the balanced scorecard presented to adnan alshiha presented by alaoula board member

The Balanced ScorecardThe Balanced Scorecard

Presented To

Adnan AlshihaAdnan AlshihaPresented By

Alaoula Board MemberAlaoula Board Member

Workshop OutlineWorkshop Outline

Introduction to the Balanced ScorecardIntroduction to the Balanced Scorecard

What is it? What is it?

Why do it?Why do it?

1-31-3

Brayer BreakBrayer Break

Balanced Scorecard FundamentalsBalanced Scorecard FundamentalsThe Four Perspectives The Four Perspectives Measures, Targets and InitiativesMeasures, Targets and InitiativesRoles and ResponsibilitiesRoles and Responsibilities

Business StrategyBusiness Strategy

The Balanced ScorecardThe Balanced ScorecardWhat is it?What is it?

Definition: Definition:

The Balanced Scorecard is a The Balanced Scorecard is a management tool that provides management tool that provides stakeholders with a stakeholders with a comprehensive measure of how comprehensive measure of how the organization is progressing the organization is progressing towards the achievement of its towards the achievement of its strategic goals.strategic goals.

1992 1996 2000

Balanced Scorecard HistoryBalanced Scorecard History

Measurement and

Reporting

Alignment and Communication

Enterprise-wide Strategic

Management

Articles in Harvard Business Review:

“The Balanced Scorecard — Measures that Drive Performance” January - February 1992

“Putting the Balanced Scorecard to Work” September - October 1993

“Using the Balanced Scorecard asa Strategic Management System” January - February 1996

1996 2000

Acceptance and Acclaim:

“The Balanced Scorecard” is translated into 18 languages

Selected by Harvard Business Review as one of the “most important management practices of the past 75 years.“

• The Balanced Scorecard is the main The Balanced Scorecard is the main management tool that has been used by management tool that has been used by successful organizations in various fieldssuccessful organizations in various fields

• Private and Public Sector Private and Public Sector • For- Profit and Not For- Profit For- Profit and Not For- Profit • Different industries Different industries • These successful organizations placed their These successful organizations placed their

strategies at the centre of their operations. strategies at the centre of their operations. Their strategies, guided Their day- to- day Their strategies, guided Their day- to- day activitiesactivities

• In this workshop, we will learn more about In this workshop, we will learn more about strategy- focused organizations, and how to strategy- focused organizations, and how to develop Balanced Scorecardsdevelop Balanced Scorecards

The Strategy-Focused-The Strategy-Focused-OrganizationOrganization

Organizations Often Have A Gap Organizations Often Have A Gap Between Strategy and ActionBetween Strategy and Action

Strategy Is a Step In a Continuum

MISSIONWhy we exist

VALUESWhat’s important to us

VISIONWhat we want to be

STRATEGYOur game plan

STRATEGIC OUTCOMES

SatisfiedSHAREHOLDERS

Delighted CUSTOMERS

Efficient and EffectivePROCESSES

Motivated & PreparedWORKFORCE

The Balanced Scorecard Is A The Balanced Scorecard Is A Bridge To Close That GapBridge To Close That Gap

Strategy Is a Step In a Continuum

MISSIONWhy we exist

VALUESWhat’s important to us

VISIONWhat we want to be

STRATEGYOur game plan

BALANCED SCORECARDImplementation & Focus

STRATEGIC INITIATIVESWhat we need to do

STRATEGIC OUTCOMES

SatisfiedSHAREHOLDERS

Delighted CUSTOMERS

Efficient and EffectivePROCESSES

Motivated & PreparedWORKFORCE

PERSONAL OBJECTIVESWhat I need to do

The Balanced ScorecardThe Balanced ScorecardWhat is it?What is it?

The Balanced Scorecard:The Balanced Scorecard:

• Balances financial and non-financial measuresBalances financial and non-financial measures

• Balances short and long-term measuresBalances short and long-term measures

• Balances performance drivers (leading indicators) with outcome Balances performance drivers (leading indicators) with outcome measures (lagging indicators)measures (lagging indicators)

• Should contain just enough data to give a complete picture of Should contain just enough data to give a complete picture of organizational performance… and no more!organizational performance… and no more!

• Leads to strategic focus and organizational alignment.Leads to strategic focus and organizational alignment.

Measurement is the Measurement is the language that gives language that gives clarity to vague clarity to vague conceptsconcepts

Measurement is used Measurement is used to communicate, not to communicate, not simply to controlsimply to control

Financial Perspective• Profitability• Growth • Shareholder Value

The VisionThe Vision

Customer Perspective

• Price• Service• Quality

Internal Perspective

Learning and Growth• New Skills• Continuous Improvement

• Intellectual Assets

“If we succeed, how will we look to our shareholders?”

“To achieve our vision, what customer needs must we serve?”

“To satisfy our customers and shareholders, at which business processes must we excel?”

“To excel in our processes, what must our organization learn?”

• Cycle Time• Productivity• Cost

The Balanced Scorecard Provides a Four The Balanced Scorecard Provides a Four Perspective Framework to Translate Strategy Into Perspective Framework to Translate Strategy Into Operational TermsOperational Terms

The Revenue Growth Strategy“Improve stability by broadening the sources of revenue from current customers”

The Productivity Strategy“Improve operating efficiency by shifting customers to more cost-effective channels of distribution”

Improve Returns

Improve Operating Efficiency

Broaden Revenue

Mix

Increase Customer

Confidence in Our Financial

Advice

IncreaseCustomer

Satisfaction Through Superior

Execution

IncreaseEmployee

Productivity

Access to Strategic

Information

Develop Strategic

Skills

Align Personal

Goals

FinancialPerspective

CustomerPerspective

InternalPerspective

Learning Perspective

Cross-Sell the Product

Line

Shift to Appropriate

Channel

Provide Rapid

Response

Develop New

Products

Minimize Problems

Understand Customer Segments

A Good Balanced Scorecard Strategy Map A Good Balanced Scorecard Strategy Map Tells the Story of Your StrategyTells the Story of Your Strategy

A Good Balanced Scorecard Tells the Story of A Good Balanced Scorecard Tells the Story of Your Strategy Through A Set of Linked Cause and Your Strategy Through A Set of Linked Cause and Effect HypothesesEffect Hypotheses

F1 - Improve ReturnsF2 - Broaden Revenue Mix

F3 - Reduce Cost Structure

C1 - Increase Customer Satisfaction With Our Products & People

C2 - Increase Satisfaction “After the Sale”

I1 - Understand Our CustomersI2 - Create Innovative Products

I3 - Cross-Sell Products

I4 - Shift Customers to Cost-Effective Channels

I5 - Minimize Operational Problems

I6 - Responsive Service

L1 - Develop Strategic SkillsL2 - Provide Strategic InfoL3 - Align Personal Goals

Return on Investment Revenue Growth

Deposit Service Cost Change

Share of Segment

Customer Retention

New Product Revenue

Cross-Sell Ratio

Channel Mix Change

Service Error Rate

Request Fulfillment Time

Employee Satisfaction Revenue per Employee

StrategicObjectives

Strategic Measurements

(Lag Indicators) (Lead Indicators)

Revenue Mix

Depth of Relation

Satisfaction Survey

Product Development Cycle

Hours with Customers

Strategic Job Coverage Ratio Strategic Info Availability Ratio Personal Goals Alignment (%)

Fin

an

cia

lC

us

tom

er

Inte

rna

lL

ear

nin

g

Objectives

• Fast ground turnaround

Statement of what strategy must achieve

and what’s critical to its

success

Target

• 30 Minutes• 90%

The level of performance

or rate of improvement

needed

• Cycle time optimization

Key action programs

required to achieve

objectives

InitiativeMeasurement

• On Ground Time• On-Time

Departure

How success in achieving the strategy

will be measured and

tracked

Strategic Theme: Operating Efficiency

ProfitabilityFinancial

Learning

Increase Revenue

Ground crew alignment

Lowest prices

Lower Costs

Customer

Internal

Fast ground turnaround

Strategy Map: Diagram of the cause-and-effect relationships between strategic objectives

Flight is on time

Theme Example from Southwest Airlines’ Theme Example from Southwest Airlines’ Balanced ScorecardBalanced Scorecard

The Balanced Scorecard Supports a Complete Strategic The Balanced Scorecard Supports a Complete Strategic Management System by Linking Long Term Strategy and Management System by Linking Long Term Strategy and Measures to More Tactical Planning & BudgetingMeasures to More Tactical Planning & Budgeting

Objectives Milestones

• Promote ABC Culture Model

• Employee Satisfaction Survey

• Evaluate survey response

Inte

rnal

Lea

rnin

gC

ust

om

er

Accountable

• HR Committee

• $ xxxx

Resource Alloc.Targets InitiativesMeasuresThemes/ GoalsVisionMission

• Meet access expectations

• 3rd available appointment (% met)

• ‘02 xx%

• ‘03 xx%

• ‘04 xx%

• Access project

• Meet monthly target

• Deadline met

• Mkg. Team

• $ xxxx

AB

C H

ospi

tal S

yste

m w

ill p

rovi

de e

xcel

lent

ca

re in

our

sel

ecte

d sp

ecia

lty a

reas

whi

le

mai

ntai

ning

mar

gin

and

grow

ing

shar

e

Ser

ve th

e ne

eds

of p

atie

nts

exce

llent

ly

1.

Str

en

gth

en

inn

ova

tion

2.

Imp

rove

cu

sto

mer

sa

tisfa

ctio

n3

. A

ssu

re c

on

sist

en

t h

igh

qu

ality

4.

Pro

vid

e o

pe

ratio

na

l exc

elle

nce

Longer Term (3-5 year) View Shorter Term (Annual) View

Strategic Tactical

• % patient mix • ’02 = 39%

• ’03 = 40%

• ’04 = 41%

• Mix Margins Project

• Dept. Chairs• Complete by 2003

• $ xxxx• Assure optimum patient mix

• ‘02 xx%

• ‘03 xx%

• ‘04 xx%

Fin

anci

al• Grow

revenue from patient care

• % patient care revenue growth

• ‘02 xx%

• ‘03 xx%

• ‘04 xx%

The Balanced ScorecardThe Balanced Scorecard Why do it? Why do it?

To achieve strategic objectives. To provide quality with fewer resources. To eliminate non-value added efforts. To align customer priorities and expectations with the customer. To track progress. To evaluate process changes. To continually improve. To increase accountability.

The Balanced ScorecardThe Balanced ScorecardWhy do it?Why do it?

It works!It works!

In just 90 days, Sandia Labs was able to redirect $190,000 in savings by In just 90 days, Sandia Labs was able to redirect $190,000 in savings by dropping initiatives that didn’t fit their overall strategy.dropping initiatives that didn’t fit their overall strategy.

“ “The BSC has forced our management team to focus beyond financial The BSC has forced our management team to focus beyond financial measures… too often in the past we would get sucked into short-term measures… too often in the past we would get sucked into short-term thinking.”thinking.”

“ “The BSC dramatically improved our data analysis… we don’t overreact The BSC dramatically improved our data analysis… we don’t overreact nearly as much as we used to.”nearly as much as we used to.”

Execution of Strategy Has Execution of Strategy Has Become the Corporate Become the Corporate Challenge of Our Times!Challenge of Our Times!

• ““Strategy has never been more important”Strategy has never been more important” Business WeekBusiness Week

• ““Less than 10% of strategies effectively formulated are effectively Less than 10% of strategies effectively formulated are effectively executed”executed”

Fortune MagazineFortune Magazine

• ““The problem is that our age’s fascination with strategy and vision feeds The problem is that our age’s fascination with strategy and vision feeds the mistaken belief that developing the right strategy will enable a the mistaken belief that developing the right strategy will enable a company to rocket past competitors. In reality, strategy is less than half company to rocket past competitors. In reality, strategy is less than half the battle. .. In the majority of cases – we estimate 70% – the real the battle. .. In the majority of cases – we estimate 70% – the real problem isn’t [bad strategy]…. It’s bad execution.”problem isn’t [bad strategy]…. It’s bad execution.”

Why CEO’s FailWhy CEO’s FailRam Charan and Ram Charan and

Geoffrey Colvin Geoffrey Colvin Fortune (6/21/99)Fortune (6/21/99)

The Results are WidespreadThe Results are Widespread

1993 – $275 loss1998 – Top Quartile – $3b spin-off

Brown & Root Engineering (Rockwater)

Saint Mary’s/ Duluth Clinic Health System

Duke Children’s Hospital

Southern Citrus

CIGNA Property & Casualty Chemical Bank

ATT Canada

1993 – Losing money1996 – # 1 in Niche (growth &

profits)

1995 1998

Profits

1993 – X1998 – 20X

1995 – $300M loss1998 – Customer base doubles1999 – $7b spin-off

• Shipments on Spec• On Time Delivery• Rework• Absenteeism• Employee Turnover• Cost per Pound (¢)

70%89%

6%10%100

28.8

97%98%

2%1%31

18.9

Mobil US Marketing & Refining Competitive Rank (out of 7,profit)

19931995199619971998

#6#1#1#1#16363Readmission Readmission

RateRate

2525Length of Length of StayStay

1111Family Family SatisfactionSatisfaction

2525Operating Operating MarginMargin

% Improvement% ImprovementMeasureMeasure

15%15%Overall Overall Hospital Hospital Point Point SatisfactionSatisfaction

Decrease 16 daysDecrease 16 daysDays in ARDays in AR$18M since BSC $18M since BSC implementationimplementation

Operating Operating MarginMargin

ImprovementImprovementMeasureMeasure

Mission: What we doMission: What we do

Vision: What we aspire to beVision: What we aspire to be

Strategies: How we accomplish our Strategies: How we accomplish our goalsgoals

Measures: Indicators of our progressMeasures: Indicators of our progress

The Strategy Focused The Strategy Focused OrganizationOrganization

..the question..?..the question..?

What is our strategy?What is our strategy?

Environmental ScanEnvironmental Scan

Strengths WeaknessesStrengths Weaknesses

Opportunities ThreatsOpportunities Threats

ValuesValues

Mission Mission &&

VisionVision

Strategic IssuesStrategic Issues

Strategic PrioritiesStrategic Priorities

Objectives, Initiatives, and EvaluationObjectives, Initiatives, and Evaluation

A Model A Model forforStrategiStrategiccPlanningPlanning

Business StrategyBusiness Strategy

Corporate CultureCorporate Culture


• The beliefs and values shared by people The beliefs and values shared by people who work in an organisationwho work in an organisation How people behave with each otherHow people behave with each other How people behave with customers/clientsHow people behave with customers/clients How people view their relationship with How people view their relationship with

stakeholdersstakeholders People’s responses to energy use, community People’s responses to energy use, community

involvement, absence, work ethic, etc.involvement, absence, work ethic, etc. How the organisation behaves to its How the organisation behaves to its

employees – training, professional employees – training, professional development, etc.development, etc.


• May be driven by:May be driven by:

• VisionVision – where the organisation – where the organisation wants to go in the futurewants to go in the future

• Mission StatementMission Statement – summary – summary of the beliefs of the organisation and of the beliefs of the organisation and where it is nowwhere it is now


• May be reflected in:May be reflected in:– Attitude and behaviour of the leadershipAttitude and behaviour of the leadership– Attitude to the role of individuals in the Attitude to the role of individuals in the

workplace – open plan offices, team based workplace – open plan offices, team based working, etc.working, etc.

– Logo of the organisation Logo of the organisation – The image it presents to the outside worldThe image it presents to the outside world– Its attitude to changeIts attitude to change


What corporate What corporate culture do you think culture do you think the following the following businesses have businesses have managed to develop?managed to develop?

Virgin GroupCopyright: Joshua2150, http://www.sxc.hu

The Body ShopCopyright: fadaquiqa, http://www.sxc.hu

McDonaldsCopyright: alexalliedhttp://www.sxc.hu

NikeCopyright: alexbolhttp://www/sxc.hu

Strategic PlanningStrategic Planning


• First Stage of Strategic First Stage of Strategic Planning may involve:Planning may involve:

• Futures ThinkingFutures Thinking– Thinking about what the Thinking about what the

business might need to business might need to do 10–20 years aheaddo 10–20 years ahead

• Strategic IntentsStrategic Intents– Thinking about key Thinking about key

strategic themes strategic themes that will inform that will inform decision makingdecision making

• ““The thicker the planning The thicker the planning document, the more useless document, the more useless it will be”it will be”

– (Brent Davies: 1999)(Brent Davies: 1999)

Taking time to think and reflect may be more important than many businesses allow time for!Copyright: Intuitives, http://www.sxc.hu


• The VisionThe Vision– Communicating to all staff where the Communicating to all staff where the

organisation is going and whereorganisation is going and whereit intends to be in the futureit intends to be in the future

– Allows the firm to set goalsAllows the firm to set goals

• Aims and Objectives:Aims and Objectives:– AimsAims – long term target– long term target– ObjectivesObjectives – the way in which you are going – the way in which you are going

to achieve the aimto achieve the aim


• Once the direction is identified:Once the direction is identified:Analyse positionAnalyse positionDevelop and introduce strategyDevelop and introduce strategyEvaluate:Evaluate:

– Evaluation is constant and the results of Evaluation is constant and the results of the evaluation feed back the evaluation feed back into the visioninto the vision

AnalysisAnalysis

SWOTSWOT

StrengthsStrengths – identifying existing – identifying existing organisational strengthsorganisational strengths

WeaknessesWeaknesses – identifying existing – identifying existing organisational weaknessesorganisational weaknesses

OpportunitiesOpportunities – what market opportunities – what market opportunities might there be might there be for the organisation to exploit?for the organisation to exploit?

ThreatsThreats – where might the threats – where might the threats to the future success come from?to the future success come from?

PESTPEST

Political:Political: local, national and international local, national and international political developments – how will they affect the political developments – how will they affect the organisation and in what way/s?organisation and in what way/s?

Economic:Economic: what are the main economic issues – what are the main economic issues – both nationally and internationally – that might both nationally and internationally – that might affect the organisation?affect the organisation?

Social:Social: what are the developing social trends what are the developing social trends that may impact on how the organisation that may impact on how the organisation operates and what will they mean for future operates and what will they mean for future planning?planning?

Technological:Technological: changing technology can impact changing technology can impact on competitive advantage very quickly!on competitive advantage very quickly!

PESTPEST

• Examples:Examples: Growth of China and India as manufacturing centresGrowth of China and India as manufacturing centres Concern over treatment of workers and the Concern over treatment of workers and the

environment in less developed countries who may be environment in less developed countries who may be supplierssuppliers

The future direction of the interest rate, consumer The future direction of the interest rate, consumer spending, etc.spending, etc.

The changing age structure of the populationThe changing age structure of the population The popularity of ‘fads’ like the Atkins DietThe popularity of ‘fads’ like the Atkins Diet The move towards greater political regulation of The move towards greater political regulation of

businessbusiness The effect of more bureaucracy in the labour marketThe effect of more bureaucracy in the labour market

Five-ForcesFive-Forces

• Developed by Michael Porter: forces that shape and influence Developed by Michael Porter: forces that shape and influence the industry or market the organisation operates in.the industry or market the organisation operates in. Strength of Barriers to EntryStrength of Barriers to Entry - how easy is it - how easy is it

for new rivals to enter the industry?for new rivals to enter the industry? Extent of rivalry between firmsExtent of rivalry between firms – how competitive – how competitive

is the existing market? is the existing market? Supplier powerSupplier power – the greater the power, the less – the greater the power, the less

control the organisation has on the supply of its control the organisation has on the supply of its inputs.inputs.

Buyer powerBuyer power – how much power do customers – how much power do customers in the industry have?in the industry have?

Threat from substitutesThreat from substitutes – what alternative products – what alternative products and services are there and what is the extent and services are there and what is the extent of the threat they pose?of the threat they pose?

Required InputsRequired Inputs

• Changing strategy will impact on the resources Changing strategy will impact on the resources needed to carry out the strategy:needed to carry out the strategy:

• Specifically the impact on:Specifically the impact on: Land – opportunities for acquiring land for Land – opportunities for acquiring land for

development – green belt, brownfield sites, development – green belt, brownfield sites, planning regulations, etc.planning regulations, etc.

Labour – ease of obtaining the skilled and Labour – ease of obtaining the skilled and unskilled labour requiredunskilled labour required

Capital – the type of capital and the cost of the Capital – the type of capital and the cost of the capital needed to fulfil the strategycapital needed to fulfil the strategy

EvaluationEvaluation

EvaluationEvaluation

• Data from sales, Data from sales, profit, etc. used to profit, etc. used to evaluate the evaluate the progress and progress and success of the success of the strategy and to strategy and to inform of changes inform of changes to the strategy in to the strategy in the light of that datathe light of that data Information from a wide variety of sources

can help to measure and inform the impact and direction of the strategy.

Copyright: Mad7986, http://www.sxc.hu

Types of StrategyTypes of Strategy


• Competitive AdvantageCompetitive Advantage – something – something which gives the organisation which gives the organisation some advantage over its rivalssome advantage over its rivals

• Cost advantageCost advantage – A strategy to – A strategy to seek out and secure a cost seek out and secure a cost advantage advantage of some kind - lower average of some kind - lower average costs, lower labour costs, etc.costs, lower labour costs, etc.


• Market Dominance:Market Dominance:• Achieved through:Achieved through:

– Internal growthInternal growth– Acquisitions – mergers and takeovers Acquisitions – mergers and takeovers

• New product development:New product development: to to keep ahead of rivals and set the keep ahead of rivals and set the pacepace

• Contraction/ExpansionContraction/Expansion – – focus on what you are good at (core focus on what you are good at (core competencies) or seek to expand competencies) or seek to expand into a range of markets?into a range of markets?


• Price LeadershipPrice Leadership – through – through dominating the industry – others dominating the industry – others follow your price leadfollow your price lead

• GlobalGlobal – seeking to expand – seeking to expand global operationsglobal operations

• ReengineeringReengineering – thinking outside – thinking outside the box – looking at news ways of the box – looking at news ways of doing things to leverage the doing things to leverage the organisation’s performanceorganisation’s performance


– Internal business level strategies – Internal business level strategies – DownsizingDownsizing – selling off unwanted parts of – selling off unwanted parts of

the business – similar the business – similar to contractionto contraction

DelayeringDelayering – flattening the management – flattening the management structure, removing bureaucracy, speed up structure, removing bureaucracy, speed up decision makingdecision making

RestructuringRestructuring – complete re-think – complete re-think of the way the business is organisedof the way the business is organised

The Five Principles

1. Translate the strategy to operational terms.

2. Align the organization to the strategy.


Source: The Strategy Focused Organization, Norton & Kaplan

The Five Principles (cont.)

3. Make strategy everyone’s job.

4. Make strategy a continual process.

5. Mobilize change through executive leadership


Source: The Strategy Focused Organization, Norton & Kaplan

The Balanced Scorecard The Balanced Scorecard and The Big Pictureand The Big Picture

•Activity Based Costing•Economic Value Added•Forecasting•Benchmarking•Market Research•Best Practices•Six Sigma•Statistical Process Control•Reengineering•ISO 9000•Total Quality Management•Empowerment•Learning Organization•Self-Directed Work Teams•Change Management

Missionand

Vision

BalancedScorecard

StrategicPlanning

Strategic DirectionCreate Environment

For Change

Strategic Strategic Performance Performance Management Management

SystemSystem

Linking it all together….

Communicate StrategiesDefine ObjectivesImplement BSC

Balanced ScorecardMeasure Performance

Improve Processes

Evaluate and AdjustContinuous Improvement

Redefine Initiatives

FINANCIAL/REGULATORYTo satisfy our constituents, what financial & regulatory

objectives must we accomplish?

CUSTOMERTo achieve our vision,

what customer needs must we serve?

INTERNALTo satisfy our customers and

stakeholders, in which business processes must we excel?

LEARNING & GROWTHTo achieve our goals, how

must we learn, communicate and grow?

THE BALANCED SCORECARDTHE BALANCED SCORECARD

Customer PerspectiveCustomer Perspective

o Customer Satisfaction (Average)

o Satisfaction Gap Analysis (Satisfaction vs.

Level of Importance)

o Satisfaction Distribution (% of each area scored)

Possible Performance MeasuresPossible Performance Measures

To achieve our vision, what customer needs must we serve?

Financial / Regulatory Financial / Regulatory PerspectivePerspective

o Cost / Unit

o Unfunded Requirements or Projects

o Cost of Service

o Budget Projections and Targets


To satisfy our constituents, what financial and regulatory objectives must we accomplish?

Internal PerspectiveInternal Perspective

o Cycle Time

o Completion Rate

o Workload and Employee Utilization

o Transactions per employee

o Errors or Rework


To satisfy our customers, in which business processes must we excel?

Learning and GrowthLearning and Growth

To achieve our goals and accomplish core activities, how must we learn, communicate and work together?


o Employee Satisfaction

o Retention and Turnover

o Training Hours and Resources

o Technology Investment

Why Measure?Why Measure?

• To determine how effectively and To determine how effectively and efficiently the process or service efficiently the process or service satisfies the customer.satisfies the customer.

• To identify improvement opportunities.To identify improvement opportunities.

• To make decisions based on FACT and To make decisions based on FACT and DATA DATA

Measurements Should:Measurements Should:

• Translate customer expectations into goals.Translate customer expectations into goals.

• Evaluate the quality of processes.Evaluate the quality of processes.

• Track our improvement.Track our improvement.

• Focus our efforts on our customers.Focus our efforts on our customers.

• Support our strategies.Support our strategies.

TargetsTargets

““If you don’t know where you’re going, If you don’t know where you’re going, you’re probably not gonna get you’re probably not gonna get there.”there.”

Forrest GumpForrest Gump

TargetsTargets• Targets need to be set for all measuresTargets need to be set for all measures

• Should have a “solid basis”Should have a “solid basis” • Give personnel something for which Give personnel something for which

to aimto aim

• If achieved will transform the If achieved will transform the organizationorganization

TargetsTargets

• Careful not to develop Careful not to develop measures/targets in measures/targets in

a fragmented approach:a fragmented approach:

i.e. Asking people to increase i.e. Asking people to increase customer satisfaction has to customer satisfaction has to be backed up with the be backed up with the knowledge, tools, and means knowledge, tools, and means to achieve that target.to achieve that target.

InitiativesInitiatives

Once measures and targets are Once measures and targets are established, it is the responsibility of established, it is the responsibility of management to determine management to determine HOWHOW the the organization will achieve its goals.organization will achieve its goals.

Measures are used to determine the Measures are used to determine the effectiveness of strategic initiatives.effectiveness of strategic initiatives.

The Leadership TeamThe Leadership Team

• Develops the division’s vision, Develops the division’s vision, strategy and goalsstrategy and goals

• Develops organizational objectives Develops organizational objectives and targetsand targets

• Provides leadership, endorsement Provides leadership, endorsement and vision for the projectand vision for the project

• Clears barriers to scorecard progressClears barriers to scorecard progress

The Core TeamThe Core Team

• Drafts the strategy map and Drafts the strategy map and scorecardscorecard

• Works with employees to develop Works with employees to develop measures supporting strategic measures supporting strategic objectivesobjectives

• Works with the Leadership Team to Works with the Leadership Team to plan and implement the Balanced plan and implement the Balanced Scorecard in the FAS DivisionScorecard in the FAS Division

FY1999FY1999 CORPORATE LEVEL BALANCED SCORECARDCORPORATE LEVEL BALANCED SCORECARDFinancial Customer Operational People Technical

Indica-tor

Tar-get

FY99Final

Indica-tor

Target Stat-us

Indica-tor

Target Stat-us

Indica-tor

Target Stat-us

Indica-tor

Target Stat-us

AdjustedDischarges

23,890 23,592 PatientSatis-faction

Choose keyfocus areas

forimprove-

ment

C ArrangingCare

Determine outpatientphone model,conduct pilots

C CulturalDevelop-

ment

Completecommuni-

cationsstrategy

C QualityImprove-

ment

Implementsystem-widegovernance

structure

C

Encounters 912,188 892,243 EmployerSatis-faction

Completesurvey

develop-ment in CY

1999

CY Determine outpatientmodel for

registration &scheduling

C Completephysician

survey

C Completeexternal quality

report in CY1999

CY

Cost perAdjustedDischarge

6,964 7,535 HEDISIndicators

Selectindicators

fordevelop-ment plan

M ProvidingCare

Determine model forpatient delivery

system for clinicaldivisions

C Completeemployee

survey

C Meet or exceedstandards for

SMDCaccreditation

C

Cost perEncounter

215 252 Com-munityService

Completereporting

process andinventory

C Complete systemstrategy for

ambulatory surgery

C Completeplan to

maintainCatholic-

ity

C Informa-tion

Technol-ogy

Complete ITstrategic planin CY 1999

CY

OperatingMargin

2.0 1.3 Commun-ity Aware-

ness

Completesurvey inCY 1999

CY Docu-menting

andTracking

Care

Complete plan fordecentralized coding

and charge entry

C EmployeeRelationsStrategy

Accom-plish “pay

equity”

C Complete Y2Kcompliance by

12/99

CY

ExcessMargin

3.8 3.3 MarketShare

Completebaseline

C Innova-tion andProgramDevelop-

ment

Complete feasibilitystudy for a women’s

health center

C Synchro-nize

employeebenefits

C MedicalEducation

& Research

Completereport of

funded grantsand

publications

C

Days Cashon Hand

103.6 108.6 Complete plan for ageriatrics program

C FacilitiesPlanning

CompletePerkins & Will

plan

M

Days inAccounts

Receivable

77.7 82.8

Return onInvestment

3.4 2.9

“C” = task completed; “CY” = Calendar Year 1999 task; “M” = task modifiedFinance section: Target met; Target not met

Strategy MapStrategy Map

Finance and Administrative Finance and Administrative ServicesServices

FINANCIAL CUSTOMER INTERNAL PROCESS

LEARNING & GROWTH

Hum. Rscrs. Univ. Police Facilities

Police Parking

Link it together….Link it together….

Measure: Satisfaction IndexCurrent: 3.0 Target: 4.0

DIV

ISIO

ND

EP

T.

FU

NC

TIO

N

The Strategy Map: Cause and The Strategy Map: Cause and Effect RelationshipsEffect Relationships

• What will drive margins?What will drive margins?– Managed growth in high margin Managed growth in high margin

programs/service linesprograms/service lines

• How?How?– Attract targeted patient Attract targeted patient

population through targeted population through targeted referring physicians who value referring physicians who value leading edge technology & leading edge technology & expertiseexpertise

• What will the internal focus be?What will the internal focus be?– Ensure clinical excellence Ensure clinical excellence

through leading edge programs through leading edge programs and techniques in focused and techniques in focused specialty areasspecialty areas

– Align research priorities to Align research priorities to support leading programs and support leading programs and stay out front in treatment stay out front in treatment methodsmethods

• Will our people be prepared to Will our people be prepared to do that?do that?

– Yes, with appropriate Yes, with appropriate technologytechnology

– Yes, by recruiting critical Yes, by recruiting critical expertiseexpertise

Maximize High Margin

Opportunities

Strong Financial Base

FinancialFinancial

CustomerCustomerSpecialty Care Patients

Referring Providers

Leading EdgeTechnology

Leading EdgeExpertise

InternalInternal

Continually

DevelopClinical

ExcellenceDevelop Leading

Edge Programs/Techniques

Learning & GrowthLearning & Growth

Develop Critical Staffing

Resource Plans

Align ResearchPriorities

Implement Technologyto Support Processes

and Programs

Implement Managed

Growth

The Balanced Scorecard The Balanced Scorecard as a Management Systemas a Management System

BSC reviewed regularly to enhance BSC reviewed regularly to enhance operational decision-makingoperational decision-making

• Success of initiatives assessed Success of initiatives assessed based on DATA… not opinionsbased on DATA… not opinions

• Leading indicators evaluated to Leading indicators evaluated to confirm accuracy of assumptionsconfirm accuracy of assumptions

The Balanced Scorecard as a The Balanced Scorecard as a Management SystemManagement System

The BSC is a “Living Document” that The BSC is a “Living Document” that requires regular revision of objectives, requires regular revision of objectives, measures and initiatives: measures and initiatives:

• How are we doing? How are we doing? • Are we measuring the right things? Are we measuring the right things? • What initiatives do we need to get us What initiatives do we need to get us

where we want to go?where we want to go? • Have our organizational goals changed?Have our organizational goals changed?

Rapid Deployment Case Study: Major Rapid Deployment Case Study: Major Federal OrganizationFederal Organization

Need

Approach

Benefits

•Definition of “Corporate” strategy

•Rapid roll-out and broad reach

•Develop internal capabilities to sustain momentum

•Develop Corporate Balanced Scorecard

•Define template for rolling out BSC

•Train subordinate units

•Streamline project management

•Quality checks

•Online education

•Clear guidance from Corporate

•Active involvement from client teams

•Rapid deployment with minimal resources

•Quality control

Advantages to this ApproachAdvantages to this Approach

• Simple to Use and UnderstandSimple to Use and Understand

• Based on Vision and StrategyBased on Vision and Strategy

• Multidimensional Multidimensional

•Quantitative and Qualitative MeasuresQuantitative and Qualitative Measures

•Current and FutureCurrent and Future

• Provides Measurement of and Method for Provides Measurement of and Method for Improving our ServicesImproving our Services

• Ties QI initiatives togetherTies QI initiatives together

• Serves as a Communication ToolServes as a Communication Tool

Thank YouThank You

the balanced scorecard presented to adnan alshiha presented by alaoula board member

Documents

balanced scorecard measures

balanced scorecardsin

scorecard implementation

productivity strategy

gap strategy

organization slide

strategic initiatives

action strategy