card developed in the present paper is directly based on theneeds, ideas and perspectives of the two of three most important stakeholders of IndianRailways - Customers and Employees it can be further developed and introduced directlyon any division of Indian Railways.The data collected from Railways' Customers and Employees have thrown up importantdimensions of rail business in three of the four perspectives of Balanced Score Card. Theindividual objectives, measures, targets and initiatives as developed in the fourperspectives of proposed Balanced Card put into focus the key drivers for enhancedperformance of Railway Divisions.The adoption of the proposed Balanced Score Card by Railway Divisions holdstremendous potential for performance enhancements. True the road ahead is treacherousand the journey is going to be difficult. Significant obstacles on way, nay "challenges19 -like changing the entrenched bureaucratic culture, establishment of systems formeasurement of not so easily measurable indices like customer and employeesatisfaction, linking of incentives with performance and a fundamental shift in attitude -from internal focus to customer focus are just a few of the mammoth but mandatory tasksnecessary for the successful implementation of the proposed system.But then as Stephen R Covey, one of the most influential management gurus of moderntimes has aptly said in his landmark book "Seven Habits of Highly Successful People"that - "A thousand miles journey begins with the first step and can only belaken one at atime*' The first step in the renewed journey aimed at significant enhancement ofproductivity on Indian Railways could be starting the debate for introduction of "a newand effective performance evaluation system". This has been the core and guidingpurpose of the present dissertation endeavor.