American Red Cross Balanced Scorecard

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  • 1. The American Red Cross: Performance Measurement Then and Now, and Applying the Balanced Scorecard By Bicky, Evgenii, Lavender, Natalie, and Sa
  • 2. Overview • Balanced Scorecard Method • American Red Cross • Old Performance Measurement System • Description & Evaluation • New Performance Measurement System • Description & Evaluation • Recommendations & Applying the Balanced Scorecard
  • 3. Presentation’s Objectives • WHAT the Balanced Scorecard is. • WHY it is an effective performance measurement tool • HOW the ARC makes use of the BSC. • HOW the organization‟s performance is measured with the BSC
  • 4. What is Balanced Scorecard?
  • 5. Balanced Scorecard History Measurement and Reporting 1992   2000 1996 Articles in Harvard Business Review:  Enterprise-wide Strategic Management Alignment and Communication Acceptance and Acclaim: “The Balanced Scorecard — Measures that Drive Performance” January - February 1992  “The Balanced “Putting the Balanced Scorecard to Work” September - October 1993  Selected by Harvard Scorecard” is translated into 18 languages “Using the Balanced Scorecard as a Strategic Management System” January - February 1996 1996 Business Review as one of the “most important management practices of the past 75 years.“ 2000
  • 6. Before the Balanced Scorecard MISSION Why we exist VALUES What’s important to us VISION What we want to be STRATEGY Our game plan STRATEGIC OUTCOMES Satisfied SHAREHOLDERS Delighted CUSTOMERS Efficient & Effective PROCESSES Motivated & Prepared WORKFORCE
  • 7. With the Balanced Scorecard Strategy Is a Step In a Continuum MISSION Why we exist VALUES What’s important to us VISION What we want to be STRATEGY Our game plan BALANCED SCORECARD Implementation & Focus STRATEGIC INITIATIVES What we need to do PERSONAL OBJECTIVES What I need to do STRATEGIC OUTCOMES Satisfied SHAREHOLDERS Delighted CUSTOMERS Efficient & Effective PROCESSES Motivated & Prepared WORKFORCE
  • 8. Reasons to use BSC
  • 9. Four Perspectives of the Balanced Scorecard
  • 10. Learning and Growth Perspective • An organization's ability to innovate, improve, and learn ties directly to its value as an organization. • How can we continue to improve and create value for our services?
  • 11. Business Process Perspective • Must focus on critical internal operations that enable the organization to satisfy customer needs. • To satisfy our shareholders, what business processes must we excel at?
  • 12. Customer Perspective • Must know if their organization is satisfying customer needs. • To achieve our vision, how should we appear to our customers?
  • 13. Financial Perspective • In the private sector, measure typically focused on profit and market share. • To succeed financially, how do we appear to our shareholders?
  • 14. Financial Perspective
  • 15. Perspectives & Performance Measurement CUSTOMER OBJECTIVE MEASURE FINANCIAL WEIGHT % BUSINESS PROCESS OBJECTIVE MEASURE WEIGHT % OBJECTIVE MEASURE WEIGHT % LEARNING & GROWTH OBJECTIVE MEASURE WEIGHT %
  • 16. The Balanced Scorecard: Benefits • Sets clear goals, objectives, and measures across four critical areas • Creates interdependency and interrelationship of all four quadrants; balance is key • Provides leadership with the ability to build organizational consensus around its priorities; creates organizational clarity • Provides a vehicle that can hold staff and management accountable for their results in a clear and consistent manner • Can complement any existing strategic planning effort by clearly identifying and prioritizing performance benchmarks and targets
  • 17. American Red Cross (ARC) • Nongovernmental, nonprofit organization whose purpose is to prevent and relieve human suffering • Has a mission of providing relief to victims of disasters and helping people prevent, prepare for, and respond to emergencies • Employees (13,000) and volunteers (875,000) • 850 Chapters
  • 18. Two Performance Systems in Old Plan • Re-chartering: Chapters had to answer 33 yes/no questions. • Standard of Excellence: Designed to improved the chapter performance in the reach of fundraising, revenue per population, service level, and community potential
  • 19. American Red Cross Strategic Plan • Be America‟s partner and a leader in mobilizing communities to help people prevent, prepare for, and respond to disasters and other life-threatening emergencies. • Inspire a new generation of volunteers and supporters to enrich our traditional base of support. • Strengthen our financial base, infrastructure, and support systems to continuously improve our service delivery system.
  • 20. Two Types of Chapter Performance Standards in the New System • Core Requirements: Chapters should meet these basic requirements. • Critical Performance Standards: Fifteen out of thirty standards are mandatory. The chapters are evaluated on: - Chapters‟ past year performance - Comparison against the performance of its peers
  • 21. Chapters Evaluation • Highly Performing Chapters: Meet all the core requirements and exceed both chapter performance standards. Awarded with “Recognition” • Successful Chapters: Meet all the core requirements and also meet and exceed the performance standards. • Provisional Chapter: Meet all the core requirements but lag behind in the Critical Performance Standards. • Charter Review Required: Chapters who fail one or more core requirements.
  • 22. Evaluation of the New Plan • Ensures uniformity and meet minimum requirements. • 17 core requirements do not directly support the strategic plan • Critical Performance Standards good measure of evaluation.
  • 23. Example Multiplier Performance Measurement 1 2 Percentage of fundraising expenses to related contribution 3 Disaster readiness level Percent of volunteers indicating ‘Excellent’ overall levels of satisfaction with their volunteer experience
  • 24. Measures that differ? • Different scales • What is considered „good‟?
  • 25. Measures that differ?
  • 26. Actual Score ÷ Total PerformanceWeighted Score Total Weighted Score Score × Possible Weighted Score × 100 = Total Chapter Performance Score Performance Multiplier = Score Conclusions: •Hard to focus: too many measures; too many categories •Some measures don‟t drive strategy •Just components, no alignment g
  • 27. Recommendations: Applying the Balanced Scorecard • Objectives need to drive strategy, and be aligned • Measures need to encourage objectives
  • 28. Be America’s partner and a leader in mobilizing communities to help people prevent, prepare for, and respond to disasters and other life-threatening emergencies. Inspire a new generation of volunteers and supporters to enrich our traditional base of support Strengthen our financial base, infrastructure, and support systems to continuously improve our service delivery system
  • 29. Example
  • 30. Be America’s partner and a leader in mobilizing communities to help people prevent, prepare for, and respond to disasters and other life-threatening emergencies. Inspire a new generation of volunteers and supporters to enrich our traditional base of support Strengthen our financial base, infrastructure, and support systems to continuously improve our service delivery system
  • 31. Example
  • 32. Be America’s partner and a leader in mobilizing communities to help people prevent, prepare for, and respond to disasters and other life-threatening emergencies. Inspire a new generation of volunteers and supporters to enrich our traditional base of support Strengthen our financial base, infrastructure, and support systems to continuously improve our service delivery system
  • 33. Example
  • 34. Be America’s partner and a leader in mobilizing communities to help people prevent, prepare for, and respond to disasters and other life-threatening emergencies. Inspire a new generation of volunteers and supporters to enrich our traditional base of support Strengthen our financial base, infrastructure, and support systems to continuously improve our service delivery system
  • 35. Example
  • 36. Alignment of Objectives
  • 37. Conclusion