balance_scorecard__an_effective_tool1_119.ppt
- 1. 1 The Balanced Scorecard By : Jitu Mistry
- 2. 2 What lies Ahead… Overview of the Balanced Scorecard Why the Balanced Scorecard will help execute strategy Strategy Map and Balanced Scorecard Outcomes Discussion – Ideas for scorecards
- 3. 3 Executing Strategy... Is the greatest challenge for organizations Vision - only 5% of workforce gets it! People – 25% of managers have incentives linked to strategy Management – 85% of executive teams spend less than 1 hour/mo discussing strategy Resource – 60% of organizations don’t link budgets to strategy
- 4. 4 Strategic Execution Bad execution, not bad strategy is the cause of 70% of CEO failures Execution is not just tactics—it is a discipline and a system Source: Execution: The Discipline of Getting Things Done, by Larry Bossidy, and FORTUNE Magazine, “Why CEOs Fail”
- 5. 5 Challenges in Executing Strategy Financial Management Tools Balance Sheets Income Statements Statement of Cash Flow People Management Tools MBO Training Programs HRIS 360 Feedback Customer Management Tools C R M Customer Segment Analysis Customer Surveys Process Management Tools Six Sigma Supply Chain Management TQM Strategy Management Tools ???
- 6. 6 Train and Communicate Strategy The Balanced Scorecard Set goals, select performance measures and link measures to incentives Set target for each goal and re-deploy resources to activities and initiatives to achieve targets Provide feedback on performance and learn from results Feed Forward Learning
- 7. 7 The Balanced Scorecard A robust tool – but keep it simple! Makes strategy tangible –everyone’s job! Tracks what’s important – hits and misses Measurement-lead management Provides feedback for short-term course corrections and long-term learning
- 8. 8 Balanced Scorecard Perspectives A. Financial How do we succeed financially? B. Customer How do we appear to our customers? C. Internal Process At what processes must we excel? D. Learning and Growth How do we sustain our ability to change and grow?
- 9. 9 Knowledge, Skills, Systems, and Tools Financial Results To Build the Strategic Capabilities.. Needed to Deliver Unique Sets of Benefits to Customers... To Drive Financial Success... And Realize the Vision Equip our People... Internal Capabilities Customer Benefits We Use the Scorecard to Articulate Strategic Hypotheses in Cause-effect Terms
- 10. 10 Balanced Scorecard Perspectives How do we Objectives Measures Targets Initiatives appear to our Stockholders? Financial How do we Objectives Measures Targets Initiatives appear to our Customers? Customer At what internal Objectives Measures Targets Initiatives processes must we excel? Internal Business Process Vision & Strategy How do we Objectives Measures Targets Initiatives sustain our ability to change & grow? Learning and Growth
- 11. 11 Cascading Scorecards to Build Alignment Organization Business Unit Business Unit Business Unit Teams Individual Contributors
- 12. 12 Financial Sound Fiscal Mgmt Budgeting Long-Term Investment Strategy Customer – The Value Proposition Internal Process Learning & Growth The Value Proposition Product/Services Price Selection Quality Availability Relationship Partnership Services Brand Image Innovation New learning Partnerships Future needs Operational Excellence Admin excellence Network of supplier for Products & services Adaptability Customer Mgmt Deepen Knowledge about customer Attract Retain Grow Relationship Climate for Action Personal Growth Competencies Functional Excellence Leadership Skills Strategic Readiness
- 13. 13 Scorecard Information Information Type Are…. Example is… Strategies High Level Goals Increase Market Share Objectives Measures of action plans Increase Customer Satisfaction Measures Indicates success or failure Average Customer Rating (scale of 1-10) Targets Desired level of performance for a measure Achieve 9.9 of 10 Average Customer Rating Initiatives Management actions taken to achieve target Train CSR Staff in Problem Resolution Skills Perspective: Financial / Customer / Internal Process / Learning&Growth
- 14. 14 Financial Strategy Map Strategy Map Objectives Initiative/Owner Budget Grow Revenue Grow Revenue JF Increase Profit Margin xx% JF Customer The Value Proposition Product/Services Customer Satisfaction 9.0 SPS Overall Bette Francis $xx Integrity Beyond Reproach Innovation Partnership Image Ivoice Available 10 Sites by 11/1/03 MT Availability Service Communicate value Customer Profitability Internal Process Operational Excellence Integrity Beyond Reproach Maximize efficiency Competitive Positioning 2 Replace/Qtr CP Designs/Quote 5/Quote-Complex MT Customer Profitability Create Awareness Learning & Growth Sustaining Our Ability to Change & Grow Platinum Certification Recertify as Platinum B. Francis Technical Expertise Information is Available Certify Technical Knowledge Increase Certifications Employer of Choice Tools to do the job Make application to EOC Submit 2 applicationsB. Francis N/A Live the SPS Values Great People SPS Strategy and Balanced Scorecard Our Purpose for Being is to Provide Our Customers with the Finest Communications Value in the Marketplace. Improve Profitability Customer Satisfaction Report Action Plan Financial Responsibility Integrity Beyond Reproach Profit Margin Balanced Scorecard Measurement Target Understand the strategy and what needs to be done Enhance external relationships Value of the Individual Integrity Beyond Reproach Human Capital Acquire new relationships Grow/broaden existing relationships Maximize quality of business processes Organizational Readiness Excellent Service Exceptional Customer Value Manage Customer Relationships Markets Manage Operations Our vision is to be the leading integrator of communications equipment and services for voice solutions and data networking applications. Excellent Service Exceptional Customer Value Brand Relationship $xxxM Revenue Attainment
- 15. 15 Human Resources Mission Statement: The Human Resources Team will lead by example working to build a culture of high-energy, committed professionals who understand that continuous improvement and customer service are primary value competencies integrated into every position while developing SPS as a recognized employer of choice. Learning & Growth Sustaining Our Ability to Change & Grow Platinum Certification Recertifyas Platinum B. Francis Technical Expertise Information is Available CertifyTechnical Knowledge Increase Certifications Employer of Choice Tools to do the job Make application to EOC Submit 2 applicationsB. Francis N/A Live the SPS Values Great People Value of the Individual IntegrityBeyond Reproach Human Capital Organizational Readiness Understand the strategyand what needs to be done Coordinate BP Certification Process Platinum Certification Achieved Lead: BF Target: 9/1/03 Develop matrix; assign responsibilities; conduct regular checkpoints Objective Result/Deliverable Target & Lead Initiative
- 16. 16 The TCS Model Source: Human Capital Vol.9 No.12 May 2006 ‘Redefine the HR Agenda’
- 17. 17 Vision Global Top 10 by 2010 in the IT Industry Mission Customer delight by providing best-in- class consulting, IT solutions & services and also delivering value and joy to all stakeholders.
- 18. 18 Shareholder Value Human Capital Effectiveness Human Resource Efficiency Employee delight Customer delight Manage Operating efficiency Manage Customer relationships Deliver world class services Team Integration Leadership Competencie s Cultural Climate Strategic Alignment /Motivation Work Capability FINANCIAL PERSPECTIVE CUSTOMER PERSPECTIVE INTERNAL PROCESS PERSPECTIVE LEARNING & GROWTH PERSPECTIVE
- 19. 19 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 Initiative Measurement • On Ground Time • On-Time Departure How success in achieving the strategy will be measured and tracked Strategic Theme: Operating Efficiency Profitability Financial Learning More customers Ground crew alignment Lowest prices Fewer planes Customer Internal Fast ground turnaround Strategy Map: Diagram of the cause-and-effect relationships between strategic objectives Flight Is on time BSC Terminology
- 20. 20 • % Ground crew trained • % Ground crew stockholders Objectives Measurement • Market Value • Seat Revenue • Plane Lease Cost • FAA On Time Arrival Rating • Customer Ranking (Market Survey) • On Ground Time • On-Time Departure Strategic Theme: Operating Efficiency Initiative • Cycle time optimization program • ESOP • Ground crew training • Quality management • Customer loyalty program Target • 30% CAGR • 20% CAGR • 5% CAGR • #1 • #1 • 30 Minutes • 90% • yr. 1 70% yr. 3 90% yr. 5 100% Profitability Financial Learning More Customers Ground Crew Alignment Lowest Prices Fewer Planes Customer Internal Fast Ground Turnaround Flight Is on Time • Profitability • More Customers • Fewer planes • Flight is on - time • Lowest prices • Fast ground turnaround • Ground crew alignment Balanced Scorecard Example
- 21. 21 Sample HR Measures Lagging Measures Impact of Prior Decisions Budget variance Employee relationship results Executive coaching Employee productivity Cost per hire by job class People expense/Revenues Leading Measures Guide Future Outcomes Employee strategic focus Executive retention Retraining/re-skilling Internal promotion rate Exit Rate of “C” Players Employee relationship factor
- 22. 22 So Why Consider the BSC? As an HR Professional -- Strategic Thinker Business Leader As an organization -- Welcomes change – vital culture today Achieves strategic objectives
- 23. 23 Keys to Success Educate your Executive and Teams Devise the right metrics Follow through to completion Start small! – Report immediately Don’t over measure
- 24. 24 Getting Started – Customize Your BSC 1. Describe the strategy – burning platform? Strategy Map 2. Measure the strategy Develop the measures; critical data points 3. Manage the strategy Gather detailed information about the measure and initiative
- 25. 25 The Successful Scorecard… Is a dynamic process – continues to set higher targets and achieves them – Define jobs strategically from the perspective of where it fits in with the strategic business goals Supports joint decision making about what you do/don’t do based on strategic goals
- 26. 26 Resources “The Balanced Scorecard,” Kaplan & Norton Balanced Scorecard Collaborative, Lincoln, MA, www.bscol.com “The Strategy-Focused Organization,” Kaplan & Norton www.BetterManagement.com “The HR Scorecard,” Becker, Huselid, Ulrich “Measure Like You Mean It,” Michael Hammer “The Balanced Scorecard Step By Step: Maximizing Performance and Maintaining Results,” Paul R. Niven “The Human Resources Scorecard, Measuring the Return on Investment,” Jack J. Phillips, Ron D. Stone, Patricia Pulliam Phillips Company Case Studies Networking
- 27. 27 Questions?