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NHRDN Virtual Learning Session on Balanced Scorecard-Session II
This document provides an introduction and overview of the Balanced Scorecard approach presented by Ravi Parthasarathy. It includes: 1) A profile of Ravi Parthasarathy, who has over 30 years of experience in management and was trained in the Balanced Scorecard by Kaplan and Norton. 2) An outline of the objectives of the session, including recapping the strategic planning process, introducing the Balanced Scorecard, barriers to strategy execution, and linking the BSC to HR. 3) A discussion of common barriers to strategy execution like measurement issues, lack of management prioritization, and unaligned resources. The Balanced Scorecard is presented as a way to
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NHRDN Virtual Learning Session on Balanced Scorecard-Session II
- 1. An Introduction tothe BALANCED SCORECARD Ravi Parthasarathy BSc., MHR., MBA (USA) BSC & OD Expert ©Peopleplus 2010
- 2. Profile of Mr.Ravi Parthasarthy • Current: Sr. Vice President & Head Group HR, Karle Group • Previous: CEO/Director – People Plus Consultants, Director on Board – Anu Labs • Mr. Ravi Parthasarathy has graduated in Science and holds a Post graduate degree in Masters in Human Resources & MBA in International Management & Finance, Marketing from Buffalo University, State University of New York, USA. ©Peopleplus 2010
- 3. Profile of Mr.Ravi Parthasarthy • Mr. Ravi Parthasarathy is a highly accomplished Management professional with 30 years of extensive experience in blue-chip companies in India and Singapore having worked in Singapore for over 12 years, with specialization in Process Improvements, Re- Engineering, Productivity and Quality Systems, HR & OD and in Executive Development. He was trained as Trainer in Blue Star and Unilever and has trained over 4000 professionals personally. He is also involved in NGOs and Social welfare organizations. He was active in Singapore Institute of Management for over 10 years and was trained by Dr. Kaplan and Dr. Norton in Balanced Scorecard. ©Peopleplus 2010
- 4. Profile of Mr.Ravi Parthasarthy • He brings with him rich experience for having worked in various Indian Companies such as : • Kothari Group of Companies • Taj Group Hotels, Blue Star Ltd., Mumbai • Hindustan UniLever, Mumbai, • Dr. Reddy’s Laboratories Ltd., Hyderabad, • Technip India Ltd, Chennai, etc. • People Plus Consultants, Singapore, USA ©Peopleplus 2010
- 5. Objectives of thisSession • Recap of Strategic Planning Process • Birth of BSC and what is BSC • Barriers to Strategy Execution • Cause and Effect Relationship Model • Balance in the Balanced Scorecard • Balance Scorecard and the HR Scorecard ©Peopleplus 2010
- 6. Strategic Planning Process FUTURE Vision Mission Objectives Key Result Areas Performance Indicators PRESENT Strategies Action Program Activities Tasks Resources S W O SWOT Analysis T PAST ©Peopleplus 2010
- 7. Problems of Strategy The Balanced Implementation Scorecard is: You can’t measure A MEASUREMENT what you cannot Measurement describe System + Alignment You can’t manage A Strategic MANAGEMENT what you cannot Management measure System Focus + You can’t A COMMUNICATION communicate what Communication you cannot describe Tool “Measurement is the foundation of management.” ©Peopleplus 2010
- 8. Who are thedifferent STAKEHOLDERS of an Organization and What are they Interested in? ©Peopleplus 2010
- 9. What is theBalanced Scorecard? PROFITABLE The BSC GROWTH Retains the Financial traditional Perspective financial New Revenue Current Business Productivity Use of Assets measures Customer Value Proposition Customer Best in Best Total Best Total Cost Perspective Product/Service Solution The BSC links the financial Internal Product Customer Operational measures with Perspective Innovation Intimacy Excellence the drivers of future performance Learning Skills Technology Environment and Growth ©Peopleplus 2010
- 10. Vision-Mission Barrier Only 5% of the work force understands the strategy People Barrier One of 4 managers have BARRIERS incentives linked to strategy STRATEGY TO EXECUTION Management Barrier Strategy is not regularly discussed and prioritized Resource Barrier Budgets not linked to strategy Source: Kaplan & Norton ©Peopleplus 2010
- 11. Vision-Mission Barrier Only 5% of the work force understands the strategy People Barrier One of 4 managers have BARRIERS incentives linked to strategy STRATEGY TO EXECUTION Management Barrier Strategy is not regularly discussed and prioritized Resource Barrier Budgets not linked to strategy Source: Kaplan & Norton ©Peopleplus 2010
- 12. Vision-Mission Barrier Only 5% of the work force understands the strategy People Barrier One of 4 managers have BARRIERS incentives linked to strategy STRATEGY TO EXECUTION Management Barrier Strategy is not regularly discussed and prioritized Resource Barrier Budgets not linked to strategy Source: Kaplan & Norton ©Peopleplus 2010
- 13. Vision-Mission Barrier The BSC overcomes Vision- Only 5% of the work force Mission Barrier through the understands the strategy translation of strategy The BSC is a shared understanding of the Vision-Mission strategy translated into: Financial Customer Internal Learning&Growth ©Peopleplus 2010
- 14. Vision-Mission Barrier Only 5% of the work force understands the strategy People Barrier One of 4 managers have BARRIERS incentives linked to strategy STRATEGY TO EXECUTION Management Barrier Strategy is not regularly discussed and prioritized Resource Barrier Budgets not linked to strategy Source: Kaplan & Norton ©Peopleplus 2010
- 15. People Barrier „cascading‟ the scorecard One of 4 managers have overcomes the People Barrier incentives linked to strategy STRATEGY TOP-DOWN BOTTOM-UP Profitable Growth employee Financial New Increase Efficie Expand Sources in nt Use of Revenue Current Business Productivi ty of Assets driving the sees his/her strategy to contribution to Customer Value Proposition customer all the strategy Product Service Image Customer scorecard employees at all levels “line of sight” Understand Total Efficient Use New Products the Customers Solutions Homebuilder CRM. Productivity . of Assets process Internal scorecard Increase Employee Competence • Employee • Revenue per Satisfaction Employee personal Learning& scorecard Skills Systems Align Personal Goals Growth alignment and focus ©Peopleplus 2010
- 16. Vision-Mission Barrier Only 5% of the work force understands the strategy People Barrier One of 4 managers have BARRIERS incentives linked to strategy STRATEGY TO EXECUTION Management Barrier Strategy is not regularly discussed and prioritized Resource Barrier Budgets not linked to strategy Source: Kaplan & Norton ©Peopleplus 2010
- 17. Management Barrier strategic learning overcomes the Strategy is not regularly Management Barrier discussed and prioritized The Balanced Scorecard translates the vision and strategy into a coherent set of measures in four balanced perspectives Strategy Map Objective Measure Target Initiative • Grow • Annual • Marketing Financial Revenue Revenue Gross +30% program Growth from new Sales products The Balanced Customer New Products • Satisfy • Customer • CRM Scorecard Customer Profitability +20% Program Needs describes how Internal World-Class • Fast Time to • Time to from 9 • Cycle Time the strategy will Product Market Market down to Reengineering Development 6 months be executed Learning & • Acquire, • Staff • Skills Growth Highly Skilled Develop Competence 90% Development Workforce Skills Program ©Peopleplus 2010
- 18. Vision-Mission Barrier Only 5% of the work force understands the strategy People Barrier One of 4 managers have BARRIERS incentives linked to strategy STRATEGY TO EXECUTION Management Barrier Strategy is not regularly discussed and prioritized Resource Barrier Budgets not linked to strategy Source: Kaplan & Norton ©Peopleplus 2010
- 19. Resource Barrier Strategic Resource Allocation Budgets not linked to strategy overcomes the Resource Barrier Financial Customer Internal Learning&Growth Budget linked to the strategy ©Peopleplus 2010
- 20. Resource Barrier Strategic Resource Allocation Budgets not linked to strategy overcomes the Resource Barrier Selecting and Managing Initiatives 1 Other CRM SCM projects On-going & proposed SRM CSR strategic initiatives re- TQM examined JIT,QDP Marketing Projects 2 Screen, assess, and identify “Linked and Strategic” CRITERIA: initiatives Balanced Scorecard strategies should be linked to the 3 overall strategic Select strategic initiative that goals will grow the enterprise List of Priorities ©Peopleplus 2010
- 21. Cause and EffectRelationships and the Balanced Scorecard STRATEGY MAPS – a chain of cause-and-effect logic that connects the desired outcomes with the drivers Revenue WHAT? Financial Growth Loyal Customers WHAT? HOW? Customer Quality Product WHAT? HOW? Quality Quality HOW? WHAT? Internal Production Materials Learning Skilled Workforce + HOW? & Growth Technology ©Peopleplus 2010
- 22. Cause and EffectRelationships and the Balanced Scorecard A strategy is a set of hypothesis about CAUSE and EFFECT. Revenue EFFECT Financial Growth • A chain of cause and effect Loyal Customers CAUSE EFFECT relationships can be established Customer as a vertical dimension through Quality Product CAUSE EFFECT the four BSC perspectives. Quality Quality • The BSC tells the story of the Internal CAUSE EFFECT Production Materials strategy Learning Skilled Workforce + CAUSE & Growth Technology ©Peopleplus 2010
- 23. The ‘Balance’ inthe Balanced Scorecard 1 – Balance between the tangible assets and intangible assets Revenue Financial Growth Loyal Customers Customer Quality Product Internal Quality Production Quality Materials tangible assets Learning Skilled Workforce + Technology intangible assets & Growth In order to extract value from the intangible assets, these must be transformed. ©Peopleplus 2010
- 24. The ‘Balance’ inthe Balanced Scorecard 2 – Balance between the financial measures and non- financial measures Objectives Measures Targets Initiatives Revenue Financial Growth Financial Loyal Customers Customer Quality Product Quality Quality Non-Financial Internal Production Materials Learning Skilled Workforce + & Growth Technology ©Peopleplus 2010
- 25. The ‘Balance’ inthe Balanced Scorecard 3 – Balance between the internal and external constituents Revenue Financial Growth Loyal Customers External – where we (effect) Customer want to go Quality Product Quality Quality Internal Production Materials Internal – what we (cause) Learning Skilled Workforce + have to do & Growth Technology ©Peopleplus 2010
- 26. The ‘Balance’ inthe Balanced Scorecard 4 – Balance between lag and lead indicators of performance Objectives Measures Targets Initiatives Revenue Financial Growth lag lead horizontal Loyal Customers dimension of the Customer BSC Quality Product Quality Quality Internal Production Materials Learning Skilled Workforce + & Growth Technology vertical dimension of the BSC ©Peopleplus 2010
- 27. The VMO KRAPI SPAT RES Model FUTURE Vision The Balanced Scorecard translates the Mission strategy into the four perspectives Strategy Objectives Financial Customer The „VERTICAL‟ Key Result Areas cause and effect Internal dimension of the Learning strategy Performance Indicators & Growth PRESENT Strategies Action Program Activities Tasks Resources S W O SWOT Analysis T PAST ©Peopleplus 2010
- 28. The Balanced ScorecardModel and the VMO KRA PI SPAT RES Model Vision – Mission – O KRA PI SPATRES horizontal CAUSE AND EFFECT dimension Revenue Growth Financial Finance Vision - Innovative Products Customer Marketing Mission World-Class Internal Product Dev‟t Internal Operations Stable High-Talent Learning Workforce HR &Growth vertical vertical CAUSE ALIGNMENT AND EFFECT dimension
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