Balanced Scorecard An Integrated Approach to Performance Management Creating competitive advantage through our people - PowerPoint PPT Presentation

Loading...

PPT – Balanced Scorecard An Integrated Approach to Performance Management Creating competitive advantage through our people PowerPoint presentation | free to download - id: 81d629-NmI2O



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Balanced Scorecard An Integrated Approach to Performance Management Creating competitive advantage through our people

Description:

Balanced Scorecard An Integrated Approach to Performance Management Creating competitive advantage through our people Presentation by M Nguwi Group Human Resources ... – PowerPoint PPT presentation

Number of Views:189
Avg rating:3.0/5.0
Slides: 63
Provided by: mng83
Learn more at: http://www.msu.ac.zw
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Balanced Scorecard An Integrated Approach to Performance Management Creating competitive advantage through our people


1
Balanced Scorecard An Integrated Approach to
Performance Management Creating competitive
advantage through our people
  • Presentation by
  • M Nguwi
  • Group Human Resources Manager

2
BALANCED SCORECARD
LINKING STRATEGIES TO ACTIONS
LINKS FOUR PERSPECTIVES
Growth Profitability
Clients
Human Capital
Operational Excellence
SOURCE KAPLAN AND NORTON
3
What is a Balanced Scorecard
  • At the highest level, it is a framework that
    helps organisations translate strategy into
    operational goals/objectives that drive both
    behaviour and performance.
  • ORIGIN
  • Concept developed by Robert Kaplan David Norton
  • Essentially A Strategic Management system
  • Also a Corporate Performance Management System

4
The Balanced Scorecard
  • Aligns strategies, processes, resources and
    behaviour
  • Defines what to measure
  • Identifies lag and lead indicators metrics
  • Defines how to measure
  • Provides objective and feedback to each employee
  • Operationalise the measures

5
The Premise Behind the Balanced Scorecard Is that
Measurement Motivates Behavior
6
The Balanced Scorecard Is Based on an
Understanding of the Basic Building Blocks of the
Strategy
  • 1. The economic model of key levers driving
    financial performance

Financial Perspective
Return on Investment
Revenue Strategy
Productivity Strategy
Sources of Growth
Sources of Productivity
2. The value proposition of target customers
Customer Perspective
Value Proposition
Quality
Function
Image
Relatio-ship
Price
Time
Internal Process Perspective
3. The value chain of core business processes
Build the Brand
Make the Sale
Deliver the Product
Service Exceptionally
4. The critical enablers of performance
improvement, change and learning
Learning Growth Perspective
Technology Infrastructure
Staff Competencies


Climate for Action
7
We Use the Scorecard to Articulate Strategic
Hypotheses in Cause-effect Terms
And Realize the Vision
Financial Results
To Drive Financial Success...
Customer Benefits
Needed to Deliver Unique Sets of Benefits to
Customers...
To Build the Strategic Capabilities..
Knowledge, Skills, Systems, and Tools
Equip our People...
8
BSC Terminology
9
Some of the Indicators of Good Balanced Scorecard
1. Executive InvolvementStrategic decision
makers must validate and own the strategy and
related measures
2. Cause-and-Effect RelationshipsEvery objective
selected should be part of a chain of cause and
effect linkages that represent the strategy
A good Balanced Scorecard will tell the story
of your strategy in actionable terms.
3. Balance between outcome and leading measures
There should be a balance of outcome measures and
leading measures to facilitate anticipatory
management
4. Financial LinkageEvery objective can
ultimately be related to financial results
5. Linkage of Initiatives and Measures Each
initiative should be based on a gap between
baseline and target.
10
Some Goals of the Balanced Scorecard
  • Provide a generic framework to translate strategy
    into operational terms
  • Create a systems approach to form an integrated
    Strategic Management Process
  • Provide a clear line of sight to the vision and
    strategy of the company
  • Provide a tool for communicating the
  • strategy, and
  • processes and systems required for implementing
    the strategy
  • Draw a cause and effect roadmap to stakeholder
    value shareholder, customer, and employee.

11
How Does the Scorecard Benefit Your Organization?
  • Improves management effectiveness by having a
    shared and actionable view of the strategy
  • Optimizes and ensures strategic outcomes for a
    given set of resources
  • Enables employees to work in a coordinated,
    collaborative fashion towards organizational
    goals
  • Speeds time to value through faster more informed
    decision-making on time and resource allocation
  • Accelerates the approach, and its accuracy to the
    strategic destination

12
CONCEPT
  • Imagine entering the cockpit of a jet airplane
    and observing that that there is only a single
    instrument
  • ability to exploit intangible assets has become
    far more decisive than their ability to invest in
    and manage physical assets
  • Most companies operational and management control
    systems are built around financial measures and
    targets
  • The scorecard introduces four new management
    processes that contribute to linking long term
    strategic objectives with short term actions

13
What is on the dashboard?
  • The financial success of our organisation
  • increasingly depends on intangibles-
  • our relationship with clients
  • our organisational effectiveness
  • our ability to attract, leverage and retain the
    best people

14
WHERE DO WE START?
15
Guiding Principles of Performance Management
  • Develop and Articulate a Clear Strategy
  • Create a Continuous, Flexible Performance
    Management Process
  • Actively Communicate Performance Goals and
    Targets
  • Establish Specific, Ambitious Targets Based on
    Benchmarks
  • Identify and Focus on the Vital Few
  • Establish a Balanced Measurements Portfolio
  • Monitor Results at Specific, Regular Intervals to
    Assess Progress
  • Align Reward Systems with Measures to Reinforce
    Desired Behaviours

16
Why is Performance Important?
  • PERFORMANCE is about RESULTS measurable results
  • Need for the organisation to benchmark
    performance against world class standards
  • Enables efficient and effective use of resources
  • Motivate high performers
  • Identify inadequate performance early

17
CREATING A WINNING STRATEGY
  • Critical Questions
  • Are we doing the right things?
  • Are we doing it right.

18
Plot your Value Chain First
  • Identify your customers and what they want?
  • What is the process to satisfy customers wants?
  • What kind of input to the process do you need?
  • And who supplies that?
  • Everyone must understand who our customers are
    and what their requirements are.
  •  

19
What is our Value Proposition?
  • Existence of our business relies on two important
    elements
  • The value proposition that we offer different
    stakeholders(clients, shareholders, employees
    etc.)
  • The ability to deliver that value, both in the
    short and long term

20
If you dont know where you want to go, it does
not matter what root you take.
21
Managing Strategy Four processes
22
Four Barriers to Strategy
  • Vision Barrier strategy not understood by those
    who must implement it and not translated into
    objectives/goals
  • People Barrier personal goals are not linked to
    strategy implementation
  • Management Barrier Management systems are
    designed for operational control and not strategy
  • Operational Barriers key processes are not
    designed to leverage the drivers of business
    strategy

23
Translate a Strategy into Operational Terms
Financial/Profit Growth
To satisfy our stakeholders, what financial
objectives must we accomplish?
Measures
Targets
Goals
24
The Four Perspectives
Feedback / Results
Strategy Implementation
Financial or Profit Growth To satisfy our
stakeholders, what financial objectives must we
accomplish?
Strategy Deployment
Clients What is the customer Value
Proposition That will create the financial
rewards we are seeking
Operational Excellence In which internal business
processes must we excel in order to deliver our
value proposition as described in the client
perspective and finally reach the goals in the
financial perspective
Human Capital What do wee need to change in our
Infrastructure or intellectual capital to
achieve Our operational excellence goals
Actions
25
  • Balanced Scorecard Evolved Framework

The Vision Strategy
Financial
To satisfy our shareholders, what financial
objectives must we accomplish?
Effect
Customer
Results
To achieve our financial goals, what customer
needs must we satisfy?
Internal Business Process
Cause
To satisfy our customers, in which internal
business processes must we excel?
Innovation, Learning Growth
Actions
To achieve and maintain a competitive position,
how must the organization learn and improve?
26
A Good Balanced Scorecard Tells The Story of
Strategy
Financial Perspective
Return on Investment
Reduce Costs / Improve Productivity
Increase Revenue Streams
Customer Perspective
Price
Quality
Time
Functionality
Image
Relations
Internal Process Perspective
Make the Sale
Setup the Service
Service the Customer
Build the Brand
Learning and Growth Perspective
Staff Competencies
Technology Infrastructure
Change Agenda
Critical Success Factors and Measures need to be
developed across the four perspectives
27
Strategy Interpretation Simplified Business
Model of FSC
Figure 5.3
Management Actions - Cause
Business Results Required - Effect
Improvement Learning Perspective
Customer Perspective
Internal ProcessPerspective
Financial Perspective
Increase Employee skills and productivity
Cross - sell productsand services
throughlifetime relationships
Build up largecustomer portfoliowith more
salesand customers
Achieve dramaticsales goal
Technologyenabledrevenue growth
Dealing withmembers efficientlyand effectively
High CustomerSatisfaction
Achievelower cost ratiovs competition
Develop full rangeof competitive products
Increase value ofmembers fund in linewith all
share index
Learn and embedcompliance disciplines
Innovative approachto maximiseinvestment returns
28
Balanced Scorecard Benefits
  • Improved Long-Term Financial Performance
  • Improved Level of Customer Satisfaction
  • Focused Communications on Whats Important
  • Improved Level of Employee Satisfaction Based on
    Better Understanding of Value of Individuals
    Contributions
  • Improved Mechanism to Identify Performance
    Variances of Key Processes

29
Financial Perspective
  • This indicate if company strategy, implementation
    and execution are contributing to the bottom
    line.
  • Measurement of operating income, returns on
    capital or more recently EVA.
  • Strategic themes include revenue growth and mix,
    cost reduction and, asset utilisation and
    investment strategy.
  • Our revenue normally grow from finding new
    sources or by increasing the client/customer
    value proposition
  • Looks at things like
  • Revenue growth
  • Increase market share
  • Improve cost structure
  • Reduce admin costs

30
Client Perspective
  • This is the most important one because its the
    one that facilitates the funding of all others
  • Some of the most valuable Customer Propositions
    are
  • Product leadership
  • Customer intimacy
  • Measure performance in growth and identified
    market segments
  • - customer satisfaction.
  • - customer retention.
  • - new customer acquisition.
  • - fast credit approval.
  • - market and account share in targeted segments.
  • - specific measures on the value proposition
    that the company will deliver to customers in
    targeted market segments e.g.. short lead times,
    on time delivery, innovative products and
    services, anticipation of emergency needs, new
    products.

31
Operational Excellence
  • Identify critical internal process in which the
    business must excel to enable
  • -delivery of the value proposition that will
    attract and retain customers in targeted market
    segments.
  • -satisfy shareholder expectations of excellent
    financial returns.
  • The measure should focus on internal processes
    that will have the greatest impact on customer
    satisfaction and achieving an organisations
    financial objectives.
  • Traditional approaches attempt to monitor and
    improve existing business processes. The
    scorecard will usually identify new processes at
    which the organisation must excel to meet
    customer and financial objectives (innovation).

32
Human Capital
  • Identifies the infrastructure that must be built
    to create long term growth and improvement.
  • Three principle sources
  • people - reskilling
  • Management skills compensation competitiveness
  • systems - enhance IT (real time, accuracy)
  • organisational procedures - retention, training,
    skill, satisfaction.
  • Unlike buildings and machinery support
    functions are intangible assets worth nothing
    unless they succeed in their mission.

33
Some examples of Key BSC themes measurements
  • Financial/Profit Growth
  • Return On Investment
  • Revenue growth percentage
  • Economic Value Added
  • Market Share
  • Client
  • Customer satisfaction
  • Customer Retention referrals
  • maintaining highest reputation
  • Value
  • Customer payment patterns

34
Key BSC themes measurementsExamples
  • Operational Excellence
  • Error, waste rework
  • Reducing Cycle time
  • Yield
  • On-time delivery
  • Project Deadlines
  • Human Capital
  • Core Competence deployment rates
  • Employee Satisfaction
  • Employee turnover
  • Training
  • Rewards, Recognition Compensation patterns
  • Quality Improvement rates

35
The Cause Effect Relationship in the BSC
  • There is an important sequence between the four
    perspectives
  • Financial/Profit and Growth (Make a profit)
  • Clients(By satisfying your customers needs)
  • Operational Excellence(through being able to
    deliver value)
  • Human Capital (by having the necessary knowledge
    and tools available)

36
Linkages to the Group Balanced Scorecard
Influences
Financial/Profit Growth
Financial/Profit Growth
Client Service
Client Service
Operational Excellence
Operational Excellence
Human Capital
Human Capital
Group BSC RFH
Business Unit BSC RBF, RFS, RDH,RSB
Support Functions
Teams Individuals
37
Alignment using the Balanced Scorecard
SBUs
Corporate
Individual
Financial/Growth Profitability
Financial/Growth Profitability
Client
Client
Key Result Areas
Operational Excellence
Operational Excellence
Strategic Capability- Human Capital
Strategic Capability- Human Capital
38
Translating Group Objectives for each Level
  • Step 1 a group scorecard defines overall
    strategic priorities and context
  • Step 2 Each SBU develops a develop BSC
    consistent with the corporate strategic agenda
  • Step 3 Each support department develops a
    scorecard to support the internal customers
  • Step 4 Teams and individuals develop scorecards
    consistent with their SBU and group strategy

39
Linking
  • Objectives/goals may cross over more than one
    perspective.
  • We usually start at the top with outcomes and
    work our way down, looking at what enables
    (drives) the outcome.

40
Strategic Goals
  • Establishing strategic goals is the first step in
    building the Balanced Scorecard.
  • Strategic goals establish direction in concrete
    terms. For example By the year 2003, we will
    grow revenues by 45.
  • Strategic goals anchor the rest of the process.
  • Strategic goals should fit with the vision and
    mission of the organization.

41
Set Goals for Each Strategic Perspective
Strategic Perspective
Goals
Measures
Targets
Client Service delivery and demonstrating value
to our clients
Develop effective client care meetings
Client feedback
Average rating of 4
5 of the employees to have gone for customers
service training
Human Capital Develop and utilize resources
intelligently
Devote substantial time to people development
No of people trained in essential skills
Financial Achieving profitable revenue growth
Grow revenue
By 45
Revenue growth
Operational Excellence Developing and driving
improved common business processes
Time frame
Handover to be effected by end of March 2002
Ensure smooth handover of spectrum
42
Strategic Goals
  • Goals need to be expressed in concrete terms
  • You can look at past performance or future
    performance to establish goals
  • Goals need to be agreed upon and communicated
    within the organisation.

43
If you dont know where youre going any road
will take you there.
Goals are Roadmaps to the Vision
44
If you cant measure it, you cant manage it
45

Measuring the success(or failure of your
strategy
  • Measure - How performance against set goals is
    monitored
  • For each strategic Goal, you need one
    measurement.
  • Measurement provides us with feedback on meeting
    the strategic goals
  • Most organizations will use many of their
    existing measurements.
  • Organizations requiring major change should
    include driver type measurements.

46
Measurements
  • A good balanced scorecard should consists both
    outcome and driver measures
  • Financial and Customer will have mostly outcome
    type goals
  • Operational Excellence and Learning Growth may
    include several driver type goals

47
Measurements
  • Outcome measures
  • Advantage - objective and easy to capture
  • Disadvantage - focused on the past, not current
  • Drivers
  • Advantage - Predictive and leading the
    organisation
  • Disadvantage - Difficult to drive and support

48
Measures Lag/Lead Comparison
49
Lead/Lad Measures
  • Leading and lagging indicators only makes sense
    relative to one particular strategic goal. A
    lagging measure for one goal may therefore be
    used as a leading indicator for another objective

50
Targets
  • The term used to describe what is expected for
    the measured results/required level of
    performance
  • Once you establish measurements, you need to set
    a target for each measurement.
  • Targets push the organization to a required level
    of performance.
  • Targets put focus on the goal, expressing the
    specifics of the goal.
  • When an organization hits its targets, then it
    has successfully achieved its goals.

51
Targets
  • Establish financial related targets first
  • Continuously review targets
  • Target setting enables the organisation to
  • - quantify the long term outcomes it wishes to
    achieve.
  • -identify mechanisms and provide resources for
    achieving those outcomes.
  • -establish short term milestones for the
    financial and non-financial measure
  • on the scorecard.

52
Sources for Determining Targets
  • Strategic goals
  • Industry benchmarks/best practice
  • Incremental improvements to existing performance
    levels

53
Reporting Issues
  • How often should the Balanced Scorecard measures
    be collected?
  • Who should collect?
  • Collection process owner and collector
  • Who should trend and analyse the Balanced
    Scorecard measures?
  • How often should measures be changed?

54
Best practice in global Corporations
  • Use a balanced set of performance metrics
  • Have quantifiable or verifiable (qualitative)
    goals
  • Support the values of the organisation
  • Align goals to strategy, and focus on development
  • Use multi-rater feedback as part of the process
  • Have a global philosophy/approach, but allow for
    local adaptation

55
Everybody Wins
  • Customers win because every employee understands
    the importance of customer satisfaction and the
    part they each play in delivering it.
  • Senior management win because corporate
    performance is improved through the alignment of
    effort behind the strategy, and the visibility of
    the drivers for corporate performance.
  • Middle management wins because there is better
    information at their fingertips to make resource
    allocation and prioritisation decisions, changes
    in priorities are communicated more rapidly and
    consistently, team management is easier and
    morale improved.
  • All staff benefit because they see how they fit
    in and how to succeed, they know their
    contribution is recognised and valued and...
  • We no longer expect a job for life - we do want
    employability for life!
  • Skills and competencies of all staff are clearly
    valued, and can be updated and developed.
  • The importance of personal development can be
    clearly recognised and valued, including personal
    development plans and tracking of progress, and
    the impact that skills development has on
    achieving objectives can be appreciated.

56
Implementation
  • Project Team
  • GF Chinamasa
  • E Chikaka
  • L Mkuzvazva
  • Dube
  • T Samusodza
  • C Vengesa
  • M Nguwi
  • Mapenzauswa

Presentation to Executive Management
Executive Senior Managers
Other Managers Employees
Perf Mgt Training Roll Out
Strategy Workshop Goal Setting
Contributions by Executives And Management
Design Meetings
57
Implementation Issues Concerns
  • Change management comes first
  • Ensure all employees share in the understanding
    of our performance management strategy
  • Employees need to know how the road looks ahead,
    which route to follow and how far we have come
  • Pilot project ideal in big organisations
  • Apart from BSC project team, involvement of Line
    managers is crucial
  • Data collection in developed counties and big
    organisation software support used
  • Involvement of both management and employees
    critical

58
Pitfalls
  • Getting bogged down in too many goals and
    measures
  • Vocal, but not real commitment from management
    or simply no commitment as all
  • Failing to realize that the scorecard like any
    management instrument is based on assumptions e.g
    if our strategy is based on the assumption that
    people want quality, and our measures assures us
    that we have that quality, but people still dont
    buy use our products then maybe its time to
    change the assumption.

59
BENCHMARK INFORMATIONPerformance Ratios
  • Financial Institutions

60
(No Transcript)
61
Thank You
62
QUESTIONS
About PowerShow.com