Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Balanced Business Scorecard & Performance Management: Best Practice process and principles

749 views

Published on

Balanced Business Scorecared (BBS) and Performance Management best practice criteria, process, tools and principles

Published in: Business
  • DOWNLOAD THAT BOOKS INTO AVAILABLE FORMAT (2019 Update) ......................................................................................................................... ......................................................................................................................... Download Full PDF EBOOK here { http://bit.ly/2m6jJ5M } ......................................................................................................................... Download Full EPUB Ebook here { http://bit.ly/2m6jJ5M } ......................................................................................................................... Download Full doc Ebook here { http://bit.ly/2m6jJ5M } ......................................................................................................................... Download PDF EBOOK here { http://bit.ly/2m6jJ5M } ......................................................................................................................... Download EPUB Ebook here { http://bit.ly/2m6jJ5M } ......................................................................................................................... Download doc Ebook here { http://bit.ly/2m6jJ5M } ......................................................................................................................... ......................................................................................................................... ................................................................................................................................... eBook is an electronic version of a traditional print book that can be read by using a personal computer or by using an eBook reader. (An eBook reader can be a software application for use on a computer such as Microsoft's free Reader application, or a book-sized computer that is used solely as a reading device such as Nuvomedia's Rocket eBook.) Users can purchase an eBook on diskette or CD, but the most popular method of getting an eBook is to purchase a downloadable file of the eBook (or other reading material) from a Web site (such as Barnes and Noble) to be read from the user's computer or reading device. Generally, an eBook can be downloaded in five minutes or less ......................................................................................................................... .............. Browse by Genre Available eBooks .............................................................................................................................. Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, ......................................................................................................................... ......................................................................................................................... .....BEST SELLER FOR EBOOK RECOMMEND............................................................. ......................................................................................................................... Blowout: Corrupted Democracy, Rogue State Russia, and the Richest, Most Destructive Industry on Earth,-- The Ride of a Lifetime: Lessons Learned from 15 Years as CEO of the Walt Disney Company,-- Call Sign Chaos: Learning to Lead,-- StrengthsFinder 2.0,-- Stillness Is the Key,-- She Said: Breaking the Sexual Harassment Story That Helped Ignite a Movement,-- Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones,-- Everything Is Figureoutable,-- What It Takes: Lessons in the Pursuit of Excellence,-- Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!,-- The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness,-- Shut Up and Listen!: Hard Business Truths that Will Help You Succeed, ......................................................................................................................... .........................................................................................................................
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • DOWNLOAD FULL BOOKS, INTO AVAILABLE FORMAT ......................................................................................................................... ......................................................................................................................... ,DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ......................................................................................................................... ......................................................................................................................... .............. Browse by Genre Available eBooks ......................................................................................................................... Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult,
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • DOWNLOAD FULL BOOKS, INTO AVAILABLE FORMAT ......................................................................................................................... ......................................................................................................................... 1.DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... ......................................................................................................................... ......................................................................................................................... .............. Browse by Genre Available eBooks ......................................................................................................................... Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult,
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • DOWNLOAD FULL BOOKS, INTO AVAILABLE FORMAT ......................................................................................................................... ......................................................................................................................... 1.DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... ......................................................................................................................... ......................................................................................................................... .............. Browse by Genre Available eBooks ......................................................................................................................... Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult,
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Thanks for the acknowledgement, Riyad - much appreciated.
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here

Balanced Business Scorecard & Performance Management: Best Practice process and principles

  1. 1. BALANCED BUSINESS SCORECARDS AND PERFORMANCE MANAGEMENT - BEST PRACTICE PROCESS AND PRINCIPLES CHARLES COTTER PhD, MBA, B.A (Hons), B.A www.slideshare.net/CharlesCotter NAMIBIA 6-8 MARCH 2019
  2. 2. 3-DAY, TRAINING PROGRAMME OVERVIEW • Introduction and Background • Defining the fundamental PM concepts • Performance Management principles • Performance Management process • Performance Development, PPS and Performance Matrix • Reading article and video clip • Defining the 4 perspectives of the Balanced Scorecard (BBS) • Building a business case for BBS • Diagnosis of BBS Best Practice guidelines • Applying and sustaining the 9-step, BBS building and implementing process
  3. 3. AGREE OR DISAGREE? WHY?
  4. 4. DEFINING THE FUNDAMENTAL PERFORMANCE MANAGEMENT CONCEPTS • Performance Management • Key Performance Areas (KPA’s) • Key Performance Indicators (KPI’s)
  5. 5. DEFINING PERFORMANCE MANAGEMENT (PM) • PM can be seen as a comprehensive management system aimed at constantly improving and monitoring the performance of others. • PM concerns itself with improving productivity, delivering a better quality service/product and is aimed at achieving the goals of both the institution and the employee. • PM is a strategic and integrated approach to delivering sustained success to organizations by improving the performance of people who work in them and by developing the capabilities of teams and individual contributors. • PM entails three (3) important components/dimensions, namely: ❑ Evaluation (i.e. appraisal and measurement) ❑ Development (i.e. improving performance through the acquisition of skills) ❑ Relationships (between team leaders and team members)
  6. 6. KPA’s and KPI’s • Key Performance Areas (KPA) may be defined as the primary responsibilities of an individual or the core area(s) which each employee is accountable. • KPA’s originate from the organization’s mission and represent the specific areas where the organization expects results. • Key Performance Indicators (KPI’s) define unit of measure used to assess whether or not Key Performance Area have been achieved. • KPI’s clarify how performance will be judged against each KPA. They provide the framework for generating targets and are the core of all performance management systems.
  7. 7. BALANCED SCORECARD • The Balanced Scorecard (BSC) is a strategy performance management tool - a semi-standard structured report, supported by design methods and automation tools that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions. • The critical characteristics that define a Balanced Scorecard are: ❑Its focus on the strategic agenda of the organization concerned ❑The selection of a small number of data items to monitor ❑A mix of financial and non-financial data items
  8. 8. INTRODUCTORY ACTIVITY • Individual activity: ❑ Complete the following statement by inserting one word only. In your capacity as a Performance Management Committee member, in order to effectively manage organizational performance, I need to/to be ……………………………………………………… ❑ Jot this word down and find other learners who have written down the same word. ❑ Write this word down on the flip-chart. ❑ You’ll be given the opportunity to substantiate your choice of word.
  9. 9. THE NEED FOR PERFORMANCE MANAGEMENT • To identify possible management talent which should be further developed. • To give recognition to employees’ achievements thereby motivating them to work towards even higher achievements leading to promotion, salary increases or merit award. • To identify possible shortcomings in the employee’s work performance and to correct them either through remedial measures such as training and development or through disciplinary action if really necessary. • To identify training and developmental needs; even when employees are not underperforming it might be that they still need training on certain issues.
  10. 10. THE NEED FOR PERFORMANCE MANAGEMENT • To make the horizontal placement of employees possible when they are not performing well in a certain job or when they have capabilities which can be better utilized in other positions. • To determine the skills of an employee in a specific job. • To inform employees how well they are performing and how management is rating their performance. There is usually a curiosity on the part of employees about their performance. • To encourage good behaviour on the job and ensure that standards are maintained or to discourage below-standard performance.
  11. 11. PERFORMANCE MANAGEMENT BEST PRACTICES • https://www.surveymonkey.com/r/3GXW72Z • #1: The Performance Management System (PMS) of your organization is directly linked to the strategic goals of the institution. • #2: The PMS of your organization is (horizontally) integrated with the other HRM functions and also the core business processes (finance, customer & operations) of the institution. • #3: The PMS of your organization adapts from only management performance expectations to management, customer and other (internal and external) stakeholder expectations and is agile and responsive to environmental change, global best practices and future trends. • #4: The PMS of your organization is balanced in terms of focusing on improving both short-term outputs or results and also in the medium to long-term future i.e. future-proofing the business/operating model. • #5: The PMS of your organization encourages full participation and wide engagement and extensive consultation, focused on measuring quality standards.
  12. 12. PERFORMANCE MANAGEMENT BEST PRACTICES • https://www.surveymonkey.com/r/3GXW72Z • #6: The PMS of your organization is user-friendly, simple and understandable for all users. • #7: The PMS of your organization provides an opportunity to recognize performance excellence. • #8: The PMS of your organization is vigilant and efficient in identifying and correcting poor performance levels and under achievement of performance goals and standards. • #9: The PMS of your organization is line management-driven with active support and business partnering from the human resources department. • #10: The PMS is a continuous process that accurately identifies multi-level (individual, team and organizational) performance and skills gaps i.e. generates crowd-sourced (360-degree) performance intelligence and –analytics, which is effectively leveraged as a performance development and - improvement management tool.
  13. 13. LEARNING ACTIVITY 1 • Individual diagnosis: • In your capacity as a Performance Management Committee Member, review and rate the efficiency and effectiveness of the current performance management process in your organization. Refer to the above Best Practice criteria checklist (pages 18-19). Refer to the SurveyMonkey link for the online survey: https://www.surveymonkey.com/r/325B 7H7 • Group discussion: • Identify gaps and recommend improvement strategies.
  14. 14. STEP 1: PERFORMANCE MANAGEMENT CYCLE
  15. 15. STEP 1: PERFORMANCE PLANNING Clarifying expectations 1 Setting of goal/objectives, performance standards and criteria 2 Action Planning 3 Contracting Performance Agreements 4
  16. 16. PERFORMANCE REVIEW/APPRAISAL • Monitoring, Measuring/Evaluati ng performance against the pre- determined performance goals/objectives and standards and criteria.
  17. 17. PERFORMANCE FEEDBACK/INTERVIEW • Conducting of the 8 step, Human Touch interview/discussion – formally/informally • Implementing Positive and Corrective performance feedback.
  18. 18. 8-STEP HUMAN TOUCH PERFORMANCE INTERVIEW • Step 1: Control the environment • Step 2: State the purpose of the discussion • Step 3: Ask for the employee’s opinion • Step 4: Present your assessment • Step 5: Build on employee’s strengths • Step 6: Ask for employee’s reaction to your assessment • Step 7: Set specific goals • Step 8: Close the discussion
  19. 19. PERFORMANCE DEVELOPMENT ❑ Implementing training and development and other people performance improvement initiatives ❑ The adoption of the 5 pivotal roles of people development-focused managers (people capitalism).
  20. 20. ASSUMING THE ROLE OF A PERFORMANCE COACH • Identify performance problems that may be affecting performance and where improvement is required • Generate possible solutions and map a plan to improve performance. • Identify those performance areas where the team member is performing well • Communicate future performance expectations and requirements • Managers should adopt a balanced approach to performance management i.e. focus on both good and poor areas of performance. • This balanced approach suggests that performance management is both evaluative and developmental.
  21. 21. PERFORMANCE EQUATION COMPUTING THE PERFORMANCE POTENTIAL SCORE (PPS)
  22. 22. PERFORMANCE MATRIX – APPLYING COTTER’S 4 C’s (2018) CAREER DEVELOPING COUNSELING CAPITALIZING COACHING
  23. 23. CAUSES OF POOR PERFORMANCE ❑#1: Skills/competence ❑#2: Personal problems ❑#3: Lack of resources ❑#4: Organizational factors
  24. 24. CAUSES OF POOR PERFORMANCE • Refer to the reading article, 7 Causes of Poor Employee Performance - And How to Address Them (Bernard Marr) on pages 30-32
  25. 25. 7 CAUSES OF POOR EMPLOYEE PERFORMANCE - AND HOW TO ADDRESS THEM (BERNARD MARR) • Lack of ability: ❑Resources ❑Obstacles ❑Skills ❑Expectations • Lack of Motivation ❑No carrots ❑No sticks ❑Burnout
  26. 26. ❑Accenture ❑Microsoft ❑Adobe ❑Deloitte ❑Medtronic ❑Gap ❑General Electric • To date nearly 10% of Fortune 500 companies have abolished their annual ratings, according to Cliff Stevenson, a senior research analyst for the Institute for Corporate Productivity, a research network that studies management practices. WHAT DO FOLLOWING COMPANIES HAVE IN COMMON?
  27. 27. VIDEO CLIP • Reinventing Performance Management at Deloitte (HBR) • https://hbr.org/video/512 2969232001/reinventing- performance- management
  28. 28. THE CHANGING FACE OF PMS (COTTER, 2017) • #1: RE-ENGINEERING THE ANNUAL REVIEW CYCLE • #2: SHIFT FROM PERFORMANCE RATINGS TO STRENGTHS-BASED PERFORMANCE COACHING • #3: CONTINUOUS PERFORMANCE MANAGEMENT SOFTWARE OVER APPRAISAL SOFTWARE • #4: AUTOMATION, APPS, SIMPLICITY AND AGILITY • #5: PERFORMANCE DISCUSSION AND FEEDBACK TO PERFORMANCE DIALOGUE
  29. 29. THE CHANGING FACE OF PMS (COTTER, 2017) • #6: CROWD-SOURCED PERFORMANCE DATA, PEOPLE ANALYTICS AND SNAPSHOTS • #7: PERSONALIZATION AND EMPLOYEE EXPERIENCE (EX) • #8: PERFORMANCE DIFFERENTIATION • #9: SHIFT FROM PERFORMANCE MANAGEMENT TO PERFORMANCE IMPROVEMENT • #10: DE-COUPLING PERFORMANCE AND COMPENSATION
  30. 30. LEARNING ACTIVITY 2 • Group discussion • By referring to the performance equation, compute the PPS of your organization. Develop strategies to improve any of the deficient variables. • Identify the most common causes of poor performance in your organization. Develop pro-active strategies to prevent poor performance. • Apply Cotter’s 4 C’s (2018) performance management principles to the four (4) quadrants of the Performance Matrix.
  31. 31. LEARNING ACTIVITY 2 • Group discussion • As a Performance Management Committee Member, extract and apply the learning lessons from the Reading Article, 7 Causes of Poor Employee Performance - And How to Address Them (Marr). • As a Performance Management Committee Member, measured against the Deloitte video clip and Cotter’s (2017) ten criteria, critically evaluate your organization’s state of readiness for the changing face of performance.
  32. 32. PERFORMANCE REWARD • Offering of host of customized and personalized intrinsic and extrinsic performance reward options and recognition. • Ensure compliance with best practice principles
  33. 33. PERFORMANCE REWARD PRINCIPLES AND -OPTIONS • Performance reward principles: ❑ Reward must be principle-driven ❑ A systematic, holistic approach must be followed in managing reward ❑ Reward must be focused on business performance improvement (realization of business strategy) • Performance reward options: ❑ Fixed reward vs. Variable or temporary reward ❑ Incentive reward and Recognition reward ❑ Monetary reward vs. Non-monetary reward ❑ Intrinsic (spiritual) reward vs. Extrinsic reward ❑ Individual reward vs. Group/team reward ❑ Skills-based pay plans
  34. 34. LEARNING ACTIVITY 3 • Group discussion • As a Performance Management Committee Member, discuss the key line management actions in the following 4 stages: ❑ Performance planning ❑ Performance appraisal ❑ Performance feedback ❑ Performance reward
  35. 35. • It was originated by Drs. Robert Kaplan & David Norton (Harvard Business School) as a performance measurement framework that added strategic non- financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance. • These non-financial metrics are so valuable mainly because they predict future financial performance rather than simply report what’s already happened. • Their article (1996), describes how the balanced scorecard can help senior managers systematically link current actions with tomorrow’s goals, focusing on that place where, in the words of the authors, “the rubber meets the sky.” • Predecessors to the BSC: ❖ Tableau de Bord (Dashboard) ❖ Early Metric-Driven Incentives (MDIs) ORIGIN AND HISTORY OF THE BBS
  36. 36. • The “new” balanced scorecard transforms an organization’s strategic plan from an attractive, but passive document into the "marching orders" for the organization on a daily basis. • It provides a framework that not only provides performance measurements, but helps planners identify what should be done and measured. It enables executives to truly execute their strategies. • Given the insight and wisdom provided by Kaplan & Norton, the balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. • It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. • When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise. MODERN APPLICATION OF THE BBS
  37. 37. BBS MEASURES
  38. 38. • The balanced scorecard suggests that we view the organization from four (4) perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives: ❑Learning, Innovation and Growth ❑Business (Internal) Processes ❑Customer ❑Financial BBS PERSPECTIVES/DIMENSIONS
  39. 39. ILLUSTRATION: BSC PERSPECTIVES/DIMENSIONS
  40. 40. AGREE OR DISAGREE? WHY?
  41. 41. LEARNING, INNOVATION AND GROWTH PERSPECTIVE • Strategic question: ❖ “To achieve our vision, how will sustain our ability to change and improve?” • Examples (measurable indicators): ❖ Time to develop new generation of products ❖ Life cycle to product maturity ❖ Time to market versus competition ❖ Is there the correct level of expertise for the job? ❖ Employee turnover ❖ Job satisfaction ❖ Training/Learning opportunities • Value Outcome: ❖ Organizational knowledge and growth capacity
  42. 42. COMPONENTS OF LEARNING, INNOVATION AND GROWTH
  43. 43. BUSINESS (INTERNAL) PROCESS PERSPECTIVE • Strategic question: ❖ “To satisfy our shareholders and customers, what business processes must we excel at?” • Examples (measurable indicators): ❖ Cycle time ❖ Unit cost ❖ Yield ❖ New product introductions ❖ Number of activities per function ❖ Duplicate activities across functions ❖ Process alignment (is the right process in the right department?) ❖ Process bottlenecks ❖ Process automation • Value Outcome: ❖ Efficiency
  44. 44. AGREE OR DISAGREE? WHY?
  45. 45. CUSTOMER PERSPECTIVE • Strategic question: ❖ “To achieve our vision, how should we appear to our customers?” • Examples (measurable indicators): ❖ Percent of sales from new products ❖ On time delivery ❖ Share of important customers’ purchases ❖ Ranking by important customers ❖ Delivery performance to customer ❖ Quality performance for customer ❖ Customer satisfaction rate ❖ Customer percentage of market ❖ Customer retention rate • Value Outcome: ❖ Customer satisfaction
  46. 46. FINANCIAL PERSPECTIVE • Strategic question: ❖ “To succeed financially, how should we appear to our shareholders?” • Examples (measurable indicators): ❖ Cash flow ❖ Sales growth ❖ Operating income ❖ Return on Equity (RoE) ❖ Return On Investment (ROI) ❖ Return on Capital Employed (RoCE) ❖ Financial Results (Quarterly/Yearly) • Value Outcome: ❖ Financial performance/profitability
  47. 47. • Articulate the business's vision and strategy • Identify the performance categories that best link the business's vision and strategy to its results (e.g., financial performance, operations, innovation, employee performance) • Establish objectives that support the business's vision and strategy • Develop effective measures and meaningful standards, establishing both short-term milestones and long-term targets • Ensure company-wide acceptance (ownership) of the measures • Create appropriate budgeting, tracking, communication, and reward systems • Collect and analyze performance data and compare actual results with desired performance • Take action to close unfavourable gaps PURPOSES OF THE BBS
  48. 48. • Clarify or update a business's strategy • Link strategic objectives to long-term targets and annual budgets • Track the key elements of the business strategy • Incorporate strategic objectives into resource allocation processes • Facilitate organizational change • Compare performance of geographically diverse business units • Increase company-wide understanding of the corporate vision and strategy STRATEGIC UTILITY AND FUNCTIONAL VALUE OF BBS’s
  49. 49. STRATEGIC PLANNING • Strategic planning is an organizational management activity that is used to set priorities, focus energy and resources, strengthen operations, ensure that employees and other stakeholders are working toward common goals, establish agreement around intended outcomes/results and assess and adjust the organization's direction in response to a changing environment. • It is a disciplined effort that produces fundamental decisions and actions that shape and guide what an organization is, who it serves, what it does, and why it does it, with a focus on the future. • Effective strategic planning articulates not only where an organization is going and the actions needed to make progress, but also how it will know if it is successful. • A strategic plan is a document used to communicate with the organization the organizations goals, the actions needed to achieve those goals and all of the other critical elements developed during the planning exercise.
  50. 50. STRATEGIC MANAGEMENT AND EXECUTION • Strategic management is the comprehensive collection of ongoing activities and processes that organizations use to systematically coordinate and align resources and actions with mission, vision and strategy throughout an organization. • Strategic management activities transform the static plan into a system that provides strategic performance feedback to decision making and enables the plan to evolve and grow as requirements and other circumstances change. • Strategy Execution is basically synonymous with Strategy Management and amounts to the systematic implementation of a strategy.
  51. 51. 4-STEP STRATEGIC MANAGEMENT PROCESS
  52. 52. • Strategy maps are communication tools used to tell a story of how value is created for the organization. • They show a logical, step-by-step connection between strategic objectives (shown as ovals on the map) in the form of a cause- and-effect chain. • Improving performance in the objectives found in the Learning & Growth perspective (the bottom row) enables the organization to improve its Internal Process perspective Objectives (the next row up). • This in turn enables the organization to create desirable results in the Customer and Financial perspectives (the top two rows). STRATEGY MAPPING
  53. 53. ILLUSTRATION: STRATEGY MAP
  54. 54. SUSTAINABILITY - THE 3 P’s OF THE TRIPLE BOTTOM LINE
  55. 55. LEARNING ACTIVITY 4 • Group discussion • As a Performance Management Committee Member, by means of a cost-benefit analysis, build a business case for the strategic utility and functional value of Balanced Business Scorecards at your organization. • Concentrate on the following key dimensions: ❑ Viability (can it work?) ❑ Feasibility (is it cost-effective?) ❑ Sustainable (can it last?)
  56. 56. • #1: BBS is aligned with organization’s strategic business plans • #2: BBS is future-focused, adopting a strategic, medium to long-term approach • #3: BBS is pro-active, sensitive and responsive to (internal and external) environmental change and trends • #4: BBS enjoys company-wide acceptance (ownership) of the measures and processes • #5: BBS is organized, well-coordinated and systematic approach • #6: BBS is a collaborative and partnering effort (managers have co-opted business partners to the process) • #7: BBS is integrated (with other business management and administrative) and cohesive process BEST PRACTICE GUIDELINES FOR BBS
  57. 57. • #8: BBS generates meaningful business intelligence which informs business planning and supports strategic decision-making • #9: BBS integrates both scientific (metrics and analytics) and artistic (planning) principles • #10: BBS utilizes cutting-edge and innovative technology and software • #11: BBS is continuously monitored, reviewed, evaluated and adapted • #12: BBS yields a positive business ROI, with tangible/demonstrable outcomes and impact – creates sustainable competitive advantages and organizational change • #13: BBS incorporates strategic objectives into resource allocation processes e.g. financing/budgeting • #14: BBS is a logical and rational process making use of cause-effect logic BEST PRACTICE GUIDELINES FOR BBS
  58. 58. LEARNING ACTIVITY 5 • Individual diagnosis: • As a Performance Management Committee Member, critically evaluate your organization’s current Balanced Business Scorecard processes and systems against the best practice criteria. • Group discussion: • Identify gaps and recommend improvement strategies.
  59. 59. • The balanced scorecard is a strategic planning and management system that helps everyone in an organization understand and work towards a shared vision. • Starting at high “strategic altitude”, Mission, Vision, and other planning elements are translated into desired Strategic Results. • The organization’s “Pillars of Excellence”, or Strategic Themes, are selected to focus effort on the strategies that matter the most to success. • Strategic Objectives are used to decompose strategy into actionable components that can be monitored using Performance Measures. • Finally, Strategic Initiatives translate strategy into a set of high-priority projects that need to be implemented to ensure the success of strategy. • Once the strategic thinking and necessary actions are determined, annual program plans and projects can be developed and translated into budget requests. HIERARCHY OF BALANCED SCORECARD COMPONENTS
  60. 60. ILLUSTRATION: HIERARCHY OF BALANCED SCORECARD COMPONENTS
  61. 61. THE 9-STEP BSC BUILDING AND IMPLEMENTING PROCESS
  62. 62. • Step one of the scorecard building process starts with an assessment of the organization’s Mission and Vision, challenges (pains), enablers and values. • The following strategically-relevant items form the scope to be scrutinized by business managers: ❖ The company's mission statement ❖ The company's strategic plan/vision ❖ The financial status of the organization ❖ How the organization is currently structured and operating ❖ The level of expertise of their employees ❖ Customer satisfaction level • Tools: ❖ SWOT Analysis ❖ PESTEL Analysis STEP 1: ASSESSMENT - INTERNAL AND EXTERNAL STRATEGIC ASSESSMENT
  63. 63. STEP 1: ASSESSMENT TOOLS
  64. 64. A WINNING STRATEGY • CAPITALIZE ON STRENGTHS • MINIMIZE/NEUTRALIZE WEAKNESSES • EXPLOIT OPPORTUNITIES • COUNTERACT/MITIGATE THREATS
  65. 65. THE NATURE OF THE BUSINESS ENVIRONMENT – V-U-C-A
  66. 66. LEARNING ACTIVITY 6 • Group Discussion: • As a Performance Management Committee Member, by utilizing a SWOT Analysis Matrix and PESTEL analysis, perform an environmental scan/analysis of both the internal and external environments for your organization. Internally, identify organizational strengths and weaknesses and externally identify opportunities and threats. • In particular, focus on the following key organizational factors: ❑ Strategy (plan, vision and mission) ❑ Finances ❑ Customer ❑ Internal business processes ❑ Learning and growth (people and skills)
  67. 67. STEP 2: STRATEGY - CUSTOMER VALUE, STRATEGIC THEMES AND RESULTS • In Step Two, elements of the organization’s strategy, including Strategic Results, Strategic Themes and Perspectives, are developed by managers to focus attention on customer needs and the organization’s value proposition.
  68. 68. • Strategic themes are the main, high-level business strategies that form the basis for the organization’s business model. • Reference to themes as “pillars of excellence”. • The strategic themes are very broad in scope. • They apply to every part of the organization and define what major strategic thrusts the organization will pursue to achieve its vision. • A strategic theme is an area in which your organization must excel in order to achieve your vision. • Themes also represent deliberate strategic directional decisions made by the leadership team. • Taken together, one can look at the proposed set of strategic themes and ask this question: “If we excel in these 3-4 areas, will we achieve our vision?” and receive a resounding answer of “Yes!” STRATEGIC THEMES
  69. 69. STRATEGIC RESULTS • Each theme has a “strategic result” associated with it - this is a statement of a desired end-state. • The result is stated in such a way that you will clearly recognize success when you see it. • Strategic results are measurable and explicitly defined using outcome language. • Examples include: ❖ Business Growth ❖ Operational Excellence ❖ Customer Service Excellence ❖ Innovation ❖ Sustainability • The strategic differentiator lies in the strategic result - the specificity of the result gives guidance to organizational transformation. • Can be measured by compound measures of current and future-looking indicators.
  70. 70. • The strategic elements developed in Steps one and two are decomposed into Strategic Objectives, which are the basic building blocks of strategy and define the organization's strategic intent. • Metrics must also be aligned with the company's strategic plan. • The metrics set up also must be S-M-A-R-T STEP 3: OBJECTIVES - STRATEGY ACTION COMPONENTS
  71. 71. S-M-A-R-T METRICS
  72. 72. LEARNING ACTIVITY 7 • Group Discussion: • Refer to the preceding learning activities. As a Performance Management Committee Member, apply step 2 of the BBS Building and Implementing process by developing a strategic value proposition for your organization. • • Concentrate on the following key dimensions: • Strategic Themes • Associated strategic results
  73. 73. LEARNING ACTIVITY 7 • Group Discussion: • Refer to the preceding learning activities. As a Performance Management Committee Member, apply step 3 of the BBS Building and Implementing process by formulating strategic objectives for your organization. Ensure that these objectives comply with the SMART criteria.
  74. 74. TRANSLATING THEMES INTO STRATEGY MAPS • A strategy-based balanced scorecard system involves the collaborative development of an organization’s “Story of the Strategy” and identifies the connection between capacity, processes, customer value and financial outcomes. • In order to map this “story of strategy”, we assemble a team of subject matter experts for the theme and use their expertise to systematically decompose each theme into a set of strategic objectives, mapped in a story of value creation, to achieve the desired strategic result. • Once all the theme maps are developed, they are combined to create a powerful, mutually reinforcing business strategy. • We are often asked “why” we go to all the trouble of building theme maps when we are just going to combine them in the end. That is like asking why we go to the trouble of installing the load-bearing walls when we are just going to plaster over them and they’ll disappear into the woodwork anyway.
  75. 75. • In Step Four, the cause and effect linkages between the enterprise-wide Strategic Objectives are formalized in an enterprise-wide Strategy Map. • The previously constructed theme Strategy Maps are merged into an overall enterprise-wide Strategy Map that shows how the organization creates value for its customers and stakeholders. • Apply cause-effect logic • A Strategy Map highlights that delivering the right performance in the one perspective (e.g. financial success) can only be achieved by delivering the objectives in the other perspectives (e.g. delivering what customers want) - basically creating a map of interlinked objectives • It allows companies to create a truly integrated set of strategic objectives on a single page. STEP 4: STRATEGY MAP - CAUSE-EFFECT LINKS
  76. 76. EXAMPLE: STRATEGY MAP
  77. 77. EXAMPLE: STRATEGY MAP
  78. 78. LEARNING ACTIVITY 8 • Group Discussion: • Refer to the preceding learning activities. As a Performance Management Committee Member, apply step 4 of the BBS Building and Implementing process by crafting a 1-page strategy map for your organization. • Ensure that the strategy map uses cause-effect logic and establishes interdependent linkages.
  79. 79. • Leading and lagging measures are identified ❑Lagging indicators are typically “output” oriented, easy to measure but hard to improve or influence ❑Leading indicators are typically input oriented, hard to measure and easy to influence • Expected targets and thresholds are established • Baseline and benchmarking data is developed • Key Performance Indicator (KPI) and Performance Measure Development STEP 5: PERFORMANCE MEASURES - MEASURES AND TARGETS
  80. 80. • Provide a way to see if our strategy is working • Focus employees' attention on what matters most to success • Allow measurement of accomplishments, not just of the work that is performed • Provide a common language for communication • Are explicitly defined in terms of owner, unit of measure, collection frequency, data quality, expected value (targets), and thresholds • Are valid, to ensure measurement of the right things • Are verifiable, to ensure data collection accuracy GOOD PERFORMANCE MEASURES
  81. 81. 5 STEPS TO FIND THE RIGHT MEASURES
  82. 82. DEVELOPING KEY PERFORMANCE INDICATORS • Developing KPI’s is a straightforward process. • Simply translate KPA’s into measurable values. • The values may be numerical or qualitative. • Refer to examples of KPI’s, as set out in tables 5.1 - 5-3
  83. 83. PERFORMANCE TARGETS
  84. 84. PERFORMANCE TARGETS • Target setting is the key ingredient to success. • Without target setting, huge amounts of energy can be lost, unharnessed, unused. By working consistently toward the attainment of certain clearly defined, specific targets, energy can be tightly focused and the results astounding. • Targets are set to steer the organization/team/individual during the short-term. • Targets are needed to drive performance and to measure performance; to improve performance and to control performance. • Refer to the standards for target setting
  85. 85. STANDARDS FOR TARGET SETTING • Targets must relate to a single output • Targets must be measurable • Targets must have deadlines • Targets must be realistic and attainable, yet challenging • Targets must be under the control of the person/team setting them • Focus on high-impact targets • Participation in target setting • Targets must be uncomplicated • Targets must be accompanied by a comprehensive action plan • Targets must be systematically reviewed
  86. 86. LEARNING ACTIVITY 9 • Group Discussion: • Refer to the preceding learning activities. As a Performance Management Committee Member, apply step 5 of the BBS Building and Implementing process by developing performance measures for your organization. Ensure that these performance measures comply with the criteria for good measures.
  87. 87. • Strategic Initiatives are developed that support the Strategic Objectives. • To build accountability throughout the organization, ownership of Performance Measures and Strategic Initiatives is assigned to the appropriate staff and documented in data definition tables. • Development of strategic project plans STEP 6: INITIATIVES - STRATEGIC PROJECTS
  88. 88. LEARNING ACTIVITY 10 • Group Discussion: • Refer to the preceding learning activities. As a Performance Management Committee Member, apply step 5 of the BBS Building and Implementing process by developing performance measures for your organization. Ensure that these performance measures comply with the criteria for good measures.
  89. 89. STEP 7: PERFORMANCE ANALYSIS - SOFTWARE, PERFORMANCE REPORTING AND ANALYSIS • The implementation process begins by applying performance measurement software to get the right performance information to the right people at the right time. • Automation adds structure and discipline to the system and helps people make better business decisions.
  90. 90. • The organizational level scorecard (the first Tier) is translated into business unit or support unit scorecards (the second Tier) and then later to team and individual scorecards (the third Tier). • Cascading translates high-level strategy into lower-level objectives, measures and operational details and is the key to organization alignment around strategy. • The organization alignment should be clearly visible through strategy, using the strategy map, performance measures and targets, and initiatives. • Scorecards are used to improve accountability through objective and performance measure ownership and desired employee behaviours are incentivized with recognition and rewards. STEP 8: ALIGNMENT - CASCADING TO UNIT AND INDIVIDUAL SCORECARDS
  91. 91. 3-TIER BALANCED SCORECARD CASCADING
  92. 92. LEARNING ACTIVITY 11 • Group Discussion: • Refer to the preceding learning activities. As a Performance Management Committee Member, apply steps 7-8 of the BBS Building and Implementing process by cascading Tier 1 strategies to Tiers 2 and 3 for your organization.
  93. 93. • During this evaluation, the organization tries to answer questions such as: ❑Are our strategies working? ❑Are we measuring the right things? ❑Has our environment changed? ❑Are we budgeting our money strategically? STEP 9: EVALUATION - STRATEGY RESULTS AND REVISED STRATEGIES
  94. 94. STRATEGY EVALUATION – BSC FRAMEWORK
  95. 95. SUSTAINING THE BBS • Critical implementation success factors • Applying the control process
  96. 96. • #1: Balanced Scorecard is a transformation journey and change initiative, not a once off project - ensure that you have designed a Change Management plan which should run parallel to the Balanced Scorecard. • #2: Maintain a committed and engaged leadership - change should be driven from the top • #3: Develop an organizational culture based on results by establishing a strategy management office • #4: Focus the organization on strategy by holding review meetings organized around strategy • #5: Enhance individual accountability for results through objective ownership 10 CRITICAL IMPLEMENTATION SUCCESS FACTORS
  97. 97. • #6: Align the organization, systems and employee performance around strategy through a rewards and recognition programme • #7: Create a performance, results oriented culture • #8: Link budget formation, cost accounting and performance results • #9: Emphasize continual improvement • #10: Link key organization initiatives to the balanced scorecard development process 10 CRITICAL IMPLEMENTATION SUCCESS FACTORS
  98. 98. APPLYING THE CONTROL PROCESS
  99. 99. LEARNING ACTIVITY 12 • Group Discussion: • Refer to the preceding learning activities. As a Performance Management Committee Member, apply step 9 of the BBS Building and Implementing process by evaluating the Balance Scorecard for your organization. Ensure that the fundamental evaluation questions are addressed. • Refer to the preceding learning activities. As a Performance Management Committee Member, describe how you will ensure sustainability and continuous improvement of the BBS Building and Implementing process for your organization. Ensure that you include the 10 critical success factors and the control methods and process that will be followed.
  100. 100. SELECTED LIST OF SOURCES • Cotter, C.A (2004-2019). Various Performance Management and Strategic Management Learner Manuals. Pretoria. • Kaplan, Robert S; Norton, D. P. (1996). The Balanced Scorecard: Translating Strategy into Action. Boston, MA.: Harvard Business School Press. ISBN 978-0875846514 • Kaplan, R. S. and D. P. Norton. (1992). The balanced scorecard - Measures that drive performance. Harvard Business Review (January-February): 71-79. • http://balancedscorecard.org/Portals/0/PDF/BalancedScorecard9StepsToSuccess.pdf (accessed 26 October 2014) • https://www.slideshare.net/CharlesCotter/balanced-scorecard-41321389 (accessed 21 February 2019) • https://www.slideshare.net/CharlesCotter/hrm-innovation-in-reinventing-performance- management-and-compensation (accessed 21 February 2019) • https://www.slideshare.net/CharlesCotter/performance-management-best-practice- process-and-principles (accessed 21 February 2019)
  101. 101. CONCLUSION • Key points • Summary • Questions • Training Administration • Certification

×