gopal krishan 2792 operations assignement

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ICFAI UNIVERSITY

DEHRADUN

Name: Gopal KrishanSection: AEnrollment No. 09BS0002792IUD Number 0901202792Course Title Operations Management

Course Code SLOP502Submitted on: 6 th Nov, 2009Submitted to: Sanjay RaoTopic of Assignment: Robert S. Kaplan andDavid P. Norton Balanced ScorecardConcept with reference to UNUMCor oration USA

Student Sign Faculty Sign


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ContentsBalanced Scorecard ................................ ................................ ................................ ............... 3

1. Clarifying strategies: ........................ ........ ........................... ..... ......................... ....... .. 3

2. Communication strategic objectives: ......................... ....... ........................... ..... .......... 3

3. Planning, setting targets, and aligning strategic initiatives: .......................... ...... ......... 4 4. Strategic feedback and learning: .......................... ...... ....................... ......... ................. 4

Strategic impact of implementing Balanced Scorecard: ......................... ....... ......................... 4

Corporate Example: ......................... ....... ........................ ........ .......................... ...... .............. 5

UNUM people ................................ ................................ ................................ ...................... 5

Vision: ................................ ................................ ................................ .............................. 5

Quantifiable measure: ........................ ........ ........................... ..... ........................ ........ ....... 5

Goal: ................................ ................................ ................................ ................................ . 5

Operating effectiveness .......................... ...... ........................ ........ .......................... ...... ......... 6

Vision: ................................ ................................ ................................ .............................. 6


Goal: ................................ ................................ ................................ ................................ . 6

Customer satisfaction ........................ ........ .......................... ...... ........................ ........ ............ 6

Vision: ................................ ................................ ................................ .............................. 6


Goal: ................................ ................................ ................................ ................................ . 6

Shareholder value ................................ ................................ ................................ ................. 6

Vision: ................................ ................................ ................................ .............................. 6


Goal: ................................ ................................ ................................ ................................ . 6

UNUM 1998 Goals Stock Option Plan ........................... ..... ........................ ........ .................. 6

Operational Efficiency in UNUM: ........................... ..... ......................... ....... ........................ 7

Achievements of the company after implementing the Balanced Scorecard ....................... 7

References: ................................ ................................ ................................ ........................... 8


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Bala nced Scorec a rd

Robert S. Kaplan and David P. Norton felt the need for a systemwhich could help to manage the

finance so that it can be put to perform better in future. They madea system of balanced scorecard inwhich it was laid that learning andgrowth are the keys to success.

When the system was introduced, itwas used only for the financemanagement and planning but later on it was realized that it can be usedfor management of all the functions

of an organization. Soon it was in use for customers, processes management and learning.There was a chain introduced in this system which runs as it is shown in the diagram. Thesystem of balanced scorecard takes into account 4 things which go hand in hand.

The strategy is that learning and growth helps in development of better business process andwhich helps in efficient use of finance in return. With this the cost of production will reduceand lesser prices could be charged for the product. This will lead to customer satisfaction andthat will again lead to generating more finance. With this, a chain will begin and all things

being interrelated there will be overall growth of the business.

Therefore we can say that Balanced Scorecard is a strategic planning system which helps in

the following activities:

1. Aligning the business activities towards the goals of the organization2. Monitor the progress of the organization3. Set the targets according to the objectives4. Set the action plan for achieving the target5. Overall management of the organization by controlling

Apart from improving performance management in organization, balance scorecard can also be used to implement strategies. This is done by performing following four functions:

1. Cla rifying str a tegies: All the strategies are mentioned very clearly and precisely.If the objectives of the employee are defined in a proper way, employees never face problem with their duties and when the work is measured in the eyes of employeesand the bosses it gets done well and early.

2. Communic a tion str a tegic objectives: The communication of strategicobjectives is another important function given in the balanced scorecard. Unless anduntil the objectives are clearly communicated they will not be acted upon and theaction plan will not function.


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3. P l nn ing, sett ing t r gets, n d lign ingst ra teg ic in it ia t i es: Af t t ob j ti arecommun ica ted t ey have to be ac ted upon and an ac tion

p lan has to be made . Th is ac tion p lan have to be a li nedin the d irec tion of the goa ls tha t have to be ach ieved

and this is where ba lanced scorecard comes into p icturein a b ig way and he l ps to comp lete this func tion .

4. St ra teg ic fee dback a n d le ar n ing: Whenthe work is go ing on, it is necessary to check andcon tro l it regu lar ly and feedback he l ps to do this. Feedback a lso he l ps in know ing wha t are the prob lemsfaced by the emp loyees and wha t can be done toremove those imped imen ts from their way so that theycan perform be tter . Learn ing he l ps in e limina ting the

prob lems and smoo then ing the func tion ing of the

emp loyees .

St ra teg ic i pac t of i p lement ingBa la n ce d Sco r e card :The char t below is made on a s ing le paper so tha t it iseasy to refer to and know the progress, to se t the

pr ior ities and to p lan the work accord ing ly. Th is char t acts as a mon itor for emp loyees as the dash board to thecar wh ich tells the performance . The 4 func tions of

ba lanced scorecard can be exp lained by us ing thefollow ing d iagram wh ich is an ex tens ion of the

prev ious d iagram . In this d iagram we add 4 d imens ions

In the d iagram above, the learn ingand grow th is a t the bo ttom of thestra tegic sys tem wh ich he l ps inincreas ing the mora le of theemp loyees and it also leads toincrease in sugges tions from

emp loyees.

Work s tar ts ge tting be tter automa tica lly then and rework reduces wh ich increases theeff iciency of the bus iness

processes .

At the third leve l, the cus tomersget more sa tisf ied because the cos t of produc tion reduces w ith

attaining eff icient use of resourcesand u ltimately it leads to increasein accoun ts rece ivab les. Th is leadsto a be tter f inance in the companyand re turn on cap ital increases .


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to all the four processes namely:

1. Objectives2. Measures3. Targets4. Initiatives

Each function of the process is given objectives to be achieved and the measure of it that hasto be done. There is a row include in which the target for a time period is mentioned and lastone is for the initiative taken.

Corpor a te Ex a mp le:UNUM Corporation, a company which is disability and special insurer uses balancedscorecard technique to drive its company towards the strategic vision. Company is USA

based and its headquarter is in Portland.

Before presenting UNUMs balanced scorecard it is worth pointing out that, as with all the best practice companies profiled for this Report, UNUMs strategic goals and measures are tosupport a clearly defined and meaningful corporate vision. As shall be explained later, thecorporation has a specific vision statement for each of its four scorecard perspectives.

Now they have laid their vision to We will achieve leadership in our businesses. The company has made three other elements beyond the main objective,

y We will be a products-offered company y Be known for y We will be a well-managed company

UNUM Balanced Scorecard

UNUM peop le

Vision:o We will have the mind of a customer and the pride of an owner.

Qu a ntifi a b le me a sure:o A benchmark survey will integrate the companys employee surveys into a

tool for gauging progress.Goal :

y Our goal is to improve annually on the score established by the benchmark survey. Inaddition, we will monitor our progress towards the goal on an ongoing basis throughformal and informal gathering of employee opinions.


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Oper a ting effectiveness

Vision:y We will increase customer value by rethinking, improving and streamlining our

business processes.

Qu a ntifi a b le me a sure:y Operating costs will grow at no more than one-half the rate of the top line.

Goal :y By 1998, our total operating costs ratio will be reduced by approximately one-third.

Customer s a tisf a ction

Vision:y UNUM will provide the best value in offerings matched to customers needs in the

markets we choose to serve.

Qu a ntifi a b le me a sure:y Each UNUM area with an external customer chain will develop a customer value

measurement tool. It will be aimed at determining our customers assessment of theoverall value of our products and services.

Goal :y We will continually improve our customers perception of the value of UNUMs

offerings so that the number of customers who DO NOT rate UNUM as very goodwill have declined by 40 per cent when we compile our final measurement in 1998.

Sh a reho lder v al ue

Vision:y We will deliver consistently superior long-term value to UNUM shareholders.

Qu a ntifi a b le me a sure:y Shareholder value will be measured in terms of total return - ie dividends plus share

price appreciation.

Goal :y

We will achieve a total return that consistently places UNUM among the top 125companies listed on the Standard & Poors 500.

UNUM 1998 Goal s Stoc

Option P la nEach employee of UNUM was given an option to purchase 300 shares of the company at a

price of $18 per share. This helped the employees rethink about the owners of the companyand made them work more efficiently.


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Oper a tion al Efficiency in UNUM :To make the vision of the operating effectiveness perspective (we will increase customer value by rethinking, improving and streamlining our business processes) meaningful,UNUM has communicated throughout the organization an outline of how employees cancontribute to attaining this goal.

UNUM was able to engage all levels of the organization in defining the goals and align theorganization behind the goals. This is what the genetic strategy map defines.The employees of UNUM started putting them into the shoes of shareholders and thecustomers. The culture at UNUM was changed and new visions were given to the employees.

Achievements of the comp a ny a fter imp lementing the Bala nced Scorec a rdUNUM was able to create a work environment which supports superior business results andultimately UNUM America has received, include being voted within the:

100 best companies to work for in America by Fortune magazine 100 best companies for working mothers by Working Mother magazine Top 30 family-friendly companies by Business Week magazine Top 50 employers by Equal Opportunity magazine


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References:1. Building and Implementing a Balanced Scorecard, case study on UNUM Corporation

published by Business Intelligence 19992. Operations Management by Chase, Jacobs, Aquilano and Agarwal, Eleventh edition,2006

3. Using the Balanced Scorecard as a Strategic Management System by Robert S.Kaplan and David P. Norton published by Harvard Business Reviews

4. www.balancedscorecard.org/BSCResources/aboutthebalancedscorecard5. www.quickmba.com/accounting/mgmt/balanced-scorecard

gopal krishan 2792 operations assignement

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