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Balance score card

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Balance score card

  1. 1. Balanced Score Card
  2. 2. Where it started…….. Introduced in 1992 by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework The Balanced Scorecard is the most commonly used framework for ensuring that companies execute their strategies
  3. 3. What is Balance Scorecard? A Balanced Scorecard monitors the performance of all or part of an organization, towards strategic goals It is used in business, industry, government, and nonprofit organizations worldwide to align business activities It gives a framework and helps planners identify what should be done and measured
  4. 4. Why Implement a Balanced Scorecard ? Increase focus on strategy and results Align organization strategy with the work people on day-to-day basis Improve communication of the organization’s Vision and Strategy To provide a more reliable basis for awarding incentive based pay
  5. 5. Why Implement a balanced Scorecard ? To give managers a comprehensive view of the performance of an employee and business Employee Satisfaction To survive and prosper in today’s world It provides feedback to both the internal business processes and external outcomes in order to continuously improve strategic performance and results
  6. 6. Four Strategic Perspectives
  7. 7. Financial Examines company’s implementation and execution of its strategy Three possible stages as described by Kaplan and Norton  Rapid Growth  Sustain  Harvest
  8. 8. Customer Customer Satisfaction Retention Marketing Product/Service in the eyes of the customer
  9. 9. Internal Business Process Metrics based on this perspective allow the managers to know how well their business is running Innovation - Measures how well the company identifies the customer’s future needs Operations – Measures quality ,costs, technology & plant infrastructure
  10. 10. Learning and Growth Training Forward Focused Concerned with -Human capital -Information capital -Organizational capital
  11. 11. Process Formulate business strategy Outline the company’s valueDefine business strategy chain activities Identify the strategically requiredOutline a strategy map organizational outcomes Identify workforce requirements Identify the required work force behaviors
  12. 12. Balanced Score Card
  13. 13. Philips Philips is world leader in healthcare, lifestyle and lighting Philips integrates technologies and design into people life Mission :Improve the quality of people’s lives through timely introduction of meaningful innovations
  14. 14. Issues During the mid-90s, Netherlands based Royal Philips reported losses Due to rapid changes in the external environment and growing competition of Asian companies like LG and Samsung Led to the Company initiating  High manufacturing costs  Initiating job cuts  Selling unprofitable businesses
  15. 15. Why Balance Scorecard ? The initiative to implement the Balanced Scorecard came from the top management at its HQ in the Netherlands Need to shift focus from high-volume business to high-value business They realized they had to make operations  Flexible  Innovative
  16. 16. Implementation This led the Company to introduce a program called Business Excellence through Speed and Teamwork (BEST) in July 1999 The Balanced Scorecard was one of the tools of the BEST There were four perspectives in Philips Balanced Scorecard:  Competence  Processes  Customers  Finance
  17. 17. Implementation They used Balanced Scorecard strategy across Philips’ divisions with more than 1,20,000 employees spread across 150 countries They established the Critical Success Factor’s (CSFs) Philips used the traffic light system to measure the level of achievement of the key indicators:  Green light – Target that had been met  Amber – Performance in line with the target  Red – A problem area
  18. 18. Measuring Results The Balanced Scorecard was used as an instrument to  Evaluate actual performance against targets  Monitor future plans It enabled employees understand the existing policies and plans for the future Achieving revenue growth, employee satisfaction, customer satisfaction were the common indicators in all business units
  19. 19. Balanced Score Card
  20. 20. Unified CallSoft It is based in Canada, has been providing Call center and related BPO services since the past one and a half decade It has operations in over seventeen countries includes United States, Eastern Europe, India and Japan
  21. 21. Issues Lately it has been confronting difficulties in tracking and monitoring the performance of the employee Managers were unable to decide the reason for significant dips in progress of employees and in revenues volume Need to optimize the service delivery processes
  22. 22. Why Balance Scorecard ? Amongst the several options for resolving the issue the top management used Balanced Scorecard approach as it was most feasible Implement a rigorous mechanism of checks across several delivery centers Improving the overall productivity and employee performance
  23. 23. Implementation A team was created that had members from all the major divisions to pool in their ‘plausible’ causes for the decline being experienced A criteria was developed for filtering the collected measures and used to arrive at the ‘most relevant group’ of KPIs (Key performance Indicators) The software chosen was such that it permitted arranging the scorecards in the form of ‘cascade’
  24. 24. Measuring Results Huge cost savings Total amount came down by 10% Employee contribution rose by a 40% Motivation levels too increased by 60% Coordination between different delivery centers was achieved There was transparency of the system , thus making it easy to spot the ‘weakest link’
  25. 25. Measuring Results Cleary defined performance metrics supported by an reward system helps in motivating the work force in a call center The managers no longer required to fight with numbers and values By using the values presented on scorecards, they could take quick decision
  26. 26. Balanced Score Card
  27. 27. Zenith Systems Zenith is a leading independent IT infrastructure services provider It provides services throughout the UK, Europe and internationally to more than 80 countries
  28. 28. Issues Lack of board clarity Lack of progress Some occasional disharmony Need to focus on strategic performance
  29. 29. Implementation 2GC was appointed to assist the Board to create a Corporate Balanced Scorecard 2GC helps in addressing the strategic and performance management issues They worked for 8 months with Executive Board and Quality manager The firm had good financial reporting systems in place
  30. 30. Implementation 2GC worked with two main divisions – Client Services and Business Development An analysis of how the three Balanced Scorecards interacted with each other was shown
  31. 31. Measuring Results The board agreed on a clear set of strategies The two divisions established a clear statement The managers for the first time developed long-term view of the objective ,the organization was trying to achieve Reporting on relevant information back to the centre
  32. 32. Conclusion Balanced scorecard is a powerful strategic tool It represents a fundamental change in how an organization is measured and held accountable for results It also poses threats to an established corporate culture and has potential weaknesses if it isnt executed properly

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