1. BALANCED SCORE CARD-A
TOOL OF PERFORMANCE
MANAGEMENT
15 DEC 2012
December 26, 2013

2. Programme of work
• Session 1
• Current performance challenges
• Understanding , vision and values of
the organization
• Introduction to the balanced
scorecard
• Session 2
• Recap of the case study
December 26, 2013

3. Contd--• Requirement 1- the financisl
perspective
• Requirement 2-the learnning and
development perspective
• Session 3
• Requirement 3the internal business
process perspective
• Requirement 4-The customer
perspective
December 26, 2013

4. Contd--• Requirement 5- linking the
perspectives- the strategic 4 Box
Model
• Session 4
• Benefits of implementing the
balanced scorecard
• Traps in implementation
• CLOSING REMARKS
December 26, 2013

5. PART- I
KEYS TO EFFECTIVE
PERFORMANCE
December 26, 2013

6. WHERE IS THE KEY TO
PERFORMANCE?
An old man was walking home late one night when
he saw a friend on his knees under a light
searching for something” What are you doing ?”
he asked his friend
“ I dropped the key to my house”
‘ I’ll help you look”After a few minutes of frustrated
searching the old man asked his friend” where
exactly were you when you dropped this key?:
The friend pointed towards the darkness” over
there”
“Then why are you searching for it here?”
“Because this is where the light is”
Sun parable
December 26, 2013

7. PERFORMANCE CHALLENGES
• Patchwork styles- superficial results
• Default future
• Stereotyping- making faceless groups
• Not letting go old assumptions
• Self deception
• What do i care about an issue being resolved??
• Inability to use future focused language
• How people perform depends on how the situation
occurs to them
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8. KEYS TO EFFECTIVE
PERFORMANCE
•
•
•
•
•
Personal relationships
Operational excellence
Shared vision
Managing for results
Shaping performance oriented behaviour-identifying
hidden agendas
• `Planning precisely with clear goals
• Aligning employee goals
• Having a clear set of performance standards/
measures
• Focus on cooperative communication
• Transparency
• Mutual respect
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• Continuous improvement

9. PART II
VISION AND VALUES
December 26, 2013

10. WHAT -----• IS A VISION?
• ARE VALUES?
December 26, 2013

11. WHY-----• IS A VISION IMPORTANT?
• ARE VALUES IMPORTANT?
December 26, 2013

12. FORMULATING A VISION
• Bring together all stakeholders in a vision
planning exercise
• Gather responses to vision questions from
stakeholders
• Develop a draft set of vision statements
for review by stakeholders
• Adjust the draft based on
recommendations
• Develop the final vision statement
December 26, 2013

13. VALUES RELATED TO---• Standards for action
• Internal and external relationships
• Ethical standards
• Self- development
• Ideals
• Financial matters
December 26, 2013

14. Strategic themes
• Need for a thematic approach as a
compass bearing.
• Future state vs current reality
• Translation into measures and
actions
• Importance of time frame
December 26, 2013

15. PART III
BALANCED SCORE CARD-A
CURTAIN RAISER
December 26, 2013

16. WHAT YOU MEASURE IS WHAT YOU GET
YOU CAN’T IMPROVE WHAT YOU
CANNOT MEASURE
December 26, 2013

17. What Is a Balanced
Scorecard?
A Measurement
System?
A Management
System?
A Management
Philosophy?
December 26, 2013

18. Elements of a good Management
System
• Derived from the Vision and Strategy of the organization
• Planning
– Long term strategic plan
– Short term business plan and budgets
• Measurement
– Focused set of measures
– Measures represent organization's plan and vision
• Review
– Plans are regularly reviewed and suitably revised
• Performance
– Rewards are linked to driving key measures
December 26, 2013

19. Genesis of Balanced Scorecard
• The ‘Balanced Scorecard’ solution - Kaplan & Norton
– A set of measures based on
• Finance
• Customer
• Internal processes
• Learning and growth
– Linked to vision and strategy
– ‘Balances’ short and long term needs
– Builds ‘leading’ and ‘lagging’ indicators
December 26, 2013

20. Advantages
Balanced
Scorecard because:
financial and ...
indicators
external and ...
measures
outcomes and ...
drivers
quantitative and ...
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factors
nonfinancial
internal
performance
qualitative

21. Why Balanced Scorecard
• Situation
– Bias towards Financial Measures
– Initiatives not all linkable to financials,
hence
•Either not undertaken
•Or too many initiatives
– Top Management need to focus
December 26, 2013

22. WHY BALANCED
SCORECARD
• Increasing importance of intangible assets for
competitive advantage
• Need to make strategy and its implementation
the central focus of any organization
• Alignment of strategy to organizational
departmental and personal goals
• Use of measurement and management systems
derived from strategies and capabilities
• Role of executive leadership in mobilizing and
implementing change
December 26, 2013

23. December 26, 2013

24. A PICTORIAL REPRESENTATION--The Mission
"If we succeed, how
will we look to our
financial donors?”
”To achieve our vision,
how must we look to
our customers?”
“To satisfy our customers,
financial donors and mission,
what business processes
must we excel at?"
“To achieve our vision, how
must our people learn,
communicate, and work
together?”
The Mission, rather than the financial / shareholder
objectives, drives the organization’s strategy
December 26, 2013

25. FUNCTIONS OF THE
BALANCED SCORECARD
• Helps implement vision and strategy
• Develops metrics based on the priorities of the
overall strategic plan
• Designs processes relevent to these metrics
• Reduces metrics into numeric form for storage
and analysis
• Examines outcomes of various strategies
outcomes and measures
• Tracks results to guide the company and provide
feedback
December 26, 2013

26. METRICS PROVIDE---• STRATEGIC FEEDBACK
• DIAGNOSTIC FEEDBACK
• TRENDS IN PERFORMANCE OVER
TIME
• CONTINUOUS FEEDBACK ABOUT THE
MEASURES ADOPTED- WHICH
METRICS NEED TO BE TRACKED.
December 26, 2013

27. Why are Companies
Adopting a Balanced
Scorecard?
• Change
The Revenue Growth Strategy
The Productivity Strategy
“Im
prove stability by broadening the sources of revenue from current
custom
ers”
“Improve operating efficiency by shifting custom
ers to m
ore costeffective channels of distribution”
Improve
Returns
Increase
Customer
Confidence in Our
Financial Advice
Formulate and communicate a new
strategy for a more competitive
environment
•Growth
Increase revenues, not just cut costs and
enhance productivity
• Implement
From the 10 to the 10,000. Every
employee implements the new growth
strategy in their day-to-day operations
December 26, 2013
Financial
Perspective
Improve
Operating
Efficiency
Broaden
Revenue Mix
Increase
Customer
Satisfaction
Through Superior
Execution
Customer
Perspective
Internal
Perspective
Understand
Customer
Segments
Dev
elop New
Products
Cross-Sell the
Product Line
Shift
to
Appropriate
Channel
Increase
Employee
Productiv
ity
Develop
Strategic
Skills
Access
to
Strategic
Information
Minimize
Problems
Provide
Rapid
Response
Learning
Perspective
Align
Personal
Goals

28. The Ingredients of Highly Successful
Balanced Scorecard Programs
1. Leadership From the Top
–
–
–
Create the Climate for Change
Create a Common Focus for
Change Activities
Rationalize and Align the
Organization
4. Make Strategy a Continuous
Process
–
Formulate
–
–
Communicate
2. Make Strategy Everyone’s Job
–
–
–
–
Comprehensive Communication to
Create Awareness
Align Goals and Incentives
Integrate Budgeting with Strategic
Planning
Align Resources and Initiatives
December 26, 2013
STRATEGY
Execute
Strategic Feedback That Encourages
Learning
Executive Teams Manage Strategic
Themes
Testing Hypotheses, Adapting, and
Learning
Navigate
3. Unlock and Focus Hidden Assets
–
–
Reengineer Work Processes
Create Knowledge Sharing Networks

29. CHAIN OF CAUSATION
 Our Survival is dependent upon growing the
business
 Our business growth is largely determined by
customer satisfaction
 Customer satisfaction is governed by quality,
price and delivery
 Our process capability is greatly limited by
variation
 Process variation leads to an increase in defects,
costs and cycle time
 To eliminate variation, we must apply the right
knowledge
 In order to apply the right knowledge, we must
first acquire it
 To acquire new knowledge means that we must
December 26, 2013
have the will to survive

30. .
December 26, 2013

31. The City of Charlotte Corporate-level Linkage Model
Customer Perspective
Reduce
Crime
Increase
Perception
of Safety
Improve
Service
Quality
Strengthen
Neighborhoods
Availability of
Safe,
Convenient
Transportation
Maintain
Competitive
Tax Rates
Promote
Economic
Opportunity
Financial Accountability Perspective
Expand
Non-City
Funding
Maximize
Benefit/Cost
Maintain
AAA
Rating
Grow Tax
Base
Internal Process Perspective
Increase
Positive
Contacts
Promote
Community
Based
Problem
Solving
Learning and Growth
Perspective
Secure
Funding/
Service
Partners
Enhance
Knowledge
Management
Capabilities
Improve
Productivity
Close
Skills Gap
Streamline
Customer
Interactions
Increase
Infrastructure
Capacity
Achieve
Positive
Employee
Climate
Promote
Business
Mix

32. TOP-LEVEL METRICS OF SUCCESS
•Time to develop next  Time-to-market
 Warranty cost
•No of times design  Market share
 Customer satisfaction
modified
 Key financials:
•Quality standards
gen product
•Asset Utilization
•Service quality.
 Sales margin
 Operating profit
 Return on net assets
 Cash flow
 Employee satisfaction
December 26, 2013

33. COMPANIES THAT HAVE
IMPLEMENTED THE BALANCED SCORE
CARD
• GODREJ
• TATA MOTORS
• TCS
• CASTROL INDIA LTD
• PHILIPS ELECTRONICS
• INFOSYS
• TAJ GROUP OF HOTELS
December 26, 2013

34. PART IV
THE FINANCIAL
PERSPECTIVE
December 26, 2013

35. Finance
• To succeed financially, how should we appear to
our shareholders
• Financial measures
– Show economic consequences of actions
already taken
– Show if strategy, implementation have
given results
• Typically can be:
– Operating Income
– ROCE
December 26, 2013

36. GROWTH STAGE
• PRODUCTS HAVING GROWTH
POTENTIAL
• COMMITMENT OF RESOURCES
• EXPAND PRODUCTION CAPACITY
• OPERATING CAPABILITIES
• INVESTMENT IN
SYSTEMS/INFRASTRUCTIURE
• MORE CASH OUTFLOW
December 26, 2013

37. SUSTENANCE STAGE
• ATTRACT INVESTMENTS
• ENHANCING IMPROVEMENTS
• ENHANCING PROFITABILITY
• ROI
• ROCE
• EVA
December 26, 2013

38. HARVEST STAGE
• ENOUGH TO MAINTAIN EQUIPMENT
• NO EXPANSION
• INVESTMENT S WITH A VIEW TO
SHORT TERM RETURNS
• PAY BACKS
• MAXIMIZE CASH FLOW
December 26, 2013

39. Customer
• To achieve our vision, how should we appear to our
customers
• Measures typically can be related to:
– Customer satisfaction
– Customer retention/business expansion with existing
– New customer acquisition
– Value delivery - to customer
– Market and account share in targeted segments
• Segment specific drivers could be:
– Shorter lead times
– Innovative products and services
– Better quality
December 26, 2013

40. Core Measures
Market
Share
Customer
Acquisition
Perceived
quality
December 26, 2013
Customer
Value
Perceived
image
Customer
Satisfaction
Customer
Retention

41. Internal Business Processes
Identify
the
market
Create the
Product/
Service
Offering
Innovation Process
•Operating Processes
December 26, 2013
Build the
Deliver the
Products/ Products/
Services
Services
Service
the
Customer

42. Learning and Growth
• To achieve our vision, how will we sustain our ability to
change and improve
• The infrastructure that the organisation must build to create
long-term growth and improvement
• Come from:
– People
– Systems
– Organisational procedures
• Measures include
– Employee Satisfaction
– Retention
– Training
– Skills
December 26, 2013

43. Learning & Growth Measurement
Framework
Core Measurements
Results
Employee
Retention
Employee
Productivity
Employee
Satisfaction
Enablers
Staff
Competencies
December 26, 2013
Technology
Infrastructure
Climate

44. Measures
• Employee Satisfaction
– Satisfaction rating
– Suggestions per employee
– Improvement projects implemented/employee
• Employee Productivity
– Revenue per employee
– Value added per employee
– Output produced to employee compensation
• Employee skill/competency building
– Skill matrix score
December 26, 2013

45. Barriers to Strategic Implementation
The Vision Barrier
Only 5% of the work force
understands the strategy
The People Barrier
Only 25% of managers have
incentives linked to strategy
9 of 10
companies fail
to execute
strategy
The Management Barrier
85% of executive teams spend
less than one hour per month
discussing strategy
60% of organizations don’t link
budgets to strategy
The Resource Barrier
You Can’t Manage Strategy With a System Designed for Tactics

46. Developing the Scorecard
Vision
n
lig
A
CSF's
Strategic Goals
t
en
m
Key Business Objectives
(Business Plans)
Lin
kag
e
Fin. $$
Balanced
Business
Scorecard
(BBS)
December 26, 2013
Cust.
Balanced
Business
Scorecard
Learning
Process
Key Business Processes
Key
Performance
Indicators
(KPI's)

47. Key Pitfalls to Avoid
Process
•
•
•
•
•
•
•
Middle management task
force
Not driven by senior
executive team
Only one or a few
individuals involved
Too long a development
process (allowing the
“best” to be the enemy of
the “good”)
Delay introduction
because of missing
measurements
Static not dynamic
process
Treating the BSC as an
EIS
Philosophy
•
•
•
Measurement to control;
not to communicate
Management dictating
actions vs. employee
improvisation to achieve
desired outcomes
For management only,
not shared with all
employees

48. Thank You
Questions?
December 26, 2013