1

Introductions
In China, state-owned enterprises are the predominant of economic
development. Reasonable performance evaluation system is the basis of
fair and objective evaluation of state-owned capital operating, it also
contributes to reasonable use of state capital and improvement of
operation performance. However, human resource management of state-
owned enterprises in China have not been able to keep up with the speed
of economic development because of the relatively late start. o
enterprises often do not pay attention to employee performance
management and performance appraisal system. !ith the advent of the
knowledge economy era, enterprise"s core resources such as talents,
organi#ational processes, customer relationship and other intangible
assets have been promoted to strategic height, so a new performance
evaluation method to measure and promote the development of
enterprises is needed. $fter been used by many companies in the %nited
tates, the balanced scorecard strategy has been regard as one of the
most influential strategy management tool in &' years by Harvard
(usiness Review. Chinese enterprises began to introduce the balanced
scorecard from the last )*s century after it implemented successfully and
therefore improved the management level in foreign enterprises, in more
than ten years of development, some successful e+amples appeared,
such as ,anke company, who has been rated as one of top ten cases of
human resource management by applying the balanced scorecard in
2
-**', but the overall effect is unsatisfactory. -**/0. Compared with
western countries, state-owned companies in China are still not good
enough on establishing scientific and perfect performance evaluation
system. 1any performance managements of the state-owned enterprises
become mere a formality, it is not only in vain, but also destroyed the
harmonious and stable atmosphere in enterprise, finally restricted the
whole development.
3
content
Introductions.................................................................................................................................1
1 Related Theory of the Balanced Scorecard in Performance Evaluation..................................3
2 Problems Existin in Im!lementation of The Balanced Scorecard in State"o#ned
Enter!rises in $hina ....................................................................................................................%
2.1 Particularity of State"o#ned Enter!rises ......................................................................&
2.2 'isunderstandin of P( System (mon Em!loyers and Em!loyees...........................)
2.3 Inaccurate Settin of Performance Evaluation Indicator ..............................................)
3 Reasons for Problems in Im!lementin the Balanced Scorecard in the State"o#ned
Enter!rises in $hina.....................................................................................................................*
3.1 Em!hasis on the +on",uantitative Sub-ective Evaluation Indicators and +elect on
.uantitative /b-ective Index (ssessment...........................................................................*
3.2 0nclear 1ision2 3oals and Strateies of Enter!rises ....................................................4
3.3 +elect of Performance $ommunication and Performance 5eedbac6.......................17
8 Suestions to Im!rove the 0se of the Balanced Scorecard in State"o#ned Enter!rises in
$hina .........................................................................................................................................17
% $onclusions ............................................................................................................................12
References..................................................................................................................................13
Performance Evaluation of State-owned Enterprises in China --Based
on the Balanced Scorecard
1 Related Theory of the Balanced Scorecard in Performance
Evaluation
2raditional financial model can only measures things happened in the
past, but is unable to assess organi#ation prospective investment. In the
information society, the traditional performance management approach is
not comprehensive. (alanced corecard approach broke the traditional
performance management methods which focus only on financial
8
indicators, and from four perspectives --financial, customer, internal
operations, and learning and growth .figure 30, it implements the
organi#ation"s strategy into a new performance management system with
actionable metrics and the target.
In aspect of customers in (C, managers have confirmed the customers
and market segments which will compete in the market, and changed the
target into a set of indicators. uch as market share, customer retention
rate, customer profitability level and so on.
In aspects of internal business processes in (C, in order to attract and
retain customers on the target market and meet the re4uirements of
financial returns to shareholders, managers need to focus on customer
satisfaction and achieve the greatest impact on organi#ational financial
objectives to those internal processes, then establish metrics.
In the aspect of learning and growing in (C, it object is to find what the
organi#ation must be done for the future investments, including measuring
the ability of the employee, the organi#ation"s information systems and so
on. 5rgani#ation"s success in these areas must be transformed into the
ultimate financial success.
2herefore, in aspect of financial in (C, organi#ation"s financial goal has
been set out, and whether the implementation of the strategy and
e+ecution of the operating results contributed to the improvement of the
final contribution will be measured. 2he (C goals and metrics are
interrelated, it included not only the causal link, but also the combinational
of measurement of results and the process that cause the results, which
ultimately reflect organi#ational strategy.
%
2he objective of balanced scorecard is to establish the performance
management system which can 6achieve strategic guidance7, thus ensure
the effective implementation of corporate strategy. It can also effectively
develop the problems of making strategies and disjoining of
implementation strategy, blocked the "e+ecution funnel".
2 Prolems E!istin" in Implementation of The Balanced Scorecard in
State-owned Enterprises in China
(alance scorecard has attracted the attention of a great many enterprises
when introduced into China. $s a cutting-edge performance management

5inance9 To succeed financially2 #hat #e
should sho# to the shareholders
Taret: assessment: indicator: !lan

$lient9 To achieve the desired2 #hat should
#e sho# to clients;
Taret assessment indicator !lan
<earnin and ro#th9 To achieve ro#th2
ho# #ill #e continually chane and im!rove
our ability;
Taret assessment indicator !lan
Internal business processes8 2o satisfy
shareholders and customers, which
business processes should we good
at9
Taret: assessment: indicator: !lan
1ision and stratey
&
tool, the balanced scorecard has been widely used all over the world.
!ang (ingfei:s translation 2he Comprehensive corecard; 5ne <ind 5f
Revolutionary $ssessment $nd 1anagement 2ool in 3))=, marked the
spread and development of the balanced scorecard theory in China.
>uang?ou fu mentioned in -**-, when using the balanced scorecard
performance evaluation in state-owned enterprises, find out the Critical
uccessful @actors is very important. , -**-0. (ecause in the
practice, the determination of key factors tends to give priority to with the
supervisor"s assumption in state-owned enterprises when using the
balanced scorecard, it is unscientific. 2he balanced scorecard has greatly
improved, but the application in state-owned enterprises has certain
limitations, we should consider the status 4uo and the characteristics of
state-owned enterprises and improve the balanced scorecard.
2#1 Particularity of State-owned Enterprises
Aue to the enterprises: sociality, the specificity of the state-owned
enterprise needs to be evaluated economically and socially. (ut the
balanced scorecard can not assess the sociality and social responsibilities
of state-owned enterprises well. $nd here are the limitations.
.30 $ccording to its specificity, there are two aspects that need to be
assessed. 5ne is its rentability and the other is sociality. Bven its social
responsibility is one of the most important standards, from the basic
principles of the balanced scorecard, it is difficult to totally assess the
social obligations that enterprises fulfill.
.-0 2he aim to assess enterprise performance is to reflect its rentability.
)
$nd the effort on customers, learning and internal process are only for its
financial management. (ut due to the specifity of C$ system, the three
aims of the three levels should also serve for social benefits which have
not been included yet.
.D0 2he balanced scorecard is for profit use at first. o the aim of a C$
system is to promote enterprises to get a ma+imum benefits. (ut in state-
owned enterprises, it should also consider the ma+imum of social benefits.
2#2 $isunderstandin" of P% System %mon" Employers and
Employees
B+aminees don:t pay more attention to the assessment inde+ setting, or
rather follow the management tasks of enterprise. 2he inde+ setting is also
very rash, often lacks of effective communication with employees. o
employees lack the understanding of work target, the result can:t meet the
e+pectation of the managers. In process of e+ecution, managers also can:t
timely record the problems and achievements since the e+aminees have
no daily record, just mark by subject impression in the final e+amination,
some people finish the job well at ordinary, but the inspection result is
poor. $nd some people do poor at ordinary and do well in the final
e+amine. 2hese may influent the results. >radually, employees tend to
behave well at the end of term and ignore the performance improvement
at ordinary. It shows the entire performance evaluation is just a short-term
tactical rather than a long-term strategy.
2#& Inaccurate Settin" of Performance Evaluation Indicator
*
ome enterprise budget are based on the benefits of financial Eumbers,
which can only measure the result of the decision that has been made, but
failed to assess the performance of the future, so it will easily make the
evaluation partial, which is easy for enterprise operators to overemphasi#e
short-term financial results, leading to the bad direction and impact on
business conduct.
$s the core of evaluation inde+ system, the (C has been widely applied
in various enterprises, but what really can implement effective assessment
is rare. !hen setting (C indicators, the enterprise often don:t have an in-
depth investigation and analysis, or rather comprehensive measure, which
eventually causes performance evaluation out of function.
& Reasons for Prolems in Implementin" the Balanced Scorecard in
the State-owned Enterprises in China
2he balanced scorecard has attracted the attention of a great many
scholars and managers of state-owned enterprises, many of them are also
trying to introduce the balance scorecard. (ut for now the balance
scorecard has just started, and not been effectively implementation, which
basically has the following several reasons.
&#1 Emphasis on the 'on-(uantitative Su)ective Evaluation
Indicators and 'e"lect on *uantitative +)ective Inde!
%ssessment
4
2he problem is widespread in performance appraisal work. 2he work
ability assessment indicators, for e+ample, task e+ecution ability and
coordination ability, are generally divided into several levels, such as
6e+cellent6, 6good6, 6general6, 6poor6 and 6bad6, but how clear and precise
to use these grades, such as 6good6 and 6general6, how to let employees
be sincerely convinced, most enterprises haven"t worked out the standard,
assessed impression is often based on their own subjective judgment of
ratings, even part of the assessed will be added some personal factors.
2hese lead to false performance appraisal and high employee complaints.
&#2 ,nclear -ision. /oals and Strate"ies of Enterprises
$n important prere4uisite for setting up the balanced scorecard is that the
enterprise:s strategic objectives are decomposition within the enterprise
layer, then converted into enterprise department goals and personal goals.
However, at present most of enterprise:s organi#ational structures are
relatively comple+, all levels of management:s responsibility are not clear.
2he e+istence of these 4uestions brought difficulties to decompose
strategic target. $nd various departments: works are still focused on
traditional management control system which takes meeting the budget
re4uirements as the goal, so the management system also has caused
various department subordinate group and individual goals to focus on
reali#ing short-term goals and tactical targets. 2his makes the balance
scorecard encountered the obstacles of strategic target decomposition at
the beginning and make it difficult to translate enterprises: aims into key
performance indicators which is beneficial to the enterprise success.
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&#& 'e"lect of Performance Communication and Performance
0eedac1
%sing performance appraisal results and putting forward new performance
goals all need the participation of employees, managers need to
communication with the employees. 6Carticipative management6 not only
provides the platform and the way to communicate with each other, it also
embodies the respect for employees, satisfy the staff:s needs and self-
actuali#ation needs, finally create a good atmosphere for the organi#ation.
Croblems also e+ist in the performance feedback. 2he assessment results
of no feedback form are general divided into two kinds8 @irst, not much
appraisal information can be feedback. Aue to long-term enclosed
personnel management system of most state-owned enterprises, the
evaluation work becomes a pattern, no useful results have been produced.
econd, managers don"t want to give feedback, test behavior became a
black-bo+ operation, people don"t know if assessment on them can be
satisfied and how they can improve. 2he main reason is that officers
worried that assessed feedback will cause dissatisfaction with the staff,
thus staff do not cooperative or have hostile attitude toward work.
2 Su""estions to Improve the ,se of the Balanced Scorecard in
State-owned Enterprises in China
In 3))-, Robert <aplan and Aavid Eorton Cublished articles about the
balanced scorecard In the Harvard business review .<aplan R , A C
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Eorton, 3))-0. @or the first time, it puts forward the concept of the
balanced scorecard. ince the balanced scorecard was born, some
$merican and Buropean enterprise began to used it widelyF the data
showed that more than =*G of fortune '** companies are using (C, so
does in many state-owned enterprises in China.
In view of the balanced scorecard performance appraisal problems, the
paper briefly puts forward the following solutions8
.30 (efore the performance evaluation, do preparing work and strengthen
the understanding of the value of the balanced scorecard. 2he balanced
scorecard should be a tool of strategy implementation, not just a
performance management tool.
.-0 $ttach great importance to the learning and growth dimension of the
balanced scorecard. $ccording to corporate strategy, under the strategic
geographic map, companies should evaluate current intangible assets,
human capital, organi#ation capital and information capital strategic
preparation status, find out the gap, and design the corresponding
balanced scorecard indicators and continuous improvement. 2he
organi#ers of the performance appraisal should listen to the opinions and
proposals of the workers seriously, continuously improve in practice.
.D0 Bnterprise business objectives should be able to break down.
Bnterprise strategic plans can be broken down to the annual management
indicators, corporate annual business objective can be broken down into
monthly, 4uarterly business indicators and individual annual target, etc.
.H0 Eot all businesses are suitable for introduction of the balanced
scorecard, enterprise should meet certain conditions
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3 Conclusions
2he performance evaluation system of state-owned enterprises should be
standardi#ation. Cerformance evaluation is a core content of human
resource management, many state-owned enterprises have reali#ed the
importance of the evaluation, and did much effort on the performance
appraisal work. (ut most of the performance evaluation works in state-
owned enterprises still have some pitfalls. How to review the employee
performance is a big problem the enterprise managers are facing. In the
process of implementation of performance appraisal, problems are
inevitable. It is important to know the root of the problem, and effectively
stimulate employee"s participation consciousness. $ll kinds of problems in
performance appraisal should to be faced, analy#ed and solved. It is
believed that with the deepening of the management study, more and
more scientific methods and technology would appear soon.
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References
-**/I J,
, -**-I J, -

<aplan R , A C Eorton, 3))- .3K-08&3-&)8 performance Harvard (usiness

2he (alanced corecard8 1easures that drive ReviewLMN.