Performance measurement systems play a critical role in evaluating the achievement of firms' goals, compensating managers, and developing strategies. With increasing global competition and technology changes, designing a balanced performance measure is critical to the survival and success of companies. We develop a balanced performance measurement as a management tool for enhancing decision-making and accountability, not for evaluating stock or bond performance. As a strategic process, the performance measurement can be used to assess accomplishment of organizational strategic goals and objectives. Existing financial measures are insufficient at expressing corporate value. Managers depending wholly on financial performance only get an incomplete view of the companies.
Thus, there is a pressing need for a set of widely accepted metrics by which managers and investors can rely on to measure the value creation in firms (Kaplan and Norton 1992, 1996).
How financial and non-financial performance measures can be integrated into one measure is a necessary ingredient. The performance measurement should include outcome measures, the performance drivers of those outcomes, short-term and long-term objectives, hard objective measures and more subjective measures. By articulating them clearly, managers can channel the energies, the abilities, and knowledge towards achieving the firm's long-term goals. In addition, a balanced performance measurement can serve as the focal point for the organization's efforts, defining and communicating priorities to managers, employees, investors, even customers, and can be used as a communication, information, and learning system.
Thus, how to maximize the shareholders' value is always the most dominant variable in bank managers' decisions. In response to the question of what drives the shareholders' value, there are numerous competing measures being developed both in theory and in practice. Some use the economics-based approach or financial information metrics. Since performance measures strongly affect the behavior of managers, employees, and investors (Handy, 1994; Kaplan and Norton, 1992), a more balanced approach, a combination of financial and non-financial measures, has been introduced in economics, strategy, finance and accounting (Porter, 1992; Liebowitz, 1999; Lev, 2001; Kaplan and Norton, 2001a, 2001b; Stewart, 1991a, 1991b).
3.2THEAPPLICATIONMODELOF BALANCED SCORECARDINPERFORMANCEMANAGEMENTSYSTEM
Balanced Scorecard is not only an indicator of appraisal system, but also a strategic management system. The use of the Balanced Scorecard breaks the traditional single-use financial indicators methods which measure performance. It adds the future drivers in the financial indicators, which is customer factors, internal business processes and employee learning and growth. They are said in Figure 1 above.
Ø Customers. The managers confirm the competition's customers and market segments which the organization will take part in, and turn the goal into a set of indicators. Such as market share, customer retention rate, the rate of customers, customer satisfaction, customer profitability level.
Ø Internal business process. In order to attract and retain the target customers and meet the requirements of shareholders about financial returns, managers need to focus on customer satisfaction and those internal processes, and establish measurable indicators. In this regard, BSC is not only paying attention to a simple process to improve the existing operators, but to confirm the request of customers and shareholders as a starting point, and to satisfy customers and shareholders.
Ø Learning and growth. It confirms an investment which the organization must be carried out in order to achieve long-term performance in the future, including the ability of employees, organization information system and so on. The financial success in organizations must be translated into the ultimate success. Only to translate the improvements of product quality, time to Complete orders, productivity, new product development and customer satisfaction into increased sales, reduction of operating cost and improvement in asset turnover can bring benefits for the organization.
3.3BANK OF THE VALUEOFPERFORMANCE MANAGEMENT SYSTEM EVALUATION SYSTEM
Based on the above, commercial banks Bank of evaluation index system based on the Balanced Scorecard performance management is divided into four angles: customers, business processes, financial and enterprise sustainable competitive edge. Figure 2 lists the four indicators, as well as its sub-index.
With the evaluation index, it is necessary to determine the weight of the indicators. In general, the indicators will be between the weight of significant differences in order to avoid the average weight distribution ratio. But in general the indicators weight not more than 30%, which to prevent the emergence of "putting emphasis on the large and deregulating the small" which means the smaller of the weights of indicators are not concerned about into the situation , which leads the examination results to lose their impartiality.
3.4BALANCED SCORECARD PERFORMANCE MANAGEMENT IN COMMERCIAL BANK SYSTEM MECHANISM
When it develops BSC, the commercial banks should turn organizational and operational strategies into a series of objectives and measurable indicators. At this time, bank manager needs to re-examine and modify the strategy, and BSC provides the opportunity and means of communication about business strategy on the specific meaning and the implementation. At the same time, because the process of the strategy formulation and implementation of the strategy is an interactive, the bank manager can test and adjust the strategy after using BSC and knowing about implementation of the strategy.
Balanced Scorecard reflects the balance of many aspects, such as the financial and non-financial measure, long-term goals and short-term goals, external and internal, results and the process, and management performance and operating results. Hence it can reflect the integrated operation of organizations, so that it can balance and perfect the performance evaluation, and is conducive to long-term development of the organization.
3.5THE PRACTICALITY OF THE BALANCEDSCORECARD TO PERFORMANCE MANAGEMENTSYSTEM OF COMMERCIAL BANKS
In essence the commercial banks are comprehensive, multi-function financial enterprises which are in terms of profits and operate financial assets and financial services as a target. In the current financial innovation would be difficult to produce differentiated, so the service relationship is the direction the bank want to lead to. The Balanced Scorecard can provide support in this regard:
Commercial banks should not only focus on quantitative analysis about the financial profitability, liquidity and safety but also on effective qualitative analysis about bank risk control, internal management, customer service levels when it takes performance assessment. Qualitative analysis can not be used with quantitative analysis, but it is exactly what the banks need to do to safeguard the healthy operation, which requires qualitative and quantitative analysis to be closely integrated. Balanced Scorecard can consider such a qualitative analysis to reveal the potential risks of operations.
Balanced Scorecard has great foresight for the future development of the bank, and takes the long-term development into account, which makes banks have a high degree of adaptability and long-term strategy when they are in the face of rapidly changing business environment.
In addition to taking internal operational process into account, the external environment factors should be also considered at the same time, such as the Balanced Scorecard customer level. By considering the bank's market share, customer acquisition rates, and customer satisfaction. It takes market competition factors into the performance of management, to achieve a more truly reflecting on the bank's operations and development.