sm14 - balanced scorecard\bs

8/12/2019 Sm14 - Balanced Scorecard\bs

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Mission

TH

E

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SCORECARD

CONCEPT


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Performance Measures and Management have never been hotter.

Three Factors:

Inability of Organizations to Execute Their Strategy.

Reliance on Financial Measures. Corporate Accounting Scandals:

Enrononce the 7th largest company in U.S.$63.4 Bn.

bankruptcy.

WorldCom107 billion dollar bankruptcy.

Tyco, Global Crossing, Adelphia and dozens of others.

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Why the Balanced Scorecard and Why Now?


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Sarbanes-Oxley Act:

Section 906 Requires Certification by CEO & CFO Reports fully comply with the requirements of securities law

and that the information in the report fairly presents, in all

material respects, the financial condition and results of the

operation of the company.

Wall Street:

They want broader reporting.

Hewitt Associates:

Found evidence that companies highly aligned with

traditional metrics tend to be the worst performers in

shareholder return.

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Doing Business in Post-Enron Era


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Developed by Robert Kaplan Accounting Professor at

Harvard and David Norton a Consultant in the Boston Area. They were looking to develop new methods of performance

measurement.

Kaplan & Norton found that a reliance on financial measures

was affecting a companies ability to create value. What did they mean by this?

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Origin of Balanced Scorecard

Kaplan and Norton came up with this tool that captured

performance measures on activities throughout the company: Customer Issues.

Internal Business Processes.

Employee Activities.

Shareholder Concerns.


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Over the Next Four Years Companies That Adopted the

Balanced Scorecard saw immediate results.

Kaplan and Norton wrote TheBalanced Scorecard.

50% of the Fortune 1000 have adopted the Balanced Scorecard.

HBR hailed it as one of the 75 most influential ideas of the20th century.

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Origin of Balanced Scorecard

As companies around the world transform themselves forcompetition that is based on information, their ability to

exploit intangible assets has become far more decisive thantheir ability to invest in and manage physical assets.


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Essentially the scorecard measures how well your organization

did along 4 institutional measures: Financial.

Internal processes.

Customer.

Innovation and learning.

The scorecard essentially lines up your goals and helps the

members of your organization go in the same direction to meet

those goals.

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What is a Balanced Scorecard?


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What do we need to do well to

achieve these strategies?

How do we get there?

How do we measure how

well we are doing?

Where is the organization going?

What do we focus on to

affect the KPIs?

Vision

Strategy

Critical Success Factors

Organizational

Learning

Internal

Business

Process

CustomerFinancial

KPIs

StrategicInitiatives

Vision


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Mission



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THE

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Measures Expressed in a Matrix

Financial

Cost Reduction,

Market Share, etc.

Internal Processes

Cycle time

Quality, etc.

External / Customers

Satisfaction,

Retention Rates, etc.

Innovation / Learning

Hours Training, Quality,

Attendance, etc.


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BalancedObjectives

E

xternal

Internal

Learning &

InnovationFinancial

Measures performance

against expectations

Measures the

economic impact

of actions taken

Measures employees skills,

procedures, methods...

Measures effectiveness,

ability to adapt

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Measures Expressed in Other Forms


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THE

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Steps in Implementing Balanced Scorecard

Identify Vision

Identify Strategies

Identify CSFs & Perspectives

Identify Measures

Evaluate

Create Action Plans

Follow up & Manage


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What are your

Mission?

Goals?

Core Competencies?

What are your critical

success factors?

Variables, conditions, or characteristics

which have a direct in influence onsatisfaction OR

If you dont succeed here your business is

in trouble.

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Considerations before You Start Implementing BSC Process


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What are your coreprocesses?

People?

Materials?

Methods?

Equipment?

Environment?

What is therelationship between

the intended outcome

and the process to

get there? Whats thecause and effect?

How much are you doing that is necessary and

because youve always done it that way? Look

functionally and cross functionally

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What is private sector doing?

People?

Materials?

Methods? Equipment?

Environment?

How well do you

compare to others

doing the same

thing?

What processes do others use to come to

analogous outcomes? How much does it cost

them? How long does it take? Could you be

faster, better, or smarter about the way you do

it?

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Communicate progress early and often.

Develop a scorecard at the corporate level and then cascade it down to lowerorganizational levels. This will help focus the actions in one direction to help

your goals.

Teach your scorecard process.

Support training to develop scorecards and try to use internal people to do it.

Focus on your organizationsscorecard.

Involve as many people as early as you can.

Encourage individuals to make their own scorecards for their own use.

Communicate changes; refer to the scorecard often; make it a part of the

organizationsculture.

Use the results of the scorecard to foster change; not to punish.

Encourage trial and error.

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Key Things to be Done Throughout


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ASA(FM&C) Strategy MapFour Strategic Themes

Funding = Requirements

Systems Integrat ion Cost Contro lResource

Generation Leverage/Innovate

Themes Promote Teamwork and

Communication AcrossOrganizational Lines

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Objectives

Balanced Scorecard - Strategy

Map Object ives

Cost Contro l

Imbed a Cost Culture inProgram/Budget Reviews,

Decisions and Actions

Objectives Help to Implement the

Strategy for Each Theme and

Perspective

Statement of What Strategy Must

Achieve

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Balanced Scorecard - Strategy Map

The Strategic Theme Story

Cost Contro l

1. Funding = Requirements

2. Control and Reduce Program Costs

3. Maximize the Impact of Each Dollar

Spent

4. Imbed Cost Culture in Program/Budget Reviews, Decisions andActions

5. Improve Output and PerformanceMeasures/develop Full Costs byProgram

6. Develop a Cost Culture6

5

4

3

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Object ives L inked to Measu res

How Success Will Be Tracked

Measures

Number of Programs With

Integrated Performance ReviewsPercent of Performance Reviews

That Yield Cost Reductions

Cost Contro l

Objectives

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Targets

Improvement Needed

Targets

Cost Contro lObjectives

Measures

Number of Programs WithIntegrated Performance Reviews

Worst 0 Business As Usual 0

Planned 20 Benchmark 40 Best 100

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Init iat ives

Objectives

Measures

Key Action ProgramsRequired

Initiatives

Link Output & Performance Measures toArmy Cost & Performance Reviews Starting With the Initial OMB / OSDPrograms for Performance MeasuresIntegrated Into FY11 Budget

Targets

Cost Contro l

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ASA(FM&C) Strategic Map

Theme Relat ionships

Systems Integrat ion Cost Contro lResourceGeneration Leverage/Innovate

Themes Are Not Stovepipes & AreNot Organizationally Organized

Requires Cooperation / Teamwork

More Time to Devote to Higher

Leverage Activities

Improve OutputMeasures/full Cost

by Program

Imbed a CostCulture in Program

Budget Reviews

IntegrateFunctional &

Financial SystemRequirements

Provide Timely &Relevant

ManagementInformation

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Objectives

Control &ReduceProgram

Costs

Statementof WhatStrategy

MustAchieve

Target

Improve-ment

Needed

EliminateDuplicateContractor

Payments

KeyAction

Programs

Required

InitiativeMeasurement

% Changein ProgramCosts per

Year

HowSuccessWill Be

Tracked

Strategic Theme:Cost Control

Financial

Learning

Customer

Internal

Balanced Scorecard

An Examp le

LessThan 2%per Year

Control & ReduceProgram Costs

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HE

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St t


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Strategy

SystemsInt

egration

ResourceGeneration

CostCo

ntrol

Leverage/

Innovate

ImproveAccountability

of the Army

More Fundsfor Army

Programs

ReduceProgram Costs

Increase

Investment

Funds

Funding =

Requirements

The Unique and Sustainable Ways by Wh ichWe Wil l Create Value for the Army

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What processes have you

experienced in developing abalanced scorecard? Can youshare your successes in linking

strategy, goals, and tactics?THE

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THANKYOU

sm14 - balanced scorecard\bs

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