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  1. 1. The Balanced Scorecard
  2. 2. What lies Ahead… <ul><li>Overview of the Balanced Scorecard </li></ul><ul><li>Why the Balanced Scorecard will help execute strategy </li></ul><ul><li>Strategy Map and Balanced Scorecard </li></ul><ul><li>Outcomes </li></ul><ul><li>Discussion – Ideas for scorecards </li></ul>
  3. 3. Executing Strategy... <ul><li>Is the greatest challenge for organizations </li></ul><ul><li>Vision </li></ul><ul><ul><li>- only 5% of workforce gets it! </li></ul></ul><ul><li>People </li></ul><ul><ul><li>– 25% of managers have incentives linked to strategy </li></ul></ul><ul><li>Management </li></ul><ul><ul><li>– 85% of executive teams spend less than 1 hour/mo discussing strategy </li></ul></ul><ul><li>Resource </li></ul><ul><ul><li>– 60% of organizations don’t link budgets to strategy </li></ul></ul>
  4. 4. Strategic Execution <ul><li>Bad execution, not bad strategy is the cause of 70% of CEO failures </li></ul><ul><li>Execution is not just tactics—it is a discipline and a system </li></ul>Source: Execution: The Discipline of Getting Things Done, by Larry Bossidy, and FORTUNE Magazine, “Why CEOs Fail”
  5. 5. Challenges in Executing Strategy Financial Management Tools Balance Sheets Income Statements Statement of Cash Flow People Management Tools MBO Training Programs HRIS 360 Feedback Customer Management Tools C R M Customer Segment Analysis Customer Surveys Process Management Tools Six Sigma Supply Chain Management TQM Strategy Management Tools ???
  6. 6. The Balanced Scorecard Train and Communicate Strategy Set goals, select performance measures and link measures to incentives Set target for each goal and re-deploy resources to activities and initiatives to achieve targets Provide feedback on performance and learn from results Feed Forward Learning
  7. 7. The Balanced Scorecard <ul><li>A robust tool – but keep it simple! </li></ul><ul><li>Makes strategy tangible –everyone’s job! </li></ul><ul><li>Tracks what’s important – hits and misses </li></ul><ul><li>Measurement-lead management </li></ul><ul><li>Provides feedback for short-term course corrections and long-term learning </li></ul>
  8. 8. Balanced Scorecard Perspectives <ul><li>Financial </li></ul><ul><ul><li>How do we succeed financially? </li></ul></ul><ul><li>Customer </li></ul><ul><li>How do we appear to our customers? </li></ul><ul><li>Internal Process </li></ul><ul><li>At what processes must we excel? </li></ul><ul><li>Learning and Growth </li></ul><ul><li>How do we sustain our ability to change and grow? </li></ul>
  9. 9. We Use the Scorecard to Articulate Strategic Hypotheses in Cause-effect Terms Knowledge, Skills, Systems, and Tools Financial Results To Build the Strategic Capabilities.. Needed to Deliver Unique Sets of Benefits to Customers... To Drive Financial Success... And Realize the Vision Equip our People... Customer Benefits Internal Capabilities
  10. 10. Balanced Scorecard Perspectives Vision & Strategy
  11. 11. Cascading Scorecards to Build Alignment Organization Business Unit Business Unit Business Unit Teams Individual Contributors
  12. 12. Financial Sound Fiscal Mgmt Budgeting Long-Term Investment Strategy Customer – The Value Proposition Internal Process Learning & Growth The Value Proposition Product/Services Price Selection Quality Availability Relationship Partnership Services Brand Image Innovation New learning Partnerships Future needs Operational Excellence Admin excellence Network of supplier for Products & services Adaptability Customer Mgmt Deepen Knowledge about customer Attract Retain Grow Relationship Climate for Action Personal Growth Competencies Functional Excellence Leadership Skills Strategic Readiness
  13. 13. Scorecard Information Perspective: Financial / Customer / Internal Process / Learning&Growth Train CSR Staff in Problem Resolution Skills Management actions taken to achieve target Initiatives Achieve 9.9 of 10 Average Customer Rating Desired level of performance for a measure Targets Average Customer Rating (scale of 1-10) Indicates success or failure Measures Increase Customer Satisfaction Measures of action plans Objectives Increase Market Share High Level Goals Strategies Example is… Are…. Information Type
  14. 15. Human Resources Mission Statement: The Human Resources Team will lead by example working to build a culture of high-energy, committed professionals who understand that continuous improvement and customer service are primary value competencies integrated into every position while developing SPS as a recognized employer of choice. Develop matrix; assign responsibilities; conduct regular checkpoints Lead: BF Target: 9/1/03 Platinum Certification Achieved Coordinate BP Certification Process Initiative Target & Lead Result/Deliverable Objective
  15. 16. The TCS Model Source: Human Capital Vol.9 No.12 May 2006 ‘Redefine the HR Agenda’
  16. 17. Vision <ul><li>Global Top 10 by 2010 in the IT Industry </li></ul>Mission <ul><li>Customer delight by providing best-in-class consulting, IT solutions & services and also delivering value and joy to all stakeholders. </li></ul>
  17. 18. Shareholder Value Human Capital Effectiveness Human Resource Efficiency Employee delight Customer delight Manage Operating efficiency Manage Customer relationships Deliver world class services Team Integration Leadership Competencies Cultural Climate Strategic Alignment /Motivation Work Capability FINANCIAL PERSPECTIVE CUSTOMER PERSPECTIVE INTERNAL PROCESS PERSPECTIVE LEARNING & GROWTH PERSPECTIVE
  18. 19. BSC Terminology Objectives <ul><li>Fast ground turnaround </li></ul>Statement of what strategy must achieve and what’s critical to its success Target <ul><li>30 Minutes </li></ul><ul><li>90% </li></ul>The level of performance or rate of improvement needed <ul><li>Cycle time optimization </li></ul>Key action programs required to achieve objectives Initiative Measurement <ul><li>On Ground Time </li></ul><ul><li>On-Time Departure </li></ul>How success in achieving the strategy will be measured and tracked Strategic Theme: Operating Efficiency Profitability Financial Learning More customers Ground crew alignment Lowest prices Fewer planes Customer Internal Fast ground turnaround Strategy Map: Diagram of the cause-and-effect relationships between strategic objectives Flight Is on time
  19. 20. Balanced Scorecard Example <ul><li>% Ground crew trained </li></ul><ul><li>% Ground crew stockholders </li></ul>Objectives Measurement <ul><li>Market Value </li></ul><ul><li>Seat Revenue </li></ul><ul><li>Plane Lease Cost </li></ul><ul><li>FAA On Time Arrival Rating </li></ul><ul><li>Customer Ranking (Market Survey) </li></ul><ul><li>On Ground Time </li></ul><ul><li>On-Time Departure </li></ul>Strategic Theme: Operating Efficiency Initiative <ul><li>Cycle time optimization program </li></ul><ul><li>ESOP </li></ul><ul><li>Ground crew training </li></ul><ul><li>Quality management </li></ul><ul><li>Customer loyalty program </li></ul>Target <ul><li>30% CAGR </li></ul><ul><li>20% CAGR </li></ul><ul><li>5% CAGR </li></ul><ul><li>#1 </li></ul><ul><li>#1 </li></ul><ul><li>30 Minutes </li></ul><ul><li>90% </li></ul><ul><li>yr. 1 70% yr. 3 90% yr. 5 100% </li></ul>Profitability Financial Learning More Customers Ground Crew Alignment Lowest Prices Fewer Planes Customer Internal Fast Ground Turnaround Flight Is on Time <ul><li>Profitability </li></ul><ul><li>More Customers </li></ul><ul><li>Fewer planes </li></ul><ul><li>Flight is on -time </li></ul><ul><li>Lowest prices </li></ul><ul><li>Fast ground turnaround </li></ul><ul><li>Ground crew alignment </li></ul>
  20. 21. Sample HR Measures Lagging Measures Impact of Prior Decisions Budget variance Employee relationship results Executive coaching Employee productivity Cost per hire by job class People expense/Revenues Leading Measures Guide Future Outcomes Employee strategic focus Executive retention Retraining/re-skilling Internal promotion rate Exit Rate of “C” Players Employee relationship factor
  21. 22. So Why Consider the BSC? <ul><li>As an HR Professional -- </li></ul><ul><ul><li>Strategic Thinker </li></ul></ul><ul><ul><li>Business Leader </li></ul></ul><ul><li>As an organization -- </li></ul><ul><ul><li>Welcomes change – vital culture today </li></ul></ul><ul><ul><li>Achieves strategic objectives </li></ul></ul>
  22. 23. Keys to Success <ul><li>Educate your Executive and Teams </li></ul><ul><li>Devise the right metrics </li></ul><ul><li>Follow through to completion </li></ul><ul><li>Start small ! – Report immediately </li></ul><ul><li>Don’t over measure </li></ul>
  23. 24. Getting Started – Customize Your BSC <ul><li>Describe the strategy – burning platform? </li></ul><ul><ul><li>Strategy Map </li></ul></ul><ul><li>2. Measure the strategy </li></ul><ul><ul><li>Develop the measures; critical data points </li></ul></ul><ul><li>Manage the strategy </li></ul><ul><ul><li>Gather detailed information about the measure and initiative </li></ul></ul>
  24. 25. The Successful Scorecard… <ul><li>Is a dynamic process – </li></ul><ul><ul><li>continues to set higher targets and achieves them – </li></ul></ul><ul><li>Define jobs strategically </li></ul><ul><ul><li>from the perspective of where it fits in with the strategic business goals </li></ul></ul><ul><li>Supports joint decision </li></ul><ul><ul><li>making about what you do/don’t do based on strategic goals </li></ul></ul>
  25. 26. Resources <ul><li>“ The Balanced Scorecard,” Kaplan & Norton </li></ul><ul><li>Balanced Scorecard Collaborative, Lincoln, MA, </li></ul><ul><li>“ The Strategy-Focused Organization,” Kaplan & Norton </li></ul><ul><li> </li></ul><ul><li>“ The HR Scorecard,” Becker, Huselid, Ulrich </li></ul><ul><li>“ Measure Like You Mean It,” Michael Hammer </li></ul><ul><li>“ The Balanced Scorecard Step By Step: Maximizing Performance and Maintaining Results,” Paul R. Niven </li></ul><ul><li>“ The Human Resources Scorecard, Measuring the Return on Investment,” Jack J. Phillips, Ron D. Stone, Patricia Pulliam Phillips </li></ul><ul><li>Company Case Studies </li></ul><ul><li>Networking </li></ul>
  26. 27. Questions?