balance scorecard - an effective tool[1]

8/7/2019 Balance Scorecard - An effective Tool[1]

1/27

1

The Balanced

Scorecard

By : Jitu Mistry


2/27

2

What lies Ahead

Overview of the Balanced Scorecard

Why the Balanced Scorecard will helpexecute strategy

Strategy Map and Balanced Scorecard

OutcomesDiscussion Ideas for scorecards


3/27

3

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


4/27

4

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


5/27

5

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

???


6/27

6

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


7/27

7

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


8/27

8

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?


9/27

9

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


10/27

10

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


11/27

11

Cascading Scorecards

to Build Alignment

Organization

Business

Unit

Business

Unit

Business

Unit

Teams

Individual Contributors


12/27

12

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


13/27

13

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


14/27

14

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


15/27

15

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


16/27

16

The TCS Model

Source: Human Capital Vol.9 No.12 May 2006 Redefine the HR Agenda


17/27

17

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.


18/27

18

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


19/27

19

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


20/27

20

% 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


21/27

21

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


22/27

22

So Why Consider the BSC?

As an HR Professional --

Strategic Thinker

Business Leader

As an organization --

Welcomes change vital culture today

Achieves strategic objectives


23/27

23

Keys to Success

Educate yourExecutive and Teams

Devise the right metrics

Follow through to completion

Start smallsmall! Report immediately

Dont o

ver measure


24/27

24

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


25/27

25

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


26/27

26

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


27/27

27

Questions?

balance scorecard - an effective tool[1]

Documents