Executive SummaryFinancial Performance        Implementation of a balanced scorecard enabled the South Division (SD) to ac...
03 May 2012                                                                                                 Case 2        ...
03 May 2012                                                                                           Case 2              ...
03 May 2012                                                                                            Case 2             ...
03 May 2012                                                                                           Case 2              ...
03 May 2012                                                                                            Case 2             ...
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BSC Tri-Cities Case B Written Analysis w/ Executive Summary

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Transcript of "BSC Tri-Cities Case B Written Analysis w/ Executive Summary"

  1. 1. Executive SummaryFinancial Performance Implementation of a balanced scorecard enabled the South Division (SD) to achieve a17.4% improvement in financial results over the North Division (ND). Within the SD,differences in the quality of implementation affected the degree of success of each branch.Implementation Differences Higher Performing Branches Lower Performing Branches clear and thorough regarding the inadequate in explaining why Communication was… purpose and use of the scorecard the scorecard was important Scorecard development management in collaboration with management only was done by… employees unrealistically difficult or far reasonably attainable and fair for Goals set were… too easy to attain and not equal all employees for all employees both group and individual, and not clearly defined or Incentives were… included monetary and non- nonexistent monetary rewardsRecommendations • Communication – clearly explain the purpose of the scorecard and help employees understand how to achieve their goals. • Scorecard development – allow employees to work with management to identify and set the measures and goals used in the scorecard. • Attainability/Equality of Goals – make sure goals are realistic and reachable for all employees in the branch. • Incentives – reward the group for the collective success of meeting branch goals as well as individual recognition for high performing employees.
  2. 2. 03 May 2012 Case 2 Team 2 Case 2 - Balanced Scorecard Case B (Team 2: Rima LeBlanc, Kelly Austin, Alan Bucciero, Steve Gotshall, & Kevin O’Neil)Financial PerformanceAfter one fiscal year of implementing a Balanced Score Card (BSC), the financial results for Tri-Cities Bank support the use of a scorecard at all branches. Figure 1 shows a high-levelcomparison of the financial performance changes between the North and South Divisions from2000 to 2001 – a difference of 17.4%. It is clear from this summary graph that the SouthDivision had a much larger improvement in financial performance in 2001. Noting that the onlyoperational difference between the two divisions was the implementation of the Balanced ScoreCard (BSC) management tool throughout the South Division, it is easy to see the benefit the BSChad on the average financial performance. Figure 1. Tri-Cities Bank Division comparison.Figure 2 breaks the data in Figure 1 down to show the performance increases of each branchwithin Tri-Cities Bank. The dotted line running down the middle of the graph divides thebranches by division. With the exception of branch E, this figure clearly shows the benefit thebranches in the south division received as a result of implementing the BSC. Although the northdivision produced consistently positive returns across all branches, the potential for much largergains with the use of a BSC is evident in the results of branches A, C, and B.
  3. 3. 03 May 2012 Case 2 Team 2 Figure 2. Tri-Cities Bank Branch comparison.Figure 3 focuses on a comparison of the large performance increases each branch within thesouth division accomplished using the BSC in 2001. It can be seen that branch A achieved thelargest percentage increase in financial performance, while branch E showed the smallestincrease in financial performance. While all branches did show an increase in performance from2000 to 2001, the results varied greatly. These differences can be correlated to the methods usedby management to implement and execute the BSC, and to how the program was received by thebranch employees. The implementation section discusses the lessons learned on BSCimplementation strategies Figure 3. South Division branch comparison.
  4. 4. 03 May 2012 Case 2 Team 2ImplementationAfter reviewing the financial performance results, the average benefit of using the BSC is clear.However, the results of the BSC vary greatly depending on the method by which the system isimplemented and managed within an organization. The following sections discuss lessonslearned on four major factors contributing to the performance of the BSC in operation.CommunicationManagement introduction and delivery of the BSC determined employee motivation,participation, and willingness to meet or exceed expectations. Those branches that performedwell communicated clearly how a BSC would help employees and the branch measure progressand growth. Managers that spent time explaining each goal and how to reach it engagedemployees in the process and experienced positive results. Managers that presented the BSC as atracking device found employees viewed it more as a micromanagement tool than a motivationalone. Pitching the scorecard only as a measure for competition created a negative impact onbranch performance. The success of the BSC begins with management’s ability to communicateand implement a scorecard that employees can clearly understand and attain its objectives.The management in branches A, C and D did a particularly good job communicating the purposeand use of the BSC during implementation, and that was reflected in their high-performanceresults. The management in branch E did a very poor job in communicating the BSC, which isreflected in their lack of improvement in their financial performance.Scorecard DevelopmentAfter evaluating the data from each branch in the South Division, it is evident that there weretwo main styles used to develop each scorecard. The branches either had their employeesinvolved in the scorecard development process or in the other case only had their managerinvolved. The branches that opted to have their employees help with the BSC developmentperformed significantly better than those that chose to only allow the manager to develop it. Forexample, Branch C and D did an excellent job in factoring in employee feedback when startingthe business scorecard, which made the employees feel more like a team. This teamworkstrategy seemed to create more synergy among the employees and helped lead to an overallimprovement in the banks three main financial measures. Having the employees involved indeciding what measures to include on the scorecards also helped the employees focus more ontheir goals while some of the other branchs employees were unclear of what their specific goalswere.The management in branches C and D did a particularly good job working with the branchemployees to develop the BSC during implementation, and that was reflected in their high-performance results. The management in branch E did a very poor job in involving theemployees in the development of the BSC, which is reflected in their lack of improvement intheir financial performance.
  5. 5. 03 May 2012 Case 2 Team 2Attainability/Equality of GoalsEmployee expectations and constant feedback are directly correlated to a successful branchscorecard. While every branch approached this differently, what seemed to work the best wascreating the goals as a team with employee feedback, allowing the employees to have a say inboth the goals and in the incentives that were attained in those goals. This allowed theemployees to see the goals of their fellow workers, and to understand that everyone had similardifficulties. With public goals, the employees had concrete expectations of what was expectedon them on a daily, weekly, or quarterly basis. This created a competitive environment, but alsofostered group involvement to reach the common goals of the branch. Regular feedback fromthe employees to management kept the BSC moving forward, while encouraging the competitivenature of the goals. Timely recognition of individual goal completions kept the program visiblein the branch and encouraged participation. The feeling that the goals are challenging but areultimately attainable seems to sustain the participation of the employees in the BSC throughoutthe year and helps ensure that the organization will strive to achieve high results.The management in branches A, B, C and D did a particularly good job of establishing high, butrealistic, attainable goals during the BSC implementation, and that was reflected in their high-performance results. The management in branch E did a very poor job of establishingappropriate goals BSC, which is reflected in their lack of improvement in their financialperformance.IncentivesIncentives offered to individuals and groups encourage success of the balanced scorecard.Individuals were offered monthly cash bonuses if they met or exceeded the BSC expectations.An additional cash reward was given quarterly to the employee who performed the best in his orher branch. This created a sense of competition and focus among employees and helped them tomeet the BSC objectives. Performance also determined raises, year-end bonuses, andpromotions of employees of the branch. A group incentive included a branch party at the end ofa successful quarter. Some employees did not have a clear understanding of the incentives orbelieved there simply were none. Branch managers continue to seek new and improved ways toreward positive BSC performance. These incentives promote individual determination to meetor exceed BSC expectation and teamwork among branch employees.The management in branches A, B, C and D did a particularly good job of establishing anappropriate incentive program during the BSC implementation, and that was reflected in theirhigh-performance results. The management in branch E did a very poor job of establishingappropriate incentives for the BSC, which is reflected in their lack of improvement in theirfinancial performance.
  6. 6. 03 May 2012 Case 2 Team 2RecommendationsAfter reviewing the results of a balanced scorecard from the Southern Division, successfulimplementation of the BSC in the north division will depend on the level of attentionmanagement gives to these four factors: 1. Communication – clearly explaining the purpose of the scorecard and helping employees understand how to achieve their goals. 2. Scorecard development – allowing employees to work with management to identify and set the measures and goals used in the scorecard. 3. Attainability/Equality of Goals – making sure goals are realistic and reachable for all employees in the branch. 4. Incentives – rewarding the group for the collective success of meeting branch goals as well as individual recognition for high performing employees.By using these best practices in implementing the BSC management tool and following thelessons learned, the North Division can expect to see a significant improvement in their futurefinancial performance.

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