002 balanced scorecard-cost-value creation
Download as PPT, PDF2 likes1,784 views
The document discusses the need for and benefits of a balanced scorecard approach to strategy implementation and value creation. It explains that intangible assets now make up the majority of company value, but these assets do not directly impact financial results. A balanced scorecard allows companies to manage both financial and non-financial drivers of value such as customers, innovation, and employee learning and growth. It also outlines how to design a balanced scorecard by translating strategy into objectives across financial, customer, internal process, and learning/growth perspectives and aligning objectives and measures across the organization. Change management is key to ensuring successful implementation and ongoing use of the balanced scorecard approach.
![Manpower
Index (SMI)
Non Energy Cash
Costs (NECC)
Maintenance
Index (MI)
Man Hours
Unit of Hardware
Unit of
Hardware is
a constraint
Man Hours
is not a
constraint
Man Hour
Categories
Standard Hours
Turnaround Hours (Outside
of current scope)
Other Hours (Outside of
Maintenance Engineering
Services)
Contractor
Hours
Shell Hours
Skills constraint
Risk constraint
Profit constraint
Equipment constraint
Shell hours constraint
Response Time = Sigma [Job Time Raised – Job Time Closed]
No. of Jobs
Availability = (Total m/c hrs) - (m/c downtime hrs) x 100
(Total m/c hrs)
Reliability (MTBF) = (Total m/c hrs) - (m/c downtime hrs)
No. of Breakdowns
Maintainability (MTTR) = (m/c downtime hrs)
No. of Breakdowns
PM Index = No. of m/c for which PM is carried out
No. of m/c due for PM
Crew Utilization = Total earned hrs x 100
Actual available hrs
MMTR = Mean Time To RepairMTBF = Mean Time Between Failures Versus
MTBM = Mean Time Between Maintenance?
Backlog Hours = Sigma [Job in queue x standard time]
Cost = Actual Job Cost +
Lost Opportunity
Routine Index (MI)
Turnaround Index (MI)
Maintenance
Capex
Maintenance
Costs
Inspection Costs
Routine
Costs
Plant
transforma
tions
Extraordinary Costs
Operating
Costs
Contractor
Costs
Turnaround Cost
(Outside of
current scope)
Equipment Constraint Hours
Risk Constraint Hours
Skills Constraint Hours
Profit Constraint Hours
Non Constraint Hours
RCA Design %
RCA
Installation/
Repair %
RCA
Utilization %
RCA
Preventative %
RCA Planned %
Maintenance Schedule Adherence
Planning Accuracy =
Actual Hours/Estimated
Hours
Align :KPI Roll Down – Oil RefineryAlign :KPI Roll Down – Oil Refinery](https://image.slidesharecdn.com/002-balancedscorecard-cost-valuecreation-161028094028/85/002-balanced-scorecard-cost-value-creation-24-320.jpg)
002 balanced scorecard-cost-value creation
- 1. BALANCED SCORED TOOL FOR VALUE CREATION
- 2. Why Need a Balanced Scorecard?Why Need a Balanced Scorecard? The Source of Value Has Shifted From Tangible to Intangible Assets Intangible Assets Tangible Assets 38% 62% 85% 38% 15% 62% 1982 1992 2000 + percentage of market value related to…
- 3. Value Creation: IntangibleValue Creation: Intangible AssetsAssets Intangible Assets Do Not Have AIntangible Assets Do Not Have A Direct Impact on Financial ResultsDirect Impact on Financial Results They Have Second- or Third-OrderThey Have Second- or Third-Order ImpactsImpacts Service Quality Service Quality Customer Confidence Customer Confidence Revenue Customer Retention Training Information Technology
- 4. Value Creation: Intangible AssetsValue Creation: Intangible Assets Conventional approach to managingConventional approach to managing financial & operational indicatorsfinancial & operational indicators insufficientinsufficient Balanced Approach to StrategyBalanced Approach to Strategy Implementation should includes focusImplementation should includes focus on:on: customer/stakeholdercustomer/stakeholder LearningLearning growth & innovationgrowth & innovation
- 5. BALANCED SCORED Understanding &Understanding & managing/leveraging inter-managing/leveraging inter- relationships between the aboverelationships between the above areas necessary for value creationareas necessary for value creation
- 6. Balanced Scorecard as a Tool forBalanced Scorecard as a Tool for Business ExcellenceBusiness Excellence Malcolm BaldrigeMalcolm Baldrige Balanced ScorecardBalanced Scorecard LeadershipLeadership Learning & Growth Perspective Learning & Growth Perspective Human Resource CapitalHuman Resource Capital Business ResultsBusiness Results Process ManagementProcess Management Strategic PlanningStrategic Planning Strategy MapStrategy Map Learning & Growth Perspective Learning & Growth Perspective Internal Process PerspectiveInternal Process Perspective Customer FocusCustomer Focus Customer PerspectiveCustomer Perspective Targets, Financial Perspective Targets, Financial Perspective
- 7. Balanced ScorecardBalanced Scorecard Balanced Scorecard’s keyBalanced Scorecard’s key objective is not aboutobjective is not about Measurement as the termMeasurement as the term would outwardly conveywould outwardly convey Its aboutIts about ValueValue creation -Execution ofcreation -Execution of StrategyStrategy
- 10. Balanced Scorecard Links Vision & Strategy to Personal Objectives VISION What we want to be STRATEGY Our game plan STRATEGIC OUTCOMESSTRATEGIC OUTCOMES Satisfied SHAREHOLDERS Satisfied SHAREHOLDERS Delighted CUSTOMERS Delighted CUSTOMERS Efficient and Effective PROCESSES Efficient and Effective PROCESSES Motivated & Prepared WORKFORCE Motivated & Prepared WORKFORCE PERSONAL OBJECTIVES What I need to do BALANCED SCORECARD Translate, Focus and Align TRANSFORMATION OBJECTIVES What we must improve
- 11. Strategy Implementation ProcessStrategy Implementation Process Sustained StrategySustained StrategyStrategic DirectionStrategic Direction Strategic Guidelines Strategic Guidelines StrategyStrategy Stage Output Institutionalization of the process Institutionalization of the process Identification & definition of areas of improvement Identification & definition of areas of improvement Development of solution and testing Development of solution and testing Implementation of solution across all units Implementation of solution across all units Activity Business Health Check Business Health Check Design Process Design Process RolloutRollout InstitutionalizationInstitutionalization
- 12. Business Audit AreasBusiness Audit Areas Business Health CheckBusiness Health Check Depending on the critical needsDepending on the critical needs of a business , at a point ofof a business , at a point of time, the Business Health Checktime, the Business Health Check will focus on some or all of thewill focus on some or all of the following areas:following areas:
- 13. Business Audit AreasBusiness Audit Areas
- 14. Business Audit AreasBusiness Audit Areas
- 15. Business Audit AreasBusiness Audit Areas
- 16. Scorecard Design & RolloutScorecard Design & Rollout BALANCED SCORECARD S T R A T E G Y Mobilize change through executive leadership Change people, make strategy everyone’s everyday job Align the organization to create synergies Translate the strategy to operational terms Integrate improvement programmes with scorecard
- 17. Scorecard Design & RolloutScorecard Design & Rollout BALANCED SCORECARD S T R A T E G Y Translate the strategy to operational terms
- 18. Brand / product development, sales, service, operations, logistics.. Activities needed to create the required customer value proposition and differentiation and the desired financial outcomes Organization infrastructure, skills, capabilities, knowledge of employees, working climate.. The ability to execute internal business processes in new differentiated ways Organization infrastructure, skills, capabilities, knowledge of employees, working climate.. The ability to execute internal business processes in new differentiated ways Who are the target customers that will generate the revenue growth? What are the objectives and how do we measure success with them? Who are the target customers that will generate the revenue growth? What are the objectives and how do we measure success with them? What are the financial objectives for growth and productivity? What are the major sources of growth? What are the financial objectives for growth and productivity? What are the major sources of growth? Translate : Strategy into 4 ComponentsTranslate : Strategy into 4 Components Vision and Strategy Vision and Strategy Financial Perspective Financial Perspective Customer Perspective Customer Perspective Internal Perspective Internal Perspective Learning and growth Perspective Learning and growth Perspective
- 19. •Patent Score for Process Improvements •SWIFT Training to Branches, Terminator Workshops •Performance within TATs •Quality •Productivity •% Complaints to Transactions •Branch Contacts with Customers, Delivery Success Rate % Research, Education & Teaching Translate : Terminator Zero UnhappinessTranslate : Terminator Zero Unhappiness Internal Processes MissionMission To ensure that the all causes of Unhappiness for Customer are Terminated in order for the bank to vie for Service Leadership •Customer Complaints •Customer Feedback Scores •Repeat Contacts •Request Closure beyond 24 Hours CustomerCustomer •Cost of Complaints •% of Business through Cross Selling •Average Revenue Per Customer FinancialFinancial
- 20. LeadingLeading Definition LaggingLagging InputInput OutputOutput OutcomeOutcome Objective /Objective / QuantitativeQuantitative Example Intermediate outcomes that predicts or drive bottom-line performance results Measure Type Bottom-line performance results resulting from actions taken Amount of Investments, assets, equipment, labor hours, or budget dollars used Units of a product or service rendered - a measure of yield Resulting effect (benefit) of the use or application of an output Empirical indicators of performance Subjective /Subjective / QualitativeQualitative Perceptions and evaluations of major customers and stakeholders Employee turnover rate Employee satisfaction rating Number of Value Meal orders fulfilled Customer satisfaction rating Wait time Customer complaints received as a % of total customers served Number of cashiers Translate: Types of MeasurementsTranslate: Types of Measurements
- 21. Scorecard Design & RolloutScorecard Design & Rollout BALANCED SCORECARD S T R A T E G Y Align the organization to create synergies
- 22. Align: Use Strategy Map to Build Cause & EffectAlign: Use Strategy Map to Build Cause & Effect RelationshipsRelationships Improve ROCE Revenue Growth Strategy Productivity Strategy Build the Franchise Increase Customer Value Improve Cost Structure Improve Asset Utilization A Motivated and Prepared Workforce New Revenue Sources Customer Profitability Cost per Unit Asset Utilization Price Financial Perspective Customer Perspectiv e Internal Perspective Learning & Growth Perspective Product/Service Attributes Strategic Competencies Strategic Technologies Climate for Action “Build the Franchise” “Increase Customer Value” “Achieve Operational Excellence” (Innovation Processes) (Customer Management Processes) (Operations & Logistics Processes) Customer Value Proposition Quality Operational Excellence Product Leadership Customer Satisfaction Customer Acquisition Customer Retention Time Function Service Relations Bran d Relationship Image Market Share
- 23. ReviewReview ReviewReview ReviewReview ReviewReviewReviewReview ReviewReview ReviewReview ReviewReview ReviewReview Align : Flow of the Scorecard AlongAlign : Flow of the Scorecard Along The OrganizationThe Organization Production Shift Scorecard Packing Shift Scorecard Production Daily Scorecard Maintenance Daily Scorecard Department Weekly Scorecard Packing Daily Scorecard PC/QC Daily Scorecard Maintenance Weekly Scorecard PC/QC Weekly Scorecard Plant Head :Weekly Value Loss Scorecard & Analysis
- 24. Manpower Index (SMI) Non Energy Cash Costs (NECC) Maintenance Index (MI) Man Hours Unit of Hardware Unit of Hardware is a constraint Man Hours is not a constraint Man Hour Categories Standard Hours Turnaround Hours (Outside of current scope) Other Hours (Outside of Maintenance Engineering Services) Contractor Hours Shell Hours Skills constraint Risk constraint Profit constraint Equipment constraint Shell hours constraint Response Time = Sigma [Job Time Raised – Job Time Closed] No. of Jobs Availability = (Total m/c hrs) - (m/c downtime hrs) x 100 (Total m/c hrs) Reliability (MTBF) = (Total m/c hrs) - (m/c downtime hrs) No. of Breakdowns Maintainability (MTTR) = (m/c downtime hrs) No. of Breakdowns PM Index = No. of m/c for which PM is carried out No. of m/c due for PM Crew Utilization = Total earned hrs x 100 Actual available hrs MMTR = Mean Time To RepairMTBF = Mean Time Between Failures Versus MTBM = Mean Time Between Maintenance? Backlog Hours = Sigma [Job in queue x standard time] Cost = Actual Job Cost + Lost Opportunity Routine Index (MI) Turnaround Index (MI) Maintenance Capex Maintenance Costs Inspection Costs Routine Costs Plant transforma tions Extraordinary Costs Operating Costs Contractor Costs Turnaround Cost (Outside of current scope) Equipment Constraint Hours Risk Constraint Hours Skills Constraint Hours Profit Constraint Hours Non Constraint Hours RCA Design % RCA Installation/ Repair % RCA Utilization % RCA Preventative % RCA Planned % Maintenance Schedule Adherence Planning Accuracy = Actual Hours/Estimated Hours Align :KPI Roll Down – Oil RefineryAlign :KPI Roll Down – Oil Refinery
- 25. Align : Lowest Organism in the FoodAlign : Lowest Organism in the Food ChainChain Mobil – Truck DriversMobil – Truck Drivers Truck drivers were initially skeptical about how they couldTruck drivers were initially skeptical about how they could affect any of the corporate strategic themes.affect any of the corporate strategic themes. They knew that their job was to deliver to customersThey knew that their job was to deliver to customers By driving safely and avoiding accidents truck drivers couldBy driving safely and avoiding accidents truck drivers could improve performance on all internal measures that wereimprove performance on all internal measures that were identified… lower costs, reliable, on time, environmentallyidentified… lower costs, reliable, on time, environmentally friendlyfriendly ICICI-Fire in the BranchICICI-Fire in the Branch Every single mistake by a branch added up to a lot of failuresEvery single mistake by a branch added up to a lot of failures countrywidecountrywide Single complaint in a branch will bring the branch to aSingle complaint in a branch will bring the branch to a standstillstandstill Would track to one activity not being done by a single personWould track to one activity not being done by a single person Refer to Drawer syndromeRefer to Drawer syndrome
- 26. Align : Balanced Scorecard withAlign : Balanced Scorecard with Organizational DesignOrganizational Design
- 28. All complaints to be resolved with root fix ComplaintsComplaints Get it right first time. Call up a customer if error is noticed TransactionsTransactions Ensure First Contact Resolution ContactsContacts Good Closure Quality Service RequestsService Requests Root Cause Analysis & Review Reduce Service Failure Flow Delivery FailureDelivery Failure Align :Mission Zero UnhappinessAlign :Mission Zero Unhappiness
- 29. Scorecard Design & RolloutScorecard Design & Rollout BALANCED SCORECARD S T R A T E G Y Change people, make strategy everyone’s everyday job
- 30. ConsciousUnconscious Incompetent Competent Direct Delegate Support Coach The Four States of Mind! ConsciousUnconscious Incompetent Competent Compliance Culture Understanding Usage Minds Path Matrix ……No shortcuts possible...No shortcuts possible... Change : Minds Path MatrixChange : Minds Path Matrix
- 31. Change : Minds Path MatrixChange : Minds Path Matrix Compliance Culture Understanding Usage • People understand that they are “being told” to do something new. • Why because they don’t see the use of it !! • This is normally viewed as extra non-value added responsibility. • If you stop checking, they will stop trying.
- 32. Change: Minds Path MatrixChange: Minds Path Matrix Compliance Culture Understanding Usage • People don’t think about the new system& processes anymore. It is THEIR system now. • They fully optimize the usage of data gathered at all levels. • They use the Scorecards to drive improvements in business performance. • They improve details of the systems as per the requirements.
- 33. Success Hope Problem Definition Solution Development Solution Implementation Culture Change Pain The Mind’s Path To Success Change ManagementChange Management
- 34. Change : Keep Scorecards FocusedChange : Keep Scorecards Focused At least one objective/measure per perspectiveAt least one objective/measure per perspective No more than 15 measuresNo more than 15 measures Personal scorecard must support supervisor’sPersonal scorecard must support supervisor’s scorecardscorecard Every supervisor must have an objective andEvery supervisor must have an objective and measure for coaching and employee developmentmeasure for coaching and employee development Scorecard must include an objective and measureScorecard must include an objective and measure thatthat supports another part of the businesssupports another part of the business •
- 35. •Key Issue: RTO returns would sit at the branches, waiting for customer to collect them •Solution: Outbound Calling •Every deliverable cleared resulted in a happy customer, lesser rework & cost savings •Average Contact Ratio:65% Data :Nov04-Jun 05 Change : RCA Deliverables Not ReceivedChange : RCA Deliverables Not Received
- 36. Change Management : Link to IncentivesChange Management : Link to Incentives ICICIICICI Zero Unhappiness BranchesZero Unhappiness Branches VNCVNC Incremental Performance over Base Performance isIncremental Performance over Base Performance is rewardedrewarded Sales Reps often make incentive over and aboveSales Reps often make incentive over and above salarysalary Performance observed over a quarterly period toPerformance observed over a quarterly period to avoid monthly manipulationsavoid monthly manipulations
- 37. Change : Assessment Management SystemChange : Assessment Management System ““ If you can’tIf you can’t measure it, youmeasure it, you can’t manage it.”can’t manage it.” The secret to successful change management is to be able to assessThe secret to successful change management is to be able to assess and measure your progress through the ‘minds path’and measure your progress through the ‘minds path’ Change Management Assessment SystemChange Management Assessment System The four mindsets must be measured by Auditing.The four mindsets must be measured by Auditing.Auditing is aAuditing is a quantitative measure of a qualitativequantitative measure of a qualitative
- 38. • Audit questionnaires are developed to assess the mindset levels using a structured approach: 1. Closed ended questions for compliance. 2. Open ended questions for understanding. 3. Demonstrative questions for usage. • The audit questionnaire answers get converted into a scoring scheme… • 0 for wrong or not done. • 1 for partially right or partly done. • 3 for correct or demonstrated. • The percentages of each system performance category are plotted • The target is 100%. Change :Assessment ManagementChange :Assessment Management System (CAMS)System (CAMS)
- 39. Installation Status 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% -5 -4 -3 -2 -1 0 Current Period Achievement Installed Partially Installed Not Installed System Utilization Status 0% 20% 40% 60% 80% 100% -5 -4 -3 -2 -1 Current Period Achievement Mechanical Understanding Usage Installation StatusInstallation Status Change : Assessment ManagementChange : Assessment Management System(CAMS)System(CAMS)
- 40. Ask the Head THE PUNY PAYOFF FROM OFFICE COMPUTERS ED IT O RIAL H S pecial Repo rt MA N AGEM EN T'S NE W EST STEP C ove r Story THE COMPUTER SLUMP Sp eci al Re po rt MA NAG E MEN T D IS C OV ER S THE HU M A N SID E OF A U TO M ATION Bulletin Boards Newsletters Classes Training Workshops Company Intranet Change : Training & CommunicationChange : Training & Communication
- 41. Change : Training in Problem Solving –Change : Training in Problem Solving – Decision MakingDecision Making Objective: Objective: The Program intends to provide an insight to theThe Program intends to provide an insight to the participants in to the techniques for confrontingparticipants in to the techniques for confronting the issues and arrive at alternatives to resolvethe issues and arrive at alternatives to resolve them effectively using various tools andthem effectively using various tools and techniques.techniques. The program is structured to provide an exposureThe program is structured to provide an exposure to the systematic approach to logical decisionto the systematic approach to logical decision making for attaining most optimal use ofmaking for attaining most optimal use of resources and enhanceresources and enhance effectiveness.effectiveness.
- 42. Change : Training in Problem Solving –Change : Training in Problem Solving – Decision MakingDecision Making Proposed Program Contents: Proposed Program Contents: Problem SolvingProblem Solving A conscious, systematic approach forA conscious, systematic approach for analyzing situations and articulatinganalyzing situations and articulating problems, underlying assumptions andproblems, underlying assumptions and expected outcomesexpected outcomes Root Cause AnalysisRoot Cause Analysis: A structured: A structured investigation that aims to identify the trueinvestigation that aims to identify the true cause of a problem and the actionscause of a problem and the actions necessary to eliminate it.necessary to eliminate it. Covers tools & techniques for problemCovers tools & techniques for problem understanding, cause generation, dataunderstanding, cause generation, data collection, cause-and-effect analysiscollection, cause-and-effect analysis
- 43. Change : Training in Problem Solving –Change : Training in Problem Solving – Decision MakingDecision Making Six Hat Thinking:Six Hat Thinking: Harness lateralHarness lateral thinking capabilities to unearth thethinking capabilities to unearth the resources available and make optimalresources available and make optimal use of them to gain expecteduse of them to gain expected outcomes. Avoiding ten mentaloutcomes. Avoiding ten mental creative lockscreative locks Force Field AnalysisForce Field Analysis: Identifying: Identifying potential risks and opportunitiespotential risks and opportunities inherent in the situationsinherent in the situations 80-20 Analysis or Pareto Principle:80-20 Analysis or Pareto Principle: Prioritizing & focusing problemPrioritizing & focusing problem solving exercise on key issuessolving exercise on key issues
- 44. Change : Training in Problem Solving –Change : Training in Problem Solving – Decision MakingDecision Making Decision MakingDecision Making Even SwapsEven Swaps : A rational method for: A rational method for analyzing decision options & making swapsanalyzing decision options & making swaps Hidden Traps of Decision MakingHidden Traps of Decision Making & how& how to avoid themto avoid them Group Decision Making:Group Decision Making: Using groupUsing group decision making techniques like consensusdecision making techniques like consensus & NGT. Avoiding usual traps of decision& NGT. Avoiding usual traps of decision making like Groupthinkmaking like Groupthink Decision Implementation:Decision Implementation: DecisionDecision implementation plan, monitoring,implementation plan, monitoring, feedback & change managementfeedback & change management
- 45. Scorecard Design & RolloutScorecard Design & Rollout BALANCED SCORECARD S T R A T E G Y Integrate improvement programmes with scorecard
- 46. Scorecard’s Role in TransformationScorecard’s Role in Transformation Scorecard is an indispensable tool toScorecard is an indispensable tool to manage & monitor amanage & monitor a transformation/business performancetransformation/business performance improvement programmeimprovement programme Scorecard Implementation needs to beScorecard Implementation needs to be supported by functional/departmentalsupported by functional/departmental initiativesinitiatives Scorecard supported by a TransformationScorecard supported by a Transformation Initiative drives Business ResultsInitiative drives Business Results
- 47. Goal Objective Measurement Target Initiative Achieve operational efficiencies with best practices in Reduce Operational Service Costs by 50% over the next 5 years Cost per Outlet Office, Cost per Region, Cost per FTE 5% - Year 1 10% - Year 2 15% - Year 3 Activity Based Costing / Management Reduce identified re-activities within primary processes by 80% over the next 3 years Waste Volume Charts, Rework Tracking, Cycle Time End to End in S-LX (5 of 7 Regions) Waste stream reductions of 5% each year, Reworks cut in half for next 3 years, cycle time cut by 75% Lean / Six Sigma Integrate : Goals, Measurement &Integrate : Goals, Measurement & Improvement InitiativesImprovement Initiatives
- 48. When you first launch your Initiative, you probably want to use an Output Measurement. Once the Initiative is up and running, integrate your measurement to an Outcome to see if the Initiative is really having strategic impact. InitiativeInitiative Output MeasurementOutput Measurement Outcome MeasurementOutcome Measurement Lean Process / SixLean Process / Six SigmaSigma Number of ProjectsNumber of Projects Defined by RegionDefined by Region Overall reductions in errors,Overall reductions in errors, reworks, and cycle timesreworks, and cycle times Employee CompetencyEmployee Competency ModelsModels % of Employees who have a% of Employees who have a Competency Model in placeCompetency Model in place Higher skill levels of employeesHigher skill levels of employees using the modelsusing the models Integrate :Going from Output to OutcomeIntegrate :Going from Output to Outcome
- 49. Integrate: Retail ManagementIntegrate: Retail Management Control SystemControl System ForecastForecast PlanPlan ControlControl ReportReport ManagerManager RetailRetail DistributorDistributor DSMDSM Retailer / Customer Sales Plan Route plan Contact Plan Customer / Retail Card DSM Daily Score Card Territory Sales Target Retail Manager Contact Plan Distributor Coverage Target DSM Target DSM Weekly Score Card DSM Monthly Score Card Distributor Weekly Score Card Distributor Monthly Score Card Review Distributor Sales Target Market Intelligence Retail Mgr SegmentSegment ManagerManager Marketing Department Review Review Segment Mgr Monthly Score Card Retail Mgr Ride with Segment Mgr Weekly Score Card Segment Sales Target Review Distributor Daily Score Card Review Direct Sales input Retail Mgr Daily Score Card Review Review Review Review Segment Mgr Daily Score Card Review Review Review Distributor Quarterly ROI Analysis Marketing Ride with Retail Mgr Weekly Score Card Retail Mgr Monthly Score Card
- 50. Integrate : ICICI Transformation ControlIntegrate : ICICI Transformation Control SystemSystem Budget for Key Metrics for Mar 05 Daily Measurement of Metrics:Alarm Express Daily Review & Course Correction Weekly comparison of Budget vs. Actual Root Cause Analysis Fortnightly Review Zero Unhappiness Scorecard & RCA Improvement Implementation Plan Senior Management Junior & Middle Management Planning Control Analysis & Review Focus on Short Interval Measurement, Analysis &Review
- 51. Scorecard Design & RolloutScorecard Design & Rollout BALANCED SCORECARD S T R A T E G Y Mobilize change through executive leadership
- 52. Mobilize : Top Management CommitmentMobilize : Top Management Commitment 1.Creating the Climate for Change1.Creating the Climate for Change Unfreeze the organizationUnfreeze the organization Show the need for changeShow the need for change 2.2. Creating the Leadership TeamCreating the Leadership Team Breaking down functional biasBreaking down functional bias 3.3. Creating the Vision and StrategyCreating the Vision and Strategy BSC as a “visioning process”BSC as a “visioning process” BSC to clarify the strategyBSC to clarify the strategy 4.4. Creating Team AccountabilityCreating Team Accountability Accountability for cross-functional strategic themes at Executive TeamAccountability for cross-functional strategic themes at Executive Team levellevel A successful Balanced Scorecard program starts with aA successful Balanced Scorecard program starts with a recognition that it is not a “metrics” project, it’s arecognition that it is not a “metrics” project, it’s a “change” process.“change” process.
- 53. Strategic Learning Loop Initiatives & Programs test the hypotheses Output (Results) reportingManagement Control Loopfunding Input (Resources) update the strategy PERFORMANCE 85% of management teams spend less than one hour per month on strategy issues 92% of organizations do not report on lead indicators 60% of organizations don’t link strategy & budgets 78% of organizations lock budgets to an annual cycle 20% of organizations take more than 16 weeks to prepare a budget STRATEGY BALANCED SCORECARD BUDGET Mobilize :Tight Focus & Extensive ReviewMobilize :Tight Focus & Extensive Review
- 54. Mobilize : Red Buttons to AvoidMobilize : Red Buttons to Avoid Middle Management Team: Lack of SeniorMiddle Management Team: Lack of Senior Management CommitmentManagement Commitment Done by One or Two IndividualsDone by One or Two Individuals Held at the Top: For Senior Management OnlyHeld at the Top: For Senior Management Only Too Long a Development Process: “Best BecomesToo Long a Development Process: “Best Becomes the Enemy of the Good”the Enemy of the Good” Treating the Balanced Scorecard as a SystemsTreating the Balanced Scorecard as a Systems ProjectProject Done Only for CompensationDone Only for Compensation Not Treated as a Change Management ProjectNot Treated as a Change Management Project
- 55. ContextContext Focus on Top line. ICICI Bank perceived to be veryFocus on Top line. ICICI Bank perceived to be very aggressive on sales , very poor on service.aggressive on sales , very poor on service. For bottom-line to improves it was important forFor bottom-line to improves it was important for the bank to be a service leader.the bank to be a service leader. Improved ServiceImproved Service Leads to improved productivity & profitLeads to improved productivity & profit Generates a positive word of mouth. Attracts newGenerates a positive word of mouth. Attracts new customerscustomers Provides a competitive advantage.Provides a competitive advantage. More difficult and slower for a competitor to respond toMore difficult and slower for a competitor to respond to service improvement than to price change.service improvement than to price change. Help us retain customers.Help us retain customers. Cheaper to retain customers than to acquire new onesCheaper to retain customers than to acquire new ones
- 56. •Patent Score for Process Improvements •SWIFT Training to Branches, Terminator Workshops •Performance within TATs •Quality •Productivity •% Complaints to Transactions •Branch Contacts with Customers, Delivery Success Rate % Research, Education & Teaching Terminator : Zero UnhappinessTerminator : Zero Unhappiness Internal Processes Mission To ensure that the all causes of Unhappiness for Customer are fully Terminated in order for the bank to vie for Service Leadership •Customer Complaints •Customer Feedback Scores •Repeat Contacts •Request Closure beyond 24 Hours Customer •Cost of Complaints •% of Business through Cross Selling •Average Revenue Per Customer Financial
- 57. Zero Unhappiness Scorecard Branches-SampleZero Unhappiness Scorecard Branches-Sample To p Bran ch CRs # Fe b Bu d g e t Fe b A ctu al Varian ce Jan '05 Dec '04 Nov '04 Ikit not activ ated 125 5 0 7 5 169 245 422 Instruction for A/c closure not executed 120 8 0 4 0 242 139 182 Cash Deposited A t Branch Not Credited 90 8 6 4 121 209 188 A ddress change not done 140 1 3 7 3 183 187 189 Transfer Of A ccounts related issues 65 5 5 1 0 88 169 168 A /c Not Opened 20 4 1 6 37 131 101 Outstation collection - Dispute in Am t 20 2 1 8 50 64 66 FD Renew al not done - deposits 10 9 1 8 32 23 TDS A m ount Deducted Disputed 5 5 0 11 13 10 Fixed deposit not linked to account 5 0 5 6 10 6 Form 15 H Not Entered 0 0 0 0 0 1 Cash Deposit In A tm Not Crdited 12 4 8 21 35 56 Fixed Deposit Interest Chq Not Receiv ed 2 0 2 3 3 8 Local Outw rd chq returned physical chq not recd 5 3 2 11 17 24 TO TA L 6 1 9 4 3 5 950 1254 1444 To tal Q u a lity Bu d g e t Fe b 1 -1 5Varian ce Jan Dec Nov Quality -North 90% 9 0 % 0% 45% 55% 58% Quality -East 90% 8 3 % -7% 69% 58% 70% Quality -West 90% 9 5 % 5% 65% 59% 59% Quality -South 90% 7 9 % -11% 60% 58% 58% Overall Branch Banking 90% 8 7 % -3% 60% 58% 61% To tal TA T Bu d g e t Fe b 1 -1 5Varian ce Jan Total CR beyond 24 hours 0 51 -51 82 Ze ro U n h ap p in e s s S co re c ard -D e p o s its - Bran ch e s
- 58. Sample Scorecard Scorecard presented & reviewed in fortnightly reviews All variances are linked to RCA Comparison of Monthly Performance Vs. Budget Focus on Top Service Failures Key Indicators Focused On : Number of Service Failures, Quality, Service Request Closed within TAT
- 59. Scorecard Related RCA : DeliverablesScorecard Related RCA : Deliverables Not ReceivedNot Received Apart from wrong creation, dispatch/delivery related issues needed focus
- 60. •Key Issue: RTO returns would sit at the branches, waiting for customer to collect them •Solution: Outbound Calling •Every deliverable cleared resulted in a happy customer, lesser rework & cost savings •Average Contact Ratio:65% Data :Nov04-Jun 05 RCA: Deliverables Not ReceivedRCA: Deliverables Not Received
- 61. RCA : Deliverables Not ReceivedRCA : Deliverables Not Received Issue :E-search UpdateIssue :E-search Update E-search information for certain deliverables not updated/E-search information for certain deliverables not updated/ available resulting in inadequate /incomplete information toavailable resulting in inadequate /incomplete information to customers & Service Request creation errorscustomers & Service Request creation errors Initiative :E-Search Update (CTD Initiative)Initiative :E-Search Update (CTD Initiative) Identified mandatory uploads for First Contact ResolutionIdentified mandatory uploads for First Contact Resolution related to RPC/ CPC processesrelated to RPC/ CPC processes Designed and finalized the file formats for all mandatoryDesigned and finalized the file formats for all mandatory uploads - easy reading for front enduploads - easy reading for front end National Co-ordinator appointed to tracking e-search openNational Co-ordinator appointed to tracking e-search open cases and timely uploadscases and timely uploads I-KIT AOF Rejections,Modification Request Rejections,NominationI-KIT AOF Rejections,Modification Request Rejections,Nomination Rejection Letters Nomination Registration Request Rejections,NonRejection Letters Nomination Registration Request Rejections,Non I-Kit SB/FD-RD AOF Rejections,Transfer of Account-I-Kit SB/FD-RD AOF Rejections,Transfer of Account- Rejections,Transfer Cheque Returns, ATM Retained Cards,TDS -Rejections,Transfer Cheque Returns, ATM Retained Cards,TDS - Form 15G Rejections etc.Form 15G Rejections etc.
- 62. 4307529 9037555 14793313 21799520 29187237 37593205 O ct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Terminator Results- Cost SavingTerminator Results- Cost Saving Through Failure ReductionThrough Failure Reduction
- 63. Results - Service Failures as % ofResults - Service Failures as % of TransactionsTransactions 47211 6292671624 76392 102705 108124 84805 85096 86549 79463 80410 55161 0.09% 0.17% 0.26% 0.27% 0.20% 0.20% 0.21% 0.18% 0.17% 0.11% 0.12% 0.15% 0 20000 40000 60000 80000 100000 120000 Apr-04 May- 04 Jun-04 Jul-04 Aug-04 Sep- 04 Oct-04Nov-04 Dec- 04 Jan-05Feb-05 Mar- 05 Months #ofCriticalRequests 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% %agetoTotalTransactions # of Critical Requests % Age to Total Transactions (RHS)
- 64. Results – Quality of Request HandlingResults – Quality of Request Handling 55% 62% 62% 64% 64% 68% 69% 72% 68% 77% 88% 87% 30% 50% 70% 90% Apr- 04 May- 04 Jun- 04 Jul-04 Aug- 04 Sep- 04 Oct-04 Nov- 04 Dec- 04 Jan- 05 Feb- 05 Mar- 05
- 65. Results-Customer Feedback ScoresResults-Customer Feedback Scores 74% 78% 80% 64% 70% 85% 88% 87% 63% 67% 75% 83% 56% 62% 77% 80%80% 82% 80% 81% 76% 72% 55% 65% 75% 85% Q-I '04 Q-II '04 Q-III '04 Jan'05 Feb'05 Mar'05 Phone banking Liability Branches Asset Branches- Home Loan Asset Branches- Consumer Loan
- 66. Indonesian Textile Giant CaseletIndonesian Textile Giant Caselet The company is one of the largest Textile companyThe company is one of the largest Textile company in Indonesiain Indonesia Company had been hit heavily by currency crashCompany had been hit heavily by currency crash In order to improve bottom-lines a plan to reduceIn order to improve bottom-lines a plan to reduce the various kind of value losses in production,the various kind of value losses in production, quality, packing, utility etc.quality, packing, utility etc. Ambitious target of USD 4 Million in Value LossAmbitious target of USD 4 Million in Value Loss Reduction was setReduction was set Initiatives like TQM, Setting up Management ControlInitiatives like TQM, Setting up Management Control Systems Organizational re-structuring wereSystems Organizational re-structuring were pioneeredpioneered Balanced Scorecard was used as a strategyBalanced Scorecard was used as a strategy implementation tool to support Strategyimplementation tool to support Strategy ImplementationImplementation
- 67. •Patent Score for Process Improvements •SWIFT Training to Branches, Terminator Workshops •Performance within TATs •Quality •Productivity •% Complaints to Transactions •Branch Contacts with Customers, Delivery Success Rate % Research, Education & Teaching Project Zero Value LossProject Zero Value Loss Internal Processes Mission To ensure that the all causes of Unhappiness for Customer are fully Terminated in order for the bank to vie for Service Leadership •Customer Complaints •Customer Feedback Scores •Repeat Contacts •Request Closure beyond 24 Hours Customer •Cost of Complaints •% of Business through Cross Selling •Average Revenue Per Customer Financial
- 68. Weekly CEO Scorecard – Value LossWeekly CEO Scorecard – Value Loss Total Cost USD 47,493 50,132 52,089 -4,596 Maintenance Cost USD 0 0 Steam Cost USD 1,200 1,080 1,140 1,137 -57 Power Cost USD 51,570 46,413 48,992 50,952 -4,539 Total Value Loss USD 45,636 48,314 70,513 -28,559 Reuse Material Savings/Loss USD 7,000 6,000 5,159 -1,841 Complaint Settlement Cost USD 0 0 0 0 Process Chemicals Loss USD 10,065 10,065 13,287 -3,222 Packing Material Loss USD 10,926 10,926 12,500 -1,574 Waste Loss USD 9,636 10,841 19,802 -10,166 Quality Loss USD 4,974 5,495 6,048 -1,074 Throughput Loss USD 3,035 4,988 13,717 -10,682 VarianceBase Target Plan Actual Financial perspective KPI U.O.M Overall This week Strategy: Reduction of Value Loss became the central agendaStrategy: Reduction of Value Loss became the central agenda
- 69. ReviewReview Review ReviewReview Review ReviewReview ReviewReview ReviewReview ReviewReview Review Scorecard Reporting Flow- PlantScorecard Reporting Flow- Plant Production Shift Scorecard Packing Shift Scorecard Packing Shift Scorecard Production Daily Scorecard Maintenance Daily Scorecard Maintenance Daily Scorecard Department Weekly Scorecard Department Weekly Scorecard Packing Daily Scorecard Packing Daily Scorecard PC/QC Daily Scorecard PC/QC Daily Scorecard Maintenance Weekly Scorecard Maintenance Weekly Scorecard PC/QC Weekly Scorecard PC/QC Weekly Scorecard Weekly Value Loss Scorecard & Analysis Focused: Incredible focus on “value loss reduction” strategy was created by linking scorecards of all departments into the CEO ‘ Value Loss Scorecard’ Focused: Incredible focus on “value loss reduction” strategy was created by linking scorecards of all departments into the CEO ‘ Value Loss Scorecard’
- 70. Weekly Dept. Manager ScorecardWeekly Dept. Manager Scorecard Organization: Mobilize employees to act in fundamentally different ways, guided by ‘value loss’ strategy with each employee having an individual scorecard & action plan Organization: Mobilize employees to act in fundamentally different ways, guided by ‘value loss’ strategy with each employee having an individual scorecard & action plan
- 71. Packing Superintendent ScorecardPacking Superintendent Scorecard Superintendents of Departments like Packing had individual Scorecards. These flowed into Production Manager’s Scorecard
- 72. Utility Generation ScorecardUtility Generation Scorecard Support functions like Utilities also were giving cost saving targets which were monitored through utility scorecard
- 73. Cumulative Savings : Planned vs Actual -400,000 -200,000 - 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Project Week USDollars Planned Actual Results- Cumulative SavingsResults- Cumulative Savings The Strategy Implementation Programme supported by the Balanced Scorecard produced significant Savings for the Company
- 74. Approach: Retail ManagementApproach: Retail Management Control SystemControl System Forecast Plan Control Report Manage r Retail Distributor DSM Retailer / Customer Sales Plan Route plan Contact Plan Customer / Retail Card DSM Daily Score Card Territory Sales Target Retail Manager Contact Plan Distributor Coverage Target DSM Target DSM Weekly Score Card DSM Monthly Score Card Distributor Weekly Score Card Distributor Monthly Score Card Review Distributor Sales Target Market Intelligence Retail Mgr Segment Manager Marketing Department Review Review Segment Mgr Monthly Score Card Retail Mgr Ride with Segment Mgr Weekly Score Card Segment Sales Target Review Distributor Daily Score Card Review Direct Sales input Retail Mgr Daily Score Card Review Review Review Review Segment Mgr Daily Score Card Review Review Review Distributor Quarterly ROI Analysis Marketing Ride with Retail Mgr Weekly Score Card Retail Mgr Monthly Score Card
- 75. Distributor Weekly/Monthly ScorecardDistributor Weekly/Monthly Scorecard
- 76. Retail Manager Weekly/Monthly ScorecardRetail Manager Weekly/Monthly Scorecard
- 77. Chief of Sales & Marketing- Weekly ScorecardChief of Sales & Marketing- Weekly Scorecard
- 78. ResultsResults 1.1. GI Contributions increased by Rs. 3 CroresGI Contributions increased by Rs. 3 Crores Domestic Net Realization (NR) per ton for GI increased byDomestic Net Realization (NR) per ton for GI increased by 12% (from Rs. 19,233 in Sept. 2001 to Rs. 21,513 in Sept.12% (from Rs. 19,233 in Sept. 2001 to Rs. 21,513 in Sept. 2002)2002) 1.1. Outstanding collection savings of Rs 93 LacsOutstanding collection savings of Rs 93 Lacs @ 12% interest PA@ 12% interest PA Outstanding collection from Rs. 483 Lacs Pre-Renoir to Rs.Outstanding collection from Rs. 483 Lacs Pre-Renoir to Rs. 1337 Lacs post-Renoir period1337 Lacs post-Renoir period 1.1. Incremental contribution of Rs.77 Lacs byIncremental contribution of Rs.77 Lacs by 29% increase in sales in MTB29% increase in sales in MTB 1125 TPM for the H1 of 2002-03 compared to average1125 TPM for the H1 of 2002-03 compared to average of 874 TPM for the year 2001-02.of 874 TPM for the year 2001-02. 1.1. Outsourcing Savings targeted at Rs. 6 CroreOutsourcing Savings targeted at Rs. 6 Crore
Editor's Notes
- #21: There are several different types of performance measurements. Here are some basic definitions along with some examples.
- #48: Here is a basic example of how everything should connect and link up from goal to objective, objective to measurement, measurement to target, and finally, close the loop with an initiative to drive strategic execution upstream. We want a good solid, tight model where everything is aligned together.