Tate Modern is one member of a family of four galleries in the Tate collection. Located in London it is the national gallery of international modern art. The collection held within the Tate modern consists of a collection of British art from the year 1500 to the present day, along with a vast collection of modern international art, which dates back to the year 1900. The Tate Modern opened on 12th May 2000, in the heart of London, renovating a disused power station. The gallery is located on the south bank of the river Thames in Southwark, across from St. Paul’s Cathedral. The project to convert the disused power station into the Tate Modern gallery, according to the Tate, totaled 134 million. Of this large amount 50 million was granted by the millennium commission, 12 million by the English Partnership and 6.2 million by the Arts Council of England, there were also donations from lottery funds.
Attendance at the Tate Modern for the first day of operation amounted to 120,000, in the first full year since its opening attendance was 5.25 million. The attendance has dropped in recent years, for the year from April 2004 – March 2005 the recorded attendance was 4,147,549, and for the year from April 2005 – March 2006 the recorded attendance was 3,958,026. The Tate Modern has been through difficult periods both financially and in terms of attendance. Although the attendances were fairly good, the Tate accredited this to one off major attractions. There have also been difficulties with attaining the required funds through sponsors. This has resulted in the Tate Modern being unable to purchase pieces of art, which have been purchased elsewhere. The knock on affect of this has been a dip in attendance figures.
In order to maintain attendance and financially suffice itself the Tate Modern needs to look towards management techniques which will allow it to plan and apply a strategy, through assessment of it performance. Balanced Scorecard Perspectives: 1) Customer Perspective The customer perspective of the balanced scorecard requires managers to identify the customers who they wish to target. This should be narrowed down to the market segment that they wish to compete within, which could be both existing and new customers. The managers should then track the business’s ability to create loyal and satisfied customers.
There are many objectives that are core to the customer perspective, including market share, which is the proportion of customers in a particular market that a business obtains. This can be measured by the number of customers the company is getting in the desired market segment. Another core objective is customer retention and loyalty, which aims are trying to retain existing customers and is measured through average duration of a customer relationship. Also if existing customers refer other customers, this can show loyalty. The customer perspective also aims to acquire new customers, this is measured by the number of new customers achieved in the targeted market segment. Customer satisfaction is another objective, this can be measured through customer complaints, questionnaires, mystery shoppers etc. The measurement is, however, of attitudes and not that of buying behavior, this can be seen as a limitation.
Management at the Tate Modern could apply this perspective in a manner to attract a wider range of visitors. The Tate Modern gallery could set an objective to target customers from a variety of backgrounds and ethnicities. A measure should be taken of the current visitors and there ethnic backgrounds to assess current performances of the gallery in terms of attraction. In order to acquire a greater number of visitors from a wider range of ethnic backgrounds, the company should inform potential customers through advertisement of different cultural art pieces that will be displayed.
A measure of customer satisfaction should also be taken. The Tate Modern could issue a quick questionnaire to all its visitors to acquire feedback of their visit and how they found it. This will give the management an insight into how many of its customers are actually satisfied with the service being offered. Customer loyalty should be measured by seeing how many return on a regular basis to visit the gallery and how many new visitors they bring along or recommend a visit to.
2) Financial Perspective
The financial perspective looks towards the financial growth and utilization by an organization. Companies should focus on areas such as their return on investment, economic value added to the organization, revenue growth and asset utilization. Objectives of how well the organization expects to be trading at in the future should be the key targets through this perspective. The financial figures could be viewed as the measure of the objective.
It has been argued that this perspective doesn’t require much focus, as it will improve automatically if the other areas of the scorecard are improved upon. However the view of Kaplan and Norton is that the financial perspective is essential as improvements in operational measurement don’t necessarily lead to an improvement in the financial measures. They argue that financial measures provide feedback as to whether or not the operational measures are providing improvements which are allowing the organization to grow financially and utilize its capacity to its full.
The Tate Modern is not an organization which aims to gain financially through sales to its customers. The financial interest of the Tate Modern lay with sponsorship deals and through grants from the government. The financial objective of the Tate Modern should be gain more sponsors. This should be measured through how many sponsors show an interest in the Tate Modern. A target of a gradual growth e.g. 10% should be set by the organization. Another objective under the financial perspective should be that of ensuring art pieces are sold at their maximum value. This can be measured by the intake in comparison to the valuation of the sold pieces of art. The company should set a target of the amount of which is beneficial for the galleries continuation. Another objective of the gallery could be to create new schemes to generate revenue, such as restaurants, cafes and souvenirs shops. These can be measured by putting their revenue against their cost.
3) Internal Business Perspective
The internal business perspective looks at the internal processes of an organization and how they assist in being effective, in ensuring customer satisfaction is met, and being efficient in not costing too much. Having a large work force to ensure customer satisfaction would lead to an adverse effect on the performance measures of the financial perspective. Therefore, the internal business process measures should work towards achieving both the customer and financial objectives of the company. Kaplan and Norton identified three main internal business processes. The first process is the innovation process, which looks to increase new products, decrease their production time and identify new markets and customers. In this process the managers research the needs of the customers and create new products to meet the demand of the customers and ensure their satisfaction. Products are then designed and produced to attract the new market and customers that have been identified.
This process requires research and development in order to try and gain an advantage in the competitive market. However, a major problem in this area is the time between the research and development through to the actual marketing of the product. The second process is the operations process. This process starts with the receipt of a customer and ends with the delivery of the product or service to the customer. Objectives of the operations process are to decrease process time and cost, as well as increasing process efficiency and quality. The third process identified by Kaplan and Norton is the post-sales service processes.
This process looks at warranty, repair, returns, defects and administration of customer payments. As with the operations process this process also aims to increase quality and efficiency, along with decreasing process time. This process targets to make is easier for the customer to deal with any problems after they purchase the goods or service. This can be measured through time, quality and cost measurement.
The Tate could hold an objective to ensure efficiency in tour guidance’s. The Tate Modern should aim to offer tour guides who are well educated and good at explaining the pieces of art on display. This can be measured through customer opinion and feedback, in the form of a questionnaire or opinion poll. Another measure that the Tate Modern could use is that of new attraction settings. They could research customer interests in terms of art work, and quickly adapt to the styles that are demanded by the customers and the market at the time. The measure could be made of how long the gallery takes to present the visitors with the style of art they desire.
The target should be to minimize the time to obtain the pieces of art from when demand for it was recognized. Under the operations process the Tate Modern could have an objective on ensuring that all visitors are well informed and educated on the history of the art displayed. The measurement of this could be through activities such as visitors quiz’s, where the visitors are quizzed on the display’s they have seen in order to see how many have learnt the desired knowledge of the objectives. A target of 90% would ensure high expectations, and push for more quality in tour guides and displayed information.
4) Learning and Growth Perspective
In order to ensure that an organization will continue to have satisfied and loyal customers it must ensure excellent use of its resources. Learning and development must continue both for the organization and the employees. This is the learning and growth perspective, which holds three main principles. The first of these principles is employee capabilities, which focuses on employee satisfaction, retention and productivity. It is generally seen that satisfied employee’s tend to help increase the number of satisfied customers, and vice versa. Employee satisfaction can be measured through periodic surveys, which provide a wide range of questions allowing employee’s to answer on a scale ranging from dissatisfied to highly satisfied. Questions posed to the employee’s relate to involvement in decision making, active encouragement and other general issues relating to the working environment.
Information system capabilities are the second principle in this perspective. This principle looks to provide employee’s with information on customers, internal processes and financial consequences of their decisions. This is all to create effectiveness in a competitive environment for the employee’s. Measures suggested by Kaplan and Norton include percentage of processes with real time quality, cycle time and cost feedback. The third principle is motivation, empowerment and alignment. This looks at the goals of the employee’s, which are required to be the same as the employers. Performance drivers focus on motivating the employees, who should have aligned goals with the employer. A suggested measure is the percentage of the employee who have goals aligned with the balanced scorecard, although it is a difficult area to measure as employee’s tend to give answers to please employers rather than what they actually want.
An objective that the Tate Modern could hold under this perspective is to ensure employee productivity in informing visitors to the required level. A possible measure to achieve this could be to record the number of training hours per employee, to see if they are learning at a rate to ensure good output in services to the visitors. Another objective could be to ensure a more organized service within the gallery and also an assessment on employee satisfaction. The possible measures that the Tate Modern could use include keeping a record of the amount of employee’s leaving, experience held by the employee and the level of staff satisfaction through surveying.
BenchMarking for Tate Modern Benchmarking is a technique that many business organizations are turning to. Tate Modern can use bench marking to help improve many of its activities. Tate Modern needs to find the activities and areas in which improvement is required, and then find a non-rival organization which is considered to have world-class best practice for the activity. After studying how the benchmark organization performs its activity the Tate Modern needs to implement the techniques of the organization to the extent that it helps improve the gallery’s own activity. In this manner benchmarking will give the Tate Modern a competitive edge over its competitors.
After looking at our analysis we can see how beneficial the balanced scorecard can be. It brings together four perspectives and interlinks them in manner which allows the management to use each one with reference to the other. This helps managers a lot in planning for the long term and putting together vision and strategy in a quicker and more organized way. It helps managers consider all operational measures together, being able to see the effect of an improvement on one area on another.
There are however a few criticisms of the balanced scorecard. It is in some cases difficult to apply certain perspectives to certain organizations, as is the case with the Tate Modern, which isn’t an organization with the purpose to make huge profits. Also certain areas of the scorecard are difficult to measure. In areas the scorecard does rely on information from questionnaires and surveys, which cannot be seen as very reliable sources of information. Apart from the few limitations that are held by the balanced scorecard, it is a great technique and really helps in strategic management accounting. Through development it could prove to be the essential key in strategic management accounting.