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The Balanced Scorecard & Strategy Mapping

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Title: The Balanced Scorecard & Strategy Mapping


1
The Balanced Scorecard Strategy Mapping
  • By
  • Professor G. Richard French, Ph.D., CPA
  • Indiana University Southeast

2
What is the Balanced Scorecard(BSC)?
  • The balanced scorecard is a carefully selected
    set of quantifiable measures derived from an
    organizations strategy. The measures selected
    for the Scorecard represent a tool for leaders to
    use in communicating to employees and external
    stakeholders the outcomes and performance drivers
    by which the organization will achieve its
    mission and strategic objectives. (Niven, 2006)

Communication Tool
Measurement System
Strategic Management System
3
Barriers to Strategy Execution (Kaplan Norton)
  • Only 10 of organizations execute their strategy,
    due to
  • Vision Barrier only 5 of the workforce
    understands the strategy
  • People Barrier only 25 of managers have
    incentives linked to strategy
  • Management Barrier 85 of executive teams spend
    less than 1 hour/month discussing strategy.
  • Resource Barrier 60 of organizations dont
    link budgets to strategy

4
t
Kaplan and Nortons traditional balanced
scorecard.
5
Reasons for Implementing a Scorecarding System
  • Tracking progress towards achievement of
    organizational goals
  • Need to communicate strategy to everyone
  • Aligning employee behavior with strategic
    objectives
  • Linking aligning the organization around
    strategy
  • Being able to measure people, projects strategy
  • Lawson, Stratton Hatch

6
Three Key Issues For The Successful Scorecard
Implementation
  • Establish the motivation for implementing the
    scorecarding system the right reason
  • A supportive organizational environment
  • A well-defined scorecarding system architecture
  • Lawson, Stratton Hatch

7
Rationale for Using the Balanced Scorecard
(Niven, 2006)
  • Implementation of strategy
  • Prioritizing initiatives
  • Aligning organizational and employee goals
  • Communication and education of strategy
  • Business crisis
  • New leadership

8
Supportive Organizational Environment
  • Buy-in from top management
  • Clearly define and communicate the reasons for
    the scorecarding system
  • Communicates benefits to employees and
    organization
  • Employees accept and use the system

9
Supportive Organizational Environment
  • Measures are used and linked for compensation and
    reward systems
  • Limited use of consultants to encourage employee
    ownership
  • Adequate time
  • Pervasive system, but implemented in phases

10
Well-defined Scorecarding System Architecture
  • Use a framework that represents the
    organizations vision and business model
  • Formal ties exist between strategy and the
    scorecard
  • Balanced measures financial non-financial,
    leading and lagging
  • Flexibility in scorecarding automation software

11
Well-defined Scorecarding System Architecture
  • Update the scorecarding system as needed
  • Fewer measures are better
  • Other performance-management tools in place
  • Integrated into the planning performance
    evaluation system

12
Strategy Map
A strategy map is a one-page graphical representat
ion of what you must do well in each of the four
perspectives in order to execute your strategy
successfully or to achieve your
mission. Niven, 2008
13
For-Profit Organization
Strategy
Financial How do we look to our shareholders?
Based on Kaplan and Nortons four
perspectives/Voelker, Rakich French.
14
(No Transcript)
15
Not-For-Profit Organization
Mission
Stakeholders How do our stakeholders perceive us?
Are we fulfilling our mission?
Based on Kaplan and Nortons four perspectives
and Barberg Webinar.
16
Kaplan Norton, 2004
17
Architecture of a Strategy Map
Themes
Build the Franchise
Increase Customer Value
Achieve Operational Excellence
Be a Good Corporate Citizen
18
Benefits from Scorecarding Systems to Best
Practice Companies
  • Greater ability to align employee behavior with
    strategy (gt 75)
  • Greater ability to understand relationship
    between measures and strategy (gt 70)
  • Greater ability to link performance with
    compensation (60)
  • Greater ability to measure performance (gt80)
  • Increased communication (gt80)
  • Lawson, Hatch, Desroches, 2007

19
Benefits from Scorecarding Systems to Best
Practice Companies
  • Decreased costs (gt45)
  • Increased revenues (gt30)
  • Greater organizational alignment (100)
  • Ability to make strategic decisions faster with
    better data (50)
  • Lawson, Hatch, Desroches, 2007

20
IMA Vision Statement
  • The world's leading association for management
    accounting and finance professionals

21
IMA Mission Statement
  • To develop and advance the careers of management
    accounting and finance professionals through
    certification, research and practice development,
    education, networking, and the advocacy of the
    highest ethical and professional practices.
  • Adapted from IMA Mission Statement
    www.imanet.org

22
Selected Readings Websites
  • Balanced Scorecard Step-By-Step Maximizing
    Performance and Maintaining Results , Paul Niven
    John Wiley Sons, Inc., 2006
  • The Strategy-Focused Organization , R. Kaplan
    D.P. Norton Harvard Business School Publishing
    Corporation, 2001.
  • Strategy Maps Converting Intangible Assets into
    Tangible Outcomes, R. Kaplan D.P.
    Norton,Harvard Business School Press, 2004.
  • Scorecard Best Practices Design,
    Implementation, and Evaluation, R. Lawson, T.
    Hatch, D. Desroches John Wiley Sons, 2008.
  • Balanced Scorecard Driving Strategy, Yielding
    Breakthrough Performance, IMA Webinar presented
    by Bill Barberg, 2006.
  • The Balanced Scorecard in Healthcare
    Organizations A Performance Measurement and
    Strategic Planning Methodology, Kathleen
    Voelker, Jonahon Rakich, and G. Richard French,
    Hospital Topics, 2001,
  • www.insightformation.com

23
Perspectives South Central
Chapter
Stakeholderr Perspective
Financial/Support Perspective
24
Strategy Map Themes IMA South Central Chapter
Professional Development
Member Involvement
Contribute to Business/Community
Sustainable
25
Financial/Support Perspective
26
Stakeholder Perspective
27
Internal Process Perspective
28
Learning Growth Perspective
29
Members Achieve Their Professional/Personal Goals
Members regularly serve on board
Assess communications positively
Member dues support activities
Stakeholders satisfied and improved retention
Members engage in learning networking
activities
Generate reimbursement from National IMA
Sponsor Professional Certification Courses
Promote leadership programs for board members
Develop effective communications with stakeholders
Conduct excellent education programs
Provide successful chapter administration
Provide Professional Development
Develop Networking Opportunities
Communicate effectively
Develop an Effective Leadership Group
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