ARAB BANK PLC

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ARAB BANK PLC
The Balanced Scorecard
????? ??????? ?????????

• Amman - Jordan

June 2002
2
??? ??? ???????? ?? ????? ?????? ?? ??? ?????????
????????? ? ????? ??????? ????? ???? ???????
????? ????? ?? ????????????? ????????.
3
????? ????????????Strategy Implementation

• ?? ????? 70 ?? ??? ??????? ???? ???? ?? ?????
  ???????????? ? ???? ???? ?? ???????????? ?????.
• (Fortune)

4
Barriers to Implementing Strategy
Only 10 of organizations execute their strategy
Barriers to strategy execution
Vision Barrier
People Barrier
Mgmnt. Barrier
Resource Barrier
Only 5 of the workforce understands the strategy
Only 25 of the managers have incentives linked
to strategy
85 of executive teams spend less than 1 hour per
month discussing strategy
60 of organizations dont link budgets strategy
5
????? ??????? ?????????Balanced Scorecard

• ???? ????? 10 ?????.
• ?????? ??? ???? ???? ??? ?? ??????.
• ?????? ????? ????? ???????????? ??? ?????.
• ???? ??? ?????? ??? ??? ???? ??? ?????? ?????.
• 50 ?? ????? (Fortune 1000) ????????.
• ???? ???? ?????? ?? ??????? ??? ?????? ???????
  ???????? ????? ??????? ??? ??????? ??? ???? ????
  ???? ??????? ???????.

6
Benefits of Applying BSC

• Helps align key performance measures with
  strategy at all levels of an organization.
• Provides management with a comprehensive picture
  of business operations.
• The methodology facilitates communication and
  understanding of business goals and strategies at
  all levels of an organization.
• Provides strategic feedback learning.
• Helps reduce the vast amount of information the
  companys IT systems process into essentials.

7
????? ??????? ?????????

• ??? ???????? ?? ????? ???????? ?? ??????
  (18501980) ????? ???? ???? ??? ?????? ??????
  ??????? ??????????.
• ????? ???? ? ????? ?????? ??? ????? ??? ????????
  ???????? ? ??? ????
• ?????? ????? ??????.
• ?????? ????? ?? ??????????.
• ??? ??????????? ????? ???? ???? ??????? ???????
  ??? ???????? ????????? ?????? ??????? ????????
  ?????? ??? ?????? ???????? ??????? ????????
  ???????.

8
????? ??????? ????????? / ????

• ??? ???? ????? ????????? ?? ?? ????????
  ?????????
• ?????? ?????? ????? ????? ??????? ???? ???? ????
  ??? ????????? ?? ????????? ??????? ? ????? ?? ???
  ??? ?? ????????? ?????? ????? ?? ???????
  ?????????? ????????? ?? ??????? ????? ????
  ??????.
• ???? ???????? ??????? ?????? ?????? ???? ?????
  ??? ????????? ???? ??? ?? ??? ?????? ??????????
  ???? ?? ???? ????????? ?? ??????? ?????????
  ????????? ??????? ????? ???????????? ????????.

9
????? ??????? ????????? / ????

• ?????? ?????? ?????? ?? ??????? ??? ???????
  ???????? ?? ?????? ?????? ??? ??????? ?????????
  ?? ???? ???? ??????? ?? ?????? ??????? ?? ??????
  ?? ??? ????? ??????? ????? ?????.
• ??????? ???? ? ?? ?????? ??? ?????? ????? ??????
  ?????? ???? ???? ????? ??????? ????????? (BSC)
  ??? ?????? ??? ????????.
• ???? ??? ??????? (BSC) ?? ???????? ??? ?????
  ?????? ????????? ????????? ???? ???? ????? ??????
  ????? ????? ???? ??????? ??????? ??? ????
  ????????.

10
????? ??????? ????????? / ????

• ??? ????? (BSC) ????????? ?? ???????? ???
• ???? ????? ??????? ??? ?? ???? ?? ????????
  ???????.
• ???? ??? ??????? ??????? ???????? ???? ??? ????
  ??????? ??? ??? ?????? ??????? ????????
  ????????????.
• ???? ??? ????? ????? ??????? ????????
  ???????????? ??????? ?? ??????? ??????? ????????
  ?????????? ??????? ?????? ?????? ?????????.

11
????? ??????? ????????? / ????

• ?? ??? ?? ???? ? ???? ????? (BSC) ??? ????

?????? ?? ???????? ???????? ?????? ?? ??????????
??????? ????? ????? ??? ????? ??????? ?????????
?????? ???????? ?????????? ??????? (Outcome)
???????? ??????? (Performance Drivers) ???? ????
??????? ?? ???? ???????? ??????? ????????
????????????.
12
????? ??????? ????????? / ????
Measurement System
Strategic Management System
Communication Tools
13
????? ????? ??????? ?????????

• ????? (BSC) ??????? ?????? ?????? ??????? ??????
  ?? ???? ??????? ????????.
• ?????? ??? ??????? ????????? ???? ??????? ????
  ??? ?? ????? ????? (Perspectives) ???? ?? ????
  ????? ???? ???????
• ??????? ??????.
• ????? ???????.
• ????? ???????? ????????.
• ????? ?????? ??????.

14
????? ????? ??????? ?????????

• ??? ?????? ????? ?????? ????? ?????? (?? ????
  ??????? ??????) ? ?????? ????? ??????? ?????????
  (BSC) ??????? ??????? ?????? ??? ????? ??????.

15
????? ????? ??????? ??????????

• ??? ???????? ?????? ?? ????? ????? ? ??? ???
  ????? ?????? ?????? ??????? ???? ??????? ?????
  ????? ??????.
• ???? (BSC) ??????? ???????? ???? ????????? ??
  ?????? ????????? ??? ?????? ?????????.
• ????? ????? ??????? ????????? (BSC) ???? ??????
  ??????????? ??????? ??? ?????? ?? ?????? ??????
  ???? ???? ?????? ????? ???? ?????????.

16
????? ????? ??????? ?????????? / ????

• ????? (BSC) ?????? ??? ????? ??????? ??????? ?
  ????? ?????? ?? ??? ????? ?????? ?????? ????
  ??????? ???????.
• ????? (BSC) ???? ??????? ?? ????? ????? ???????
  ??????? ?????? ? ????? ??????? ? ????? ????????
  ???????? ?????? ????? ???????.
• ???? (BSC) ???? ??????? ??????? ? ??? ??? ?????
  ????? ?????? ?? ???? ??????? ????? ??????
  ???????? ??????? ?????? ????? ?????????.

17
????? ??????? ????????? ????? ?????

• ???? (BSC) ??? ?? ???????? ??????? ???? ???????
  ??? ?? ???? ???? ?? ?????? ?????????? ??????
  ???????? ????? ?????????.
• ???? ???????? ?? ???? ??????? ??????? ?? ???????
  ??????? ??????? ????????? ???????? ? ??? ????
  ??????? ?????????? ?? ?? ??????? ????????
  ???????? ?? ????? ?????? ?????? ???? ?????.
• ?? ????? (BSC) ???? ?? ???? ?????? ?????? ????
  ???? ???? ???? ? ????? ?? ????? ?? ????? ?????
  ????? ?? ?????? ??? ?????? ???? ???? ??????
  ?????????????.

18
????? ??????? ????????? ????? ????? / ????

• ????? (BSC) ???? ??????????? ??????? ??? ?????
  ??????? ????? ???????.
• ????? ??? ???????? ?????? ?? ???
• ???????? ???????? ????? ?????? ???????? (Outcome
  Measures).
• ???????? ???????? ??????? ???????? ?????????
  ???????? ??????? ?????? (Performance Drivers).
• ??? (BSC) ????? ?? ???? ????? ????? ?????? ??
  ??????? ???????? (Lagging Indicators) ?????????
  ???? ???? ?????? ????????? (Leading Indicators).

19
????? ??????? ????????? ????? ????? / ????

• ???? (BSC) ??????? ??? ???????? ????????
  ????????? ???? ???? ?????? ?????? ???? ???????
  ????????? ???????.
• ??? (BSC) ?? ???? ?? ???? ???? ???? ??????? ??
  ??????? ? ???? ???????? ??????? ?????????? ?????
  ????? ????????? ??? ????? ??????.

20
???????

• ????? ????? (BSC) ???? ???
• ??? ??? ????? ????????????.
• ??? ????? ???? ???????????? ???? ???????? ?????
  ????? ?? ???? ??????? ? ????? ????? ???????? ???
  ????? ??????? ??? ???? ????? ???????
  ????????????.
• ??????? ??? ??????? ??????? (??? ???? ???????
  ??????? ?????????? ????? ???????? ??????? ???????
  ???? ?? ??? ? ?? ???? ??????????? ????).

21
???????

• ??????? ??? ????????? ???? ???????? ????
• ??? ???? ???????? ???????????? ????????? ??
  ??????? ????????.
• ??? ???? ??? ????????? ?? ?????? ??????? (???????
  ? ??????? ? ?????????).

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The BSC The Four Perspectives
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????????? ???????? (Financial Perspective)

• ???? ??? ??????? ??? ??????? ???????? ??????
  ????? ??????????? (Efficiency, Cost reduction).
• ???? ??? ????? ????? ???????????? ????????
  ???????? (????? ? ?????? ? ????? ? ?????? ???????
  EVA).
• ???? ???? ?? ????? ?????? ???? ????? ?? ?????
  ??????? ???? ??????? ????????? ??????? (Xerox).
• ?? ?????? ????? ????? ??????? ? ??? ???? ??????
  ???????? ?? ????????? ??? ???????? (Microsoft)
  ???? ??? ???? ?? ????????? ????????.

24
????????? ???????? / ????

• ???? ??? ??????? ?????? ???? ????? ???? ???
• ??????? ???? ?? ????? ???? ???????? ?????? ??????
  (????? ???????? ??? ???????? ??????? ? ??????? ?
  ????? ???????? ? IT).
• ???????? ??????? ????? ?? ????? ???? ??????
  ??????? ?? ??????? ???????.
• ??? ????? ??? ????? ??????? ??? ??? ???? ????? ??
  ??? ???? ??? ?????? ??????????.

25
????????? ???????? / ????

• ??????? ??? ??????? ?????? ????? ?? ????
• ??? ??????? ??????? ????? ???????.
• ???? ????????? ?? ???? ???? ???????.
• ??? ?? ????? ??? ?? ???? ????? ??????? ????????
  ??????????.
• ??? ????? ??? ???? ????? ????? ?????? ??? ????
  ??????? ?????? ??????? ??? ???????.
• ???? ? ????? ??? "????? ???????".

26
????????? ???????? / ????

• ?????? ??????? ?????? ???? ???? ? ??? ???
  ???????
• ?? ???? ?????? ???????.
• ?? ???? ????? ???????? ???? ????? ????? ???????.
• ???? ? ????? ??? "????? ???????? ????????".
• ?????? ?????? ??????? ?????? ?????? ?????????
  ??????? ??? ?????? ?????? ??????? ? ????? ???
  ????? ?????? ???????.

27
????????? ???????? / ????

• ???????? ??? ?????? ??????? ?????? ? ??? ???????
  ??? ????? ???????? ???? ?????? ???????? ???
  ?????? ?? ???????? ??????

• ?????????.
• ????????? / ????.
• ?????? ??? ?????????.
• ?????? ??????.
• ???? ?????.
• ????? / ????.

• ?????? ????? ??? ????????.
• ?????? ??? ??? ?????.
• ??? ??????.
• ??????? ?????????.
• ?????? ??????? ??????.

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?????? ????????? (Customer Perspective)

• ????? ??????? ????????? ???? ???????? ???????
  ????? ?????? ???? ????? ?? ??? ?????? (???
  ??????? ? ???????? ???????? ? ??????? ????? ?
  ????? ?????? ? ????? ???????).
• ??? ??????? ?? ???? ????? ???? ????? ?? ???????
  ?????????? ????????? ?????? ???? ??????? ????????
  ???????? ??????????.

29
?????? ????????? / ????

• ????? ???? ????? ???????

• ??? ???????.
• ???? ??????.
• ????? ???????.
• ???? ???????.
• ???? ????????? ???? ??????.

• ???? ??? ??????? ?? ??????.
• ???????? ????????.
• ?????? ??? ????? ???.
• ????? ??????.
• ??? ???????.

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?????? ???????? ???????? (Internal Bus. Process
Perspective)

• ????? ???????? ???? ?????? ??? ??????? ???????
  ???????? ??? ?????? ??????? ?????? ???????? ??
  ???? ???????? ????? ??????? ?????? ? ?? ???? ????
  ??? ????? ???? ???? ???????? ???????.
• ??????? ????????? ?? ???? ?????? ???? ??? ??????
  ???????? ?????? ????????? ??????? ??? ? ?????
  ????? (BSC) ???? ?? ???? ????? ??? ????? ??????
  ???? ????? ??????.

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?????? ???????? ???????? / ???? (Internal Bus.
Process Perspective)

• ???? ??? ??????? ??? ??????? ?????? ?????? ???
  ??? ??????? ????? ???? ??????? ??????? ???????.

Innovation
Operation
Customer Needs Identified
Customer Needs Satisfied
Make
Design
Develop
Market
Service
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?????? ???????? ???????? / ????

• ????? ???? ????? ???????? ????????

• ???? ???? ??????? ???????.
• ??????? ?? ?????.
• ???? ????? ????????.
• ??? ????????? ?????? ???????.
• ????? ????????? ?? ???????.
• ???????? ??????? ???????.

33
?????? ?????? ?????? (Learning Growth
Perspective)
Close skills gaps Increase employee training

• ???? ?????? ??????? ???? ??? ??????? ??????? ????
  ?????? ???? ???? ????? ?????? ?? ????? ???????
  ??????? ???? ???? ??? ???????? ??????? ??????.
• ?? ????? ??????? ?????? ???????? ???????? ???
  ?????? ??????? ????? ?????? ?????? ??????????.
• ?????? ?????? ?? ??????? ?????? ?? ????? ?????
  ?????? ?? ??????? ? ??????? ? ?????????.

34
?????? ?????? ?????? / ???? (Learning Growth
Perspective)

• ??????? ?????? ?????? ??????? ????????? ??? (BSC)
  ???? ?????? ??? ?? ?? ???? ?? ??????? ?? ???????
  ???????? ?????????? ???? ?? ?????? ??????? ??????
  ??????? ???? ????? ?????.
• ???? ??????? ?? ??? ?? ???? ??? ?????? ?? ????
  ????????? ?? ????? ????? ???????? ? ????? (IT)
  ???????? ??????????.

35
?????? ?????? ?????? / ???? (Learning Growth
Perspective)

• ????? ???? ????? ?????? ??????

• ??? ????????.
• ????? ???????? ???.
• ???? ?????.
• ???????.
• ????? ??????.

• ??????? (???? / ?????).
• ????????.
• ???? ???????.
• ???????? ???????? ?????????.
• ????? ????????.

36
????????? ??????

• ?? ???? ???? (BSC).
• ????? ?????? ?????? ? ?? ?? ?? ??????? ???????
  ??? ????? ???? ??? ????? ???????
• ???????? ?????????????.
• ??????? ??????? ????.
• ??????? ?????? ??? ???????.
• ?? ???? ??????? ??? ?????.
• ?? ???? ??????? ??????? ?? ?????? ?????????.
• ?? ????? ???? ??? ???? (Relevant).
• ??? ????? ??????? ????????? (??? ???? ??????).

37
Worksheet to Select BSC Measures
38
????????? ?????? / ????

• ??? ????????? ??????? ?????? ???????? ?? ???
  ????? ????? ?????? (BSC).
• ?????? ?????? ????? ??? ???????? ??? ??????
  ???????? ???????? ?????? ????????.
• ?? ??????? ??? ????? ????? (???? ? ????? ? ??????
  ? ??????).
• ??? ??????? ????? ?? 10 ??? ?? ??? ??????
  ????????.

39
??? ?????????? ?????????

• ???? ????? ????????? ?????? ???? ??? ???? ??
  ???????? ????????.
• ????? ??????? ???????? ????????? ?? ????? ????
  ???? ????? ?????? ???????????? ?? ???? ???????
  ??????? ??? (BSC).
• ???? ????? ??? ?????????? ??? ??????? 20 25
  ????? ????? ??? ???

40
BSC Measure Dictionary
41
A Typical Scorecard
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Financial vs. Non-Financial
43
External vs. Internal
The measures represent a balance between external
measures for shareholders customers and
internal measures of critical business processes,
innovation and learning growth.
44
Lagging Outcome vs. Leading Input
45
Strategic Alignment

• Formulating a BSC to link mission strategy to
  explicit objectives measures is only a start of
  using BSC as a management System.
• Every person in the organization (including the
  Board) should understand the strategy and his
  role in it.
• Forming an executive team is essential to
• Share the vision strategy with the whole
  organization.

46
Strategic Alignment / Contd

• Communicating the strategy and linking it to
  personal goals to create a shared understanding
  among people (create awareness change
  behaviors).
• Everyone understands long term goals strategy
  for achieving them.
• All organization efforts can become aligned to
  the needed transformation winning the minds
  the hearts of our people.

The following diagram shows the mechanism used.
47
A Different Management System for Strategic
Implementation
48
BSC Strategic Framework for Action

• Board members, staff seniors should understand
  the strategy the required behavior to achieve
  it- continuous education feedback are essential.

• Financial non-financial measures must be part
  of the information system for all levels of
  employees.

• Front staff must know the financial impact of
  their decisions.
• Seniors must understand the drivers of long-term
  financial success.

• Objectives of BSC are derived from top-down
  process driven by mission strategy.

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BSC Translating Strategy into Operational Terms

• Objectives measures derived from vision
  strategy.

• Objectives measures view organizational
  performance from 4 perspectives.
• Explanation of objectives beyond financial
  measures.

50
????? (BSC)
????? ???? ???????
?????? (1)

• ????? ????????????? ???? ???? ???????.
• ??????? ???? ???? ??????? ?????.

?????? (2)

• ????? ????? ?????? ???????? ?????? ?????? ????
  ???? ?????? ?? ?? ???????? ???????.
• ??????? ????????? ?????????.

?????? (3)
?????? (4)
????? ????? ?????? ????? ????? ?? ?? ???? ????
????
?????? (5)
??? ???? ??????? ???? ?????
?????? (6)
??????? ??????? ??????? ?????? ??? ???????
?????? (7)
??? ????? ????? ??????? BSC
51
How BSC is Developed?
52
Cause Effect Relationship
Shallow men believe in luck. Strong men believe
in cause effect

• ??? ???? ?????????? ??????? ?? ???? ??????
  ??????? ?? ?? ???? (BSC) ?? ????? ?????? ??????.
• ??? ?? ???? ????? ????? ???????? ??? ?? ?????
  (BSC).
• ?????? ??? ??? ????? ???????? (??????? ??????).
• ??? ?????? ??? ??? ????? ????? ??????? ???????
  ???????? ???? ?????? (????? ???????).
• ?????? ??????? ?? ???? ??? ??? ??????? ???????
  (????? ???????).
• ?? ???? ????? ???????? ????? ??? ???? ???????
  (????? ????????).
• ????? ???????? ???? ??????? ??? ????? ????????
  (????? ????? ???????).

53
BSC A Business Model (Cause Effect
Relationship)
54
General Principles in our Strategy

• Main Issues
• Leadership in the financial industry.
• Superior customer service.
• Efficient IT.
• Professional ethical staff.
• These corporate level themes should be translated
  into specific operational measures by areas
  SBUs.
• The targets then assigned to each area or SBU.

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General Principles in our Strategy /Contd

• Areas SBUs are to develop their own strategy
  objectives that are consistent with the corporate
  strategy.
• Areas SBUs are to measure result using
  customized ones.

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Corporate BSC Vs. Area or Divisional Level BSC

• Area or SBU Vs. Corporate Strategy

Overall strategic objectives provide the
structure for BSC that areas or SBUs should
produce.