ACF1481 Balanced Scorecard Balanced Scorecard

BSC

1. Balanced ScorecardBalanced Scorecard
Pat BriggsPat Briggs

2. OriginsOrigins

One of a number of quality schemes and One of a number of quality schemes and
tools used by organisations to improve tools used by organisations to improve
their performancetheir performance

Created by Kaplan and Norton of Harvard Created by Kaplan and Norton of Harvard
Business School in the early 90’sBusiness School in the early 90’s

Originally adopted by organisations to Originally adopted by organisations to
improve their performance measurement improve their performance measurement
systemssystems

3. The PhilosophyThe Philosophy

““As companies around the world transform As companies around the world transform
themselves for competition that is based themselves for competition that is based
on information, their ability to exploit on information, their ability to exploit
intangible assets has become far more intangible assets has become far more
decisive than their ability to invest in and decisive than their ability to invest in and
manage physical assets.”manage physical assets.”
•Kaplan and Norton Harvard Business Review 1996Kaplan and Norton Harvard Business Review 1996

4. BasicsBasics

Moves focus away from purely financial Moves focus away from purely financial
measures of performancemeasures of performance

Balances financial measures with those Balances financial measures with those
from three additional perspectives:from three additional perspectives:

CustomersCustomers

Internal business processesInternal business processes

Learning and growthLearning and growth

5. FundamentalsFundamentals

Context of vision and strategyContext of vision and strategy

Balances performance from a number of Balances performance from a number of
different perspectivesdifferent perspectives

Centres around identifying Critical Centres around identifying Critical
Success Factors (CSF’s) for the Success Factors (CSF’s) for the
organisation to achieve its objectives organisation to achieve its objectives

6. Fundamentals (cont)Fundamentals (cont)

For each CSF, Key Performance For each CSF, Key Performance
Indicators (KPI’s) are identified to measure Indicators (KPI’s) are identified to measure
progress in achieving the objectivesprogress in achieving the objectives

For each KPI, targets and actions can be For each KPI, targets and actions can be
aligned and assigned to ensure activity is aligned and assigned to ensure activity is
focused on delivering the objectivesfocused on delivering the objectives

Initiatives can be identified which will Initiatives can be identified which will
enable the targets to be achievedenable the targets to be achieved

7. Fundamentals - ChartFundamentals - Chart

8. Creating a Balanced Scorecard Creating a Balanced Scorecard
(Chart)(Chart)

9. Balanced Scorecard Example – Balanced Scorecard Example –
General (Chart)General (Chart)

10. Client Loyalty  Employer of choice 
CSF: KPI: CSF: KPI:
Satisfaction of Service1. Client Satisfaction
score
Loyalty 3. Retention
    4. Number of referrals
Perceived value 2. Perceived value scoreInvolvement/Participation5. Percentage of
employees involved
(Involvement =
Rotations,
promotions,
community
involvement,
committee
involvement, etc)
Operational Excellence  Cost competitive 
CSF: KPI: CSF: KPI:
Continuous improvement6 Percentage of gold
medal suggestions
implemented (Gold
medal = suggestions
mutually agreed to by
SSC and clients)
Among industry low-cost
providers
9. Quartile vs similar
organisations
  7. Number of process
related suggestions
per associate
  
Process delivery 8. Percentage of Service
Level Agreement
targets met
Achieving budget 10. SSC actual costs vs
budget

11. Balanced Scorecard as Strategic Balanced Scorecard as Strategic
Management systemManagement system

Links an organisation’s long-term strategy Links an organisation’s long-term strategy
with its short-term actions through four with its short-term actions through four
processesprocesses

Translating the visionTranslating the vision

Communication and linkingCommunication and linking

Business planningBusiness planning

Feedback and learningFeedback and learning
•(Kaplan and Norton 1996)(Kaplan and Norton 1996)

12. Translating the VisionTranslating the Vision
Helps managers build a consensus around Helps managers build a consensus around
the organisation’s vision and strategythe organisation’s vision and strategy
Translates the vision into operational Translates the vision into operational
terms that provide useful guides to action terms that provide useful guides to action
at the local levelat the local level
Expresses vision and strategy statements Expresses vision and strategy statements
as an integrated set of objectives and as an integrated set of objectives and
measures that will support the delivery of measures that will support the delivery of
long-term successlong-term success

13. Communicating and LinkingCommunicating and Linking

Represents a succinct presentation of Represents a succinct presentation of
what the organisation is trying to achieve what the organisation is trying to achieve
for stakeholders, customers and stafffor stakeholders, customers and staff

Facilitates the setting of goals for Facilitates the setting of goals for
individuals and departments which are individuals and departments which are
aligned to the strategyaligned to the strategy

Can be used to link rewards to Can be used to link rewards to
performance measuresperformance measures

14. Business PlanningBusiness Planning
Enables organisations to integrate their business Enables organisations to integrate their business
and financial plansand financial plans
Can be used as a basis for allocating resources Can be used as a basis for allocating resources
and setting prioritiesand setting priorities
Creates a framework for managing an Creates a framework for managing an
organisation’s various change programs and organisation’s various change programs and
initiativesinitiatives
Encourages the establishment of specific Encourages the establishment of specific
milestones for the measures that mark progress milestones for the measures that mark progress
toward achieving the strategic goalstoward achieving the strategic goals

15. Feedback and LearningFeedback and Learning

Assists an organisation to monitor Assists an organisation to monitor
progress from all 4 perspectives and progress from all 4 perspectives and
evaluate strategy in light of performanceevaluate strategy in light of performance

Represents an essential strategic Represents an essential strategic
feedback systemfeedback system

Allows the relationship between Allows the relationship between
performance measures and objectives to performance measures and objectives to
be tested and evaluatedbe tested and evaluated

16. Cause and Effect Relationship for a Cause and Effect Relationship for a
Profit Seeking OrganisationProfit Seeking Organisation

1. Financial (make a profit)1. Financial (make a profit)

2. Customer (by satisfying customer 2. Customer (by satisfying customer
needs)needs)

3. Internal Processes (through being able 3. Internal Processes (through being able
to deliver value)to deliver value)

4. Learning and Growth (by having the 4. Learning and Growth (by having the
necessary knowledge and tools available)necessary knowledge and tools available)

17. Cause and Effect Relationship for a Cause and Effect Relationship for a
Public Service OrganisationPublic Service Organisation

Customer (fulfil your value obligation to the Customer (fulfil your value obligation to the
public)public)

Internal Processes (through being able to Internal Processes (through being able to
deliver)deliver)

Learning and Growth (by having the Learning and Growth (by having the
necessary knowledge and tools available)necessary knowledge and tools available)

Financial (by securing and prioritising the Financial (by securing and prioritising the
use of financial resources)use of financial resources)

18. Balanced Scorecard – summary of Balanced Scorecard – summary of
strategic applicationsstrategic applications

Clarify and update strategyClarify and update strategy

Communicate strategy throughout the Communicate strategy throughout the
organisationorganisation

Align team and individual goals with the strategyAlign team and individual goals with the strategy

Link strategic objectives to long-term targets and Link strategic objectives to long-term targets and
annual budgetsannual budgets

Identify and align strategic initiativesIdentify and align strategic initiatives

Conduct periodic performance reviews to learn Conduct periodic performance reviews to learn
about and improve strategyabout and improve strategy

19. Questions?Questions?

20. BRAINSTORMINGBRAINSTORMING
CSF’S AND KPI’SCSF’S AND KPI’S