case 1

Swift Logistics, an international supply chain group, has been operating in Hong Kong for a long time. It possesses a large network and serves diverse customers from various Asian countries such as Korea, Japan, Malaysia, Singapore, etc. It has many overseas operations that offer a wide variety of services including raw materials procurement, inventory management, warehousing, physical distribution, etc..

As the players in the logistics industry struggling to out-perform against each other, Swift Logistics’ management decided that the key to the future success of the company lies in fully engaged employees in serving customers, along with the advanced technology and quick responses to the rapid changes in the industry. The management further decided to expand and adopt a new approach which is consistent with the Group’s mission of “using superior client services to enhance customer relationship and thus to increase profit and prosper”.

The top management held a meeting for discussing the details about the new approach for expansion. Kenny, the Managing Director, suggested that Swift Logistics should transform the business in accordance with three strategic initiatives: (1) performance-driven and team-based culture, (2) putting clients first and (3) focusing on profitable growth through good relationship with stakeholders. These initiatives require managers to know how to foster employees’commitment to their work and serving their clients. To that end, Kenny proposed to make it a priority to review all the company’s HR policies and systems, in particular, the performance management system. It is because Swift Logistics needed to select and promote the top ten percent talented performers to take up higher managerial positions for the expansion in the near future.

With the aim of using a more systematic approach to measuring organizational performance, the HR manager suggested that the balanced scorecard method could be adopted for evaluating and managing the company’s performance. She further reported that a recent employee survey revealed that the employees generally were not satisfied with the existing compensation system. Apart from being unfairly paid and lacking good welfare, they complained that they all received the same pay regardless of their performance level. This pay practice discouraged them to strive for better performance and they also thought the performance appraisal meant little to them.

As a result, the employees lacked initiative to perform better and the rates of absenteeism and turnover were also high. There was an obvious need for the company to improve its performance at all levels. Concerning the compensation policy, compared with the competitors’ pay mix, Swift Logistics preferred more fixed pay and seldom used incentive schemes. In this regard, Nancy was urged to redesign the compensation system by applying the pay model.

    (a) In order to align with Swift Logistics’ strategic direction, identify and explain the four areas in the balanced scorecard for measuring its organizational performance.