balance scorecard - an effective tool[1]
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The Balanced
Scorecard
By : Jitu Mistry
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What lies Ahead
Overview of the Balanced Scorecard
Why the Balanced Scorecard will helpexecute strategy
Strategy Map and Balanced Scorecard
OutcomesDiscussion Ideas for scorecards
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Executing Strategy...
Is the greatest challenge for organizations
Vision
- only 5% of workforce getsit!
People 25% of managers have incentives linked to strategy
Management
85% of executive teams spend less than 1 hour/modiscussing strategy
Resource 60% of organizations dont link budgets to strategy
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Strategic Execution
Bad execution, not bad strategy is the
cause of 70% of CEO failures
Execution is not just tacticsit is a
discipline and a system
Source: Execution: The Discipline of Getting Things Done, by Larry Bossidy, and FORTUNE Magazine, Why CEOs Fail
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Challenges in Executing Strategy
Financial Management
ToolsBalance Sheets
Income Statements
Statement of Cash Flow
People Management
ToolsMBO
Training Programs
HRIS
360 Feedback
Customer Management
Tools
C R MCustomer Segment Analysis
Customer Surveys
Process Management
ToolsSix Sigma
Supply Chain Management
TQMStrategy Management
Tools
???
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Train and Communicate Strategy
The Balanced Scorecard
Set goals, select performance measures and link
measures to incentives
Set target for each goal and re-deploy resources to
activities and initiatives to achieve targets
Provide feedback on performance and
learn from results
Feed
Forward
Learning
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The Balanced Scorecard
A robust tool but keep it simple!
Makes strategy tangible everyones job!
Tracks whats important hits and misses
Measurement-lead management
Pro
vides feedback for short-term coursecorrections and long-term learning
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Balanced Scorecard Perspectives
A. Financial
How do we succeed financially?
B.B. CustomerCustomerHow do we appear to our customers?
C.C. Internal ProcessInternal ProcessAt what processes must we excel?
D.D. Learning and GrowthLearning and Growth
How do we sustain our ability to change and grow?
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Knowledge, Skills, Systems, and ToolsKnowledge, Skills, Systems, and Tools
FinancialFinancial
ResultsResults
To Build the Strategic Capabilities..
Needed to Deliver UniqueSets of Benefits to Customers...
To Drive Financial
Success...
And Realizethe Vision
Equip our People...
InternalInternal
CapabilitiesCapabilities
CustomerBenefits
We Use the Scorecard to Articulate Strategic
Hypotheses in Cause-effect Terms
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Balanced Scorecard Perspectives
How do we Objectives Measures Targets Init iatives
appear to our
Stockholders?
Financial
How do we Objectives Measures Targets Initiatives
appear to our
Customers?
ustomerAt what internal Objectives Measures Targets Initiatives
processes must
we excel?
Internal Business rocessVision
&
Strategy
How do we Objectives Measures Targets Initiatives
sustain our
ability to change
& grow?
earning and Gro wth
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Cascading Scorecards
to Build Alignment
Organization
Business
Unit
Business
Unit
Business
Unit
Teams
Individual Contributors
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FinancialSoundFiscalMgmt
BudgetingLong-TermInvestment
Strategy
Customer The Value
Proposition
Internal Process
Learning & Growth
The Value Proposition
Product/ServicesPrice SelectionQuality Availability
RelationshipPartnershipServices
BrandImage
InnovationNew learningPartnerships
Future needs
Operational ExcellenceAdmin excellenceNetwork of supplier for
Products & servicesAdaptability
Customer MgmtDeepen Knowledgeabout customer
AttractRetainGrow Relationship
Climate for ActionPersonal Growth
CompetenciesFunctional ExcellenceLeadership SkillsStrategic Readiness
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Scorecard Information
Information Type Are. Example is
Strategies High Level Goals Increase Market Share
Objectives Measures of action
plans
Increase Customer
Satisfaction
Measures Indicates success or
failure
Average Customer Rating
(scale of 1-10)
Targets Desired level ofperformance for a
measure
Achieve 9.9 of 10 AverageCustomer Rating
Initiatives Management actions
taken to achieve target
Train CSR Staffin Problem
Resolution Skills
Perspective: Financial / Customer / Internal Process / Learning&Growth
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Financial Strategy M Strategy Map
bjectives
Initiative/Owner Budget
Grow Revenue Grow Revenue JF
Increase Profit Margin xx% JF
Customer The Value Proposition
Product/Services Customer Satisfaction 9.0 SPS Overall Bette Francis $xxIntegrity Beyond
Reproach Innovation Partnership Image Ivoice Available 10 Sites by 11/1/03 MT
Availability Service Communicate valueCustomer Profitability
Internal Process Operational Excellence
Integrity BeyondReproach Maximize efficiency Competitive Positioning 2 Replace/Qtr CP
Designs/Quote 5/Quote-Complex MT
Customer Profitability
Create Awareness
Learning & Growth SustainingOurAbilitytoChange & Grow
Platinum Certification Recertify as Platinum B. Francis
Technical Expertise Information is Available
Certify Technical
Knowledge Increase CertificationsEmployer of Choice Tools to do the job Make application to EOC Submit 2 applications B. Francis N/A
Live the SPS ValuesGreat People
SPSStrategy and BalancedScorecard
OurPurpose forBeing isto ProvideOurCustomerswiththe FinestCommunications Value in the Marketplace.
Improve Profitability
ustomer Satisfaction Report
Action Plan
Financial ResponsibilityIntegrity Beyond
Reproach
Profit Margin
BalancedScorecard
Measurement Target
Understand thestrategy and what
needs to be done
Enhance external
relationships
Value of the IndividualIntegrity BeyondReproach Human Capital
Acquire new relationshipsGrow/broaden existingrelationships
Maximize quality ofbusiness processes
Organizational
Readiness
Excellent ServiceExceptional CustomerValue
ManageCustomer
Relationships MarketsManageOperations
Ourvision isto bethe leading integratorof communicationsequipment andservices forvoicesolutions anddata networking ap
Excellent Service
Exceptional CustomerValue BrandRelationship
$xxxMRevenue Attainment
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Human Resources Mission Statement:
The Human Resources Team will lead by example working to build a culture of high-energy,
committed professionals who understand that continuous improvement and customer service
are primary value competencies integrated into every position while developing SPS as a
recognized employer of choice.
Learning & Growth Sustaining Our Ability to Change & Grow
Platinum ertification Recertifyas Platinum . rancis
Technical Expertise nformationis vailable
ertifyTechnical
nowledge ncrease ertifications
Employer of hoice Tools todotheob akeapplicationtoEO Submit application . rancis
ivetheSPSValues
reat People
Valueof thendividual
ntegrity eyond
Reproach uman Capital
Organizational
Readiness
nderstandthe
strategyandwhat
needs tobedone
Coordinate BP Certification
Process
Platinum Certification Achieved Lead: BF
Target: 9/1/03
Develop matrix; assign
responsibilities; conduct
regular checkpoints
Objective Result/Deliverable Target & Lead Initiative
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The TCS Model
Source: Human Capital Vol.9 No.12 May 2006 Redefine the HR Agenda
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Vision
Global Top 10 by 2010 in the IT Industry
Mission
Customer delight by providing best-in-
class consulting, IT solutions & ser vicesand also delivering value and joy to all
stakeholders.
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Shareholder
Value
Human Capital
Effectiveness
Human Resource
Efficiency
Employee
delight
Customer
delight
Manage Operating
efficiency
Manage Customer
relationships
Deliver world
class services
Team
Integration
Leadership
Competencie
sCultural Climate
Strategic Alignment
/Motivation
Work Capability
FINANCIAL PERSPECTIVE
CUSTOMER PERSPECTIVE
INTERNAL PROCESS PERSPECTIVE
LEARNING & GROWTHPERSPECTIVE
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Objectives
Fast groundturnaround
Statement of what
strategy must
achieve and
whats critical to
its success
Target
30 Minutes 90%
The level of
performance or rate
of improvement
needed
Cycle timeoptimization
Key action
programs
required to
achieve
objectives
InitiativeMeasurement
O
n Ground Time On-Time Departure
How success in
achieving the
strategy will be
measured and
tracked
Strategic Theme:
Operating Efficiency
ProfitabilityFinancial
Learning
Morecustomers
Ground crewalignment
Lowestprices
Fewer planes
Customer
InternalFast groundturnaround
Strategy Map: Diagram of the
cause-and-effect relationshipsbetween strategic objectives
FlightIs on time
BSC Terminology
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% Ground crewtrained
% Ground crewstockholders
Objectives Measurement
Market Value
Seat Revenue
Plane Lease Cost
FAAOn TimeArrival Rating
Customer Ranking(Market Survey)
On Ground Time On-Time Departure
Strategic Theme:
Operating EfficiencyInitiative
Cycle timeoptimization
program
ESOP
Ground crewtraining
Qualitymanagement
Customerloyalty program
Target
30% CAGR
20% CAGR
5% CAGR
#1
#1
30 Minutes 90%
yr. 1 70%yr. 3 90%
yr. 5 100%
ProfitabilityFinancial
Learning
MoreCustomers
Ground CrewAlignment
LowestPrices
Fewer Planes
Customer
Internal
Fast GroundTurnaround
FlightIs on Time
Profitability
More Customers
Fewer planes
Flight is on -time Lowest prices
Fast groundturnaround
Ground crewalignment
Balanced Scorecard Example
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Sample HR Measures
Lagging Measures
Impact ofPriorDecisions
Budget variance
Employee relationship results
Executive coaching
Employee productivity
Cost per hire by job class
People expense/Revenues
Leading Measures
Guide Future Outcomes
Employee strategic focus
Executive retention
Retraining/re-skilling
Internal promotion rate
Exit Rate of C Players
Employee relationship factor
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So Why Consider the BSC?
As an HR Professional --
Strategic Thinker
Business Leader
As an organization --
Welcomes change vital culture today
Achieves strategic objectives
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Keys to Success
Educate yourExecutive and Teams
Devise the right metrics
Follow through to completion
Start smallsmall! Report immediately
Dont o
ver measure
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Getting Started Customize Your BSC
1. Describe the strategy burningplatform?
Strategy Map
2. Measure the strategy
Develop the measures; critical data points
3. Manage the strategy Gather detailed information about the
measure and initiative
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The Successful Scorecard
Is a dynamic process
continues to set higher targets and achieves them
Define jobs strategically from the perspective of where it fits in with the
strategic business goals
Supports joint decision
making about what you do/dont do based on
strategic goals
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Resources
The Balanced Scorecard, Kaplan & Norton
Balanced Scorecard Collaborative, Lincoln, MA, www.bscol.com
The Strategy-Focused Organization, Kaplan & Norton
www.BetterManagement.com
The HR Scorecard, Becker, Huselid, Ulrich
Measure Like You Mean It, Michael Hammer
The Balanced Scorecard Step By Step: Maximizing Performanceand Maintaining Results, Paul R. Niven
The Human Resources Scorecard, Measuring the Return on
Investment, Jack J. Phillips, Ron D. Stone, Patricia Pulliam Phillips Company Case Studies
Networking
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Questions?
top related