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building a balanced scorecard

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Imagine an excellent scorecard built by a staff executive or middle management without actively involving the senior management team in the process

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The scorecard may be accepted as accurate representation of the organisation, but may not become an integral part of the organizationalmanagement process

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Therefore, building BSC may require actual involvement of senior management

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The first Step for building a successful BSC is to gain consensus and support among senior Management on why the scorecardis being developed

Establish objectives for BSC Programme

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Guide the preparation of BSCGain CommitmentClarify the framework for implementation

Establish objectives for BSC Programme

The objectives would help to…

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building the BSC- the process

Task 1. Select the appropriate Organizational UnitTask 2. Identify SBU/Corporate LinkagesTask 3. Conduct First Round of InterviewsTask 4. Synthesis SessionTask 5. Executive WorkshopTask 6. Sub Groups MeetingsTask 7. Executive Workshop: ii nd RoundTask8. Develop Implementation PlanTask 9. Executive Workshop: iii rd RoundTask10.Finalize the Implementation Plan

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Task 1. Select the appropriate Organizational Unit

building the BSC- the process

Corporate

Div A Div B Div C

SBU1 SBU2 SBU3 SBU4 SBU5 SBU6 SBU7 SBU8 SBU9

Level I

Level II

Level III

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building the BSC- the process

Task 2. Identify SBU/Corporate Linkages

Financial Objectives for SBU

GrowthProfitabilityCash flowHarvest

Overriding Corporate themes

EnvironmentSafetyEmployees policiesCommunity relationsInnovationprice

Linkages to other SBUs

Common customersCore competenciesSuppliersCustomer RelationshipIntegrated approach to customers

Linkage necessary becauseOne SBU may notDevelop at cost of other

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building the BSC- the process

Task 3. Conduct First Round of Interviews

The architect will prepare

Background Materials on BSCInternal Documents of OrganizationVision, mission and strategySubmitted to Senior ManagementAcquire information about industryTrends like growth, competitors, customers, technology

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building the BSC- the process

Task 3. Conduct First Round of Interviews

After review of materials, architect(1-3) Conduct interviews for at least 90 mtswith senior management

Obtain inputs on 4 perspectivesIntroduce the conceptIdentifying potential conflictsConsolidate views and understanding of BSC

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building the BSC- the process

Task 4. Synthesis Session

After interview the architect & designTeam discuss

Responses in the interviewMajor issuesLikely resistance to BSCExpected changes in ProcessesDevelop tentative list of objectives and measuresBasis for first meeting of Top ManagementObjectives for 4 perspectives identifiedCause and effect relationship of objectives

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building the BSC- the process

Task 5. Executive Workshop:1st Round

Architect schedule meeting with top Mgt.

Begin process of consensus on BSCGroup debate on Mission, Vision, Strategy…Addressing each perspective……..Show proposed objectivesVideotapes of interviewsBrainstorm on objectives ,top ones selectedDividing executive team into 4 sub-groupsSelect 3-4 strategic obj to each perspective along with the measuresPost workshop document is distributed

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building the BSC- the process

Task 6. Sub Group Meetings

Architect schedule meeting with Sub groupsfor several meetings. The subgroup attempts to accomplish 4 principal objectives

1 Refine the wording of the strategic Objectives

2 For each objective, identify the measure that best capture and communicate the intentions of objectives

3 For each measure, identify the source of information and actions necessary to access information

4 For each perspective, identify the key linkage among measures within and between the perspectives

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Selecting & Designing Measures

Core Financial Measures

ROI/EVAProfitabilityRevenue GrowthCost Reduction/ productivity

Core Customer Measures

Market ShareCustomer AcquisitionCustomer RetentionCustomer ProfitabilityCustomer satisfaction

Core Learning & Growth Measures

Employee SatisfactionEmployee RetentionEmployee Productivity

Internal Processes

Innovation ProcessesOperation ProcessesPost Sales Processes

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building the BSC- the process

Task 7: Executive Workshop-IInd Round

Involve senior management & their subordinates

Debate on organizational, vision, strategy statement

and tentative objectives & measures

Output of workshop be presented to subgroups

Participants offer their comments

Prepare draft brochure for communication

Formulate stretch targets for each measure

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building the BSC- the process

Task 8. Develop the implementation Plan

New team consisting of leader of each sub group

Formalize the targets

Develop implementation plan

Linking measures with data base

Communicating the Balance Scorecard

Information Metric to be developed

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building the BSC- the process

Task 9. Executive Workshop 3rd Round

Senior Team Meets for the third time

Final consensus of Vision, mission, strategy….

Validate the stretch targets fixed by implementation team

Identifies action programmes to achieve targets

Aligning various initiatives to objectives, measures

Communicate implementation to employees

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building the BSC- the process

Task 10. Finalize the Implementation Plan

To be integrated into management system

Management information system

Management start using BSC

Phase in plan at Place

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Frame for implementation

Week 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

ActivitiesI Measurement Program Architecture

1Select Organizational Unit2 Identify SBU/Corporate Linkage

II Define Strategic Objectives

3 First Round Interviews4 Synthesis Session5 Executive Workshop-1st round

III Select Strategic Measures

6 Subgroup Meeting7 Executive Workshop: 2nd Round

IV Build Implementation Plan

8 Develop Implementation Plan9 Executive Workshop:3rd Round10 Finalize Implementation Plan

Project Plan

Interviews

Workshop 1

subgroups

Workshop 2

Roll out Plan

Workshop 3

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Systematic process to build consensus & clarityBuild management teamCommunicate the strategyLink reward to achieving strategic objectivesSet strategic targetsAlign strategic targets and initiativesAn architect for framing, collect and constructActive support of senior managementClear objective about development of BSCSustain investment in intellectual and intangible

AssetsProvide foundation for strategic learning

Building a Balance Scorecard…..

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questions