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BALANCED SCORECARD <ul><li>INTRODUCTION </li></ul><ul><li>BENEFIT </li></ul><ul><li>EXAMPLE OF BUILDING BSC </li></ul><ul>...
I. INTRODUCTION <ul><li>How to manage the company or the business </li></ul><ul><li>Identify and use the key strategic mea...
Ia) Performance measurement <ul><li>The role of performance measurement is to </li></ul><ul><li>Provide the feedback loop ...
Ib) What is Balance Scorecard(BSC) <ul><li>It is  defined  by Robert Kaplan and David Norton as a  powerful strategic meas...
Ic) Strategic Measurement System What must we excel at ? OUTCOMES DRIVERS Financial Perspective GOALS MEASURES Customer Pe...
Ic) Strategic Measurement System Financial ROCE Customer Customer Satisfaction Internal Business Process On-time delivery ...
Id)  Communication tool <ul><li>Communicate the multiple, linked objectives </li></ul><ul><li>See the logic between the st...
Ie) Innovative Feedback and Learning Tool Review Measures / Strategies/ Objectives Update BSC Due to underachieve-ment of ...
II) How BSC will  BENEFIT  US <ul><li>Focus on the organization as a whole, not individual plant targets only </li></ul><u...
III)  EXMAPLE  of Building BSC <ul><li>Building a BSC is basically a process of translating an organization's  vision  int...
IIIa. Example(MSM)
IIIb. Define departmental action plan 1)Prepare project proposal 2) Measure “IS” Process 3)Estimate project goals Order pr...
IV) IMPLEMENTATION PROBLEMS & COPING STRATEGIES Automate date collection Efficient data collection mechanism vi. Link BSC ...
IV) More COPING STRATEGIES <ul><li>Training for all managers  </li></ul><ul><li>Senior mgr play a role model  </li></ul><u...
V) STEP BY STEP APPROACH <ul><li>Step 1: Reaching an Agreement on Core Processes </li></ul><ul><li>Step 2: Decide on the G...
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Balanced Scoredcard

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It is defined by Robert Kaplan and David Norton as a powerful strategic measurement system, communication tools and innovative feedback & learning tool that “… translates strategy into measures that uniquely communicate your vision to the organization”

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  • Performance measurement provide evidence that plans are on track regularly review these measures to see whether the set of actions they instituted as a result of planning discussions are having the desired effect (2) Performance indicators addresses the capability of the organization in meeting a desired performance level the situation where people perform jobs (often to the best of their ability using the available resources) but concentrate on getting the job done rather than attempting to change the way the job is done.
  • (1) BSC includes financial measures that tell the results of actions - already taken. At the same time to complement the non-financial measures on customer satisfaction , internal processes , and the organization&apos;s innovation and improvement that are the drivers of the future financial performance.  get the balance of result and cost or the balance of “ IS ” and Future result. (2) Outcomes and performance drivers - The outcomes tend to be lag indicators such as profitability, market share, customer satisfaction, customer retention, and employee satisfactions which fall into the Financial and Customer perspective of the BSC - The performance drivers are the lead indicators for the particular business unit, They reflect the business unit’s strategy.
  • (1) Cause and effect relationships pervades all the perspectives on the BSC Learning&amp;Growth: Staff training, improve tech Process: Fine tune internal processes Customer: Improve customer satisfaction Financial: Increase revenue &amp; Market share
  • BSC was developed to communicate the multiple, linked objectives that companies must achieve to compete on the basis of capabilities and innovation , not just tangible physical assets The management can clearly explain the logic of developing and interrelationship between various strategies, objectives and measures of the company. It promote company-wide understanding using a common model of which can be shared throughout the organization. Every individual can see how his or her efforts contribute to achieving the organizational goals and staff morale can be improved.
  • The BSC provides the capacity for double loop learning. The cause and effect relationships embodied in a BSC enable management to establish short term, quantitative milestones that reflect their best forecast between changes in performance drives and the associated changes in one or more outcome measures. If the outcome had not met due to the underachievement of one or more of performance drivers, actions can be taken to correct the situation. If, however, the evidence demonstrates inconsistent conclusion between the outcome and the drivers, the management may need to review its measures or analyze if the strategy is still valid based on current market conditions, competitors behavior or customer preferences. New strategies have to be devised to response to new changes. The initial BSC is then updated with the new strategies with modified objectives and measures.
  • BSC translates strategies into targets, which enable every units will focus on doing things that truly matter in driving the company’s performance such as the discussion about the where is the products manufactured. At the same time, it can help to make the decision in allocating resources by investing in technology and people, which are essential to create future breakthrough. Internally, because of the vertical structure, the dept works in isolation and independently. With BSC , it provides a comprehensive view on how the individual dept efforts are linked throughout the organization and how they contribute to achieving the strategic objectives. This understanding will help align the entire organization strategically to the vision and mission of Loctite. The double feedback earning capacity embodied in BSC enables Loctite to closely monitor the customer needs and market condition. If need, we can change strategies accordingly to meet the new opportunities or threats. Using not only financial measures, but also the operational measures that can help decision making.
  • Training for all managers on the BSC concept and implementation process, helping them visualize BSC a good tool for their performance management Senior mgr play a role model and are measured on BSC performance Involvement of the BU managers in the review and consent of the dept initiatives Complementary initiatives being developed by supporting dept to help both corporate and Bus achieve their BSCs. Interviews with lower level managers to share on the critical issued for BSC implementation Involvement of the lower level managers in the review of the progress of the BSC implementation and the alignment of the incentive scheme to BSC.
  • Training for all managers on the BSC concept and implementation process, helping them visualize BSC a good tool for their performance management Senior mgr play a role model and are measured on BSC performance Involvement of the BU managers in the review and consent of the dept initiatives Complementary initiatives being developed by supporting dept to help both corporate and Bus achieve their BSCs. Interviews with lower level managers to share on the critical issued for BSC implementation Involvement of the lower level managers in the review of the progress of the BSC implementation and the alignment of the incentive scheme to BSC.
  • Transcript of "Balanced Scoredcard"

    1. 1. BALANCED SCORECARD <ul><li>INTRODUCTION </li></ul><ul><li>BENEFIT </li></ul><ul><li>EXAMPLE OF BUILDING BSC </li></ul><ul><li>IMPLEMENTATION PROBLEMS AND COPING STRATEGIES </li></ul><ul><li>A STEP-BY-STEP APPROACH TO BUILDING BSC </li></ul>
    2. 2. I. INTRODUCTION <ul><li>How to manage the company or the business </li></ul><ul><li>Identify and use the key strategic measures </li></ul><ul><li>Identify actions and KPI´s linked to the strategic measures. </li></ul><ul><li>With the Higher competition of our business </li></ul><ul><li>Link all together to measure how well of our performance </li></ul><ul><li>Relate to the performance measurement </li></ul><ul><li>Review the performance with the strategic objectives </li></ul>
    3. 3. Ia) Performance measurement <ul><li>The role of performance measurement is to </li></ul><ul><li>Provide the feedback loop between desired and actual changes to business processes </li></ul><ul><li>Hold managers accountable for their actions </li></ul><ul><li>Provide signals, both financial and non-financial, that stated strategic objectives are being reached. </li></ul>
    4. 4. Ib) What is Balance Scorecard(BSC) <ul><li>It is defined by Robert Kaplan and David Norton as a powerful strategic measurement system, communication tools and innovative feedback & learning tool that “… translates strategy into measures that uniquely communicate your vision to the organization ” </li></ul>
    5. 5. Ic) Strategic Measurement System What must we excel at ? OUTCOMES DRIVERS Financial Perspective GOALS MEASURES Customer Perspective GOALS MEASURES Innovation & Learning GOALS MEASURES Internal Business GOALS MEASURES Can we continues to improve and create value ? How do we look to shareholders ? How do customers see us ?
    6. 6. Ic) Strategic Measurement System Financial ROCE Customer Customer Satisfaction Internal Business Process On-time delivery Process Quality Process Quality Employee Skills Learning and Growth
    7. 7. Id) Communication tool <ul><li>Communicate the multiple, linked objectives </li></ul><ul><li>See the logic between the strategies, objectives and measures </li></ul><ul><li>Share throughout the company </li></ul><ul><li>The ownership of goals or objectives of each staff </li></ul>
    8. 8. Ie) Innovative Feedback and Learning Tool Review Measures / Strategies/ Objectives Update BSC Due to underachieve-ment of drivers Remedy Action Outcomes not met Manage Outcome Amend / formulates new measures / strategies / objectives Inconsistent linkage between outcomes and drivers NO YES
    9. 9. II) How BSC will BENEFIT US <ul><li>Focus on the organization as a whole, not individual plant targets only </li></ul><ul><li>Align organization to company vision and mission </li></ul><ul><li>Adapt strategically to the changing environment </li></ul><ul><li>Facilitate Decision making with the whole view of the organization </li></ul><ul><li>The performance of the objectives can be properly traced. </li></ul>
    10. 10. III) EXMAPLE of Building BSC <ul><li>Building a BSC is basically a process of translating an organization's vision into strategic objectives , concrete performance measures , and specific targets . </li></ul>
    11. 11. IIIa. Example(MSM)
    12. 12. IIIb. Define departmental action plan 1)Prepare project proposal 2) Measure “IS” Process 3)Estimate project goals Order process reduction program 1. Reduce order process leading time by 12 hr to 24 hr 4th Qtr Action 3rd Qtr Action 2nd Qtr Action 1 st Qtr Action KPI & Targets
    13. 13. IV) IMPLEMENTATION PROBLEMS & COPING STRATEGIES Automate date collection Efficient data collection mechanism vi. Link BSC to incentive Reward and recognition v. Communication iv. Understanding of what is involved iii. Staff ownership ii. Involve staff in developing the BSC. Show BSC performance regularly in common areas. Effective Deployment process i. Copying strategies Implementation problems
    14. 14. IV) More COPING STRATEGIES <ul><li>Training for all managers </li></ul><ul><li>Senior mgr play a role model </li></ul><ul><li>Involvement of the BU managers </li></ul><ul><li>Team work for implementation </li></ul><ul><li>Share with lower level managers on the critical issued for BSC implementation </li></ul><ul><li>Involvement of the lower level managers in the review of the progress of the BSC implementation </li></ul>
    15. 15. V) STEP BY STEP APPROACH <ul><li>Step 1: Reaching an Agreement on Core Processes </li></ul><ul><li>Step 2: Decide on the Generic Form of Scorecard </li></ul><ul><li>Step 3: Define & Link Objectives in Outcome Perspectives </li></ul><ul><li>Step 4: Unpack Each Core Process </li></ul><ul><li>Step 5: Link Objectives in Outcome Perspectives to Hot Spots in Core Processes & Define Process Objectives </li></ul><ul><li>Step 6: Link Objectives in other Driver perspectives to Process Objectives </li></ul><ul><li>Step 7: Add Measures that Support Objectives </li></ul>
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