balanced scorecard v0.1

8/11/2019 Balanced ScoreCard V0.1

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Balanced ScoreCard

Linking Strategy and

Performance Measurement


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Agenda

Balanced ScoreCardWhere it Started

Why Balanced ScoreCard?

BSC Basics

The HCL way


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Balanced ScoreCardWhere it started

Introduced in 1992, by Robert Kaplan and David Norton, the Balanced

Scorecard (BSC) is the most commonly used framework for ensuring that

agencies execute their strategies. Today, about 70% of the Fortune 1,000

companies utilize the Balanced Scorecard to help manage performance.

Balanced Scorecards are used as the roadmap for creating the Strategic

Management System and this will drive overall organizational

performance


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Its not what you can see

Its what you cant

Its not what you can see

Its what you cant


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The Organization will become more strategically focused over the

years

People at all levels rely heavily on tactical performance measurements,

such as number of requests submitted, % of supply vendor contracts

in place, etc.

Need more balanced approach to looking at performance, both tactical

and strategic.

Only 5% of a workforce tends to understand their companys strategy.

86% of executive teams spend less than one hour per monthdiscussing strategy.


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Quantifies the Organizational Strategy in measurable terms

Strategy is summarized on a Strategy Map over four views of

perspectives.

Must capture a cause-effect relationship between strategic objectives

over the four perspectives on the Strategy Map. Critical Components include:

- Measurements

- Targets

- Initiatives

Everything must be linked: Goals to Objectives, Objectives to

Measurements, Measurements to Targets.

BSC Basic Principles


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The BSC Framework

Objectives

Measures

Targets

Initiatives

FinancialTo SucceedFinancially, how

should we

appear to our

Stakeholders?

Vision

and

Strategy Objectives

Measures

Targets

Initiatives

Internal BusinessProcessTo satisfy our

Shareholders

and Customers

What business

processes must

we excel at?

Objectives

Measures

Targets

Initiatives

Learning andGrowthTo achieve our

Vision how will

we sustain our

ability to change

and improve?

Objectives

Measures

Targets

Initiatives

Customer

To achieve our

Vision how

Should we

appear to our

Customers?


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The Four Perspectives of BSC

FinancialThe ability to provide financial profitability and stability

(private) or cost-efficiency/effectiveness (public)

CustomerThe ability to provide quality goods and services, delivery

effectiveness, and customer satisfaction

Internal Business ProcessesInternal processes that lead tofinancial goals

Learning and GrowthThe ability of employees, technology tools and

effects of change to support organizational goals

Note: Each of the four perspectives is inter-dependent - improvement in just one area is not necessarily a recipe for

success in the other areas.


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HCLs Approach

Framework for BSC

Strategy Objectives Measures

Organization

Department

Team /

Individual


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Before we can map strategy

Get down to a set of quantifiable strategic objectives:

Too vague

More precise

Make sure your objectives have a direct relationship to your goals and

your goals have a direct relationship to your mission and values.

Improve Customer Service

Reduce average customer wait times by

20% by year end


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Strategy Map: Capture a Cause Effect Relationship

from the Bottom Up

InternalProcess

Stakeholder

Learning

&Growth

Reduce Re-Activities

thru ABC/MEstablish Web

Based Self Services

Knowledge

Management

Human Capital

Improved Returns

on Investments

More rapid and

accessible services

Leadership

Development

Investments

IT InfrastructureFacilities and

Fixed Assets

Economic

Model Process

Expand Global

Facility Reach


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Strategy Mapping

The 4 to 5

Rule

Splitting thePerspective

General Rule of Thumb to ensure strategy mapis developed both vertically and horizontally

Way of pulling out both drivers and outcomes

that match up against the core competencies of

the business model

Customer Growth Customer SatisfactionRetention Rate

Timely Delivery Pricing Quality Service Reputation

Custom er Perspective

Outcomes

Drivers

Weak Strong


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Key Benefits of Strategy Maps

Articulates how the organization creates value for its constituents and

legitimizing authority

Displays key priorities and relationships between outcomes (the

"what") and performance enablers or drivers (the "how")

Provides a clear view of "how I fit in" for sub-organizations, teams, and

individuals

"Cascading the scorecard throughout the organization, and clearlymapping the various units and functions back to the organization

St t M


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Strategy Maps

A Better Way to Communicate Strategy

Executive consensus and

accountability:

Building the map eliminates

ambiguity and clarifies

responsibility.

Educate and Communicate:

Build awareness and

understanding of organization

strategy across the

workforce.

Ensure Alignment:

Each sub-unit and individual

link their objectives

to the map.

Promote Transparency:

Communicate with andeducate constituents, partners,

oversight bodies, and the

general public.

E t d th M i t M t


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Extend the Map into Measurement,

Targets and Initiatives

Detailed

statement of

what is critical to

successfully

achieving the

strategy

How success in

achieving the

strategy will be

measured and

tracked

Key action

programs

required to

achieve

objectives

The level of

performance

or rate of

improvement

needed

ObjectiveDescription

Target

2 per setup per

month each

Outlet Office

InitiativeMeasure

Number of

Reworks

Strategy Map

Stakeholder

InternalProcess

L&G

Faster Service Access

Self Service

Applications

Web EnableTechnologies

Process and Value

Map Analysis

Lean Processes

Investments

Invest in IT

Lean / Six

SigmaEliminate waste,

reworks, and

other errors in

our processes


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Alignment of ScoreCard Components

Make sure the components of your scorecard fit together. We want to

create a tight model for driving execution of your strategy.

Goal Objective Measurement Target Initiative

Achieve operational

efficiencies with

best practices

Reduce Operational

Service Costs by 50%

over the next 5 years

Cost per Outlet Office,

Cost per Region, Cost

per FTE

5% - Year 1

10% - Year 2

15% - Year 3

Activity Based

Costing /

Management

Reduce identified re-

activities within primary

processes by 80% over

the next 3 years

Waste Volume Charts,

Rework Tracking, Cycle

Time End to End

Waste stream

reductions of 5% each

year, Reworks cut in

half for next 3 years,

cycle time cut by 75%

Lean / Six Sigma


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Why Measure Performance?

Enables decision making

Manage by results

Promote accountability

Distinguish between program success and failure

Allow for organizational learning and improvement

Justify budget requests

Optimize Investments

Provide means of performance comparison

Fulfill mandates

Establish catalysts for change

And so on


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Measurement by Perspectives

Stakeholder / Customer Internal Processes

Learning and Growth Investments

% of facility assets fully funded for

upgrading

% of IT infrastructure investments approved

# of new hire positions authorized for filling

% of required contracts awarded and in place

Percentage employee absenteeism

Hours of absenteeism

Job posting response rate

Personnel turnover rate

Ratio of acceptances to offers

Time to fill vacancy

Number of unscheduled maintenance calls

Production time lost because of maintenance

problems

Percentage of equipment maintained on

schedule

Average number of monthly unscheduled

outages Mean time between failures

Current customer satisfaction level

Improvement in customer satisfaction

Customer retention rate

Frequency of customer contact by customer

service

Average time to resolve a customer inquiry

Number of customer complaints

Selection Criteria for Performance


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Selection Criteria for Performance

Measurements

MEANINGFUL - related significantly and directly to organizations

mission and goal

VALUABLE - measure the most important activities of the organization

BALANCED - inclusive of several types of measures (i.e. quality,

efficiency)

LINKED - matched to a unit responsible for achieving the measure

PRACTICAL - affordable price to retrieve and/or capture data

COMPARABLE - used to make comparisons with other data over time

CREDIBLE - based on accurate and reliable data

TIMELY - use and report data in a usable timeframe SIMPLE - easy to calculate and understand


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Tools to Determine Measure

InputsProcess/

SystemOutput

Intermediate

Outcomes

End

Outcome

Program Logic Model

Desired

Outcome

Causal Analysis

Process Flow

Product

Prototype

ResultsOf

Testing

To Market

Acceptable Not Acceptable

Back to Lab


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Target Setting

Past performance trends per historical data.

Performance levels of similar organizational units at a comparable

level that facilitates benchmarking.

Best practices across the organization, the public sector or the private

sector. Must be at a pre-existing high level of performance before you

use this approach.

For newly launched services, may have to establish a baseline per a

prototype test and extend out from this point forward.

For major strategic shifts, may have to set directly per the plan itself

without regard for hard data.


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Initiatives

When yo u f i rs t launch yo ur In i t ia t ive, you probably w ant to use an Output

Measurement. Once the Ini tia t ive is u p and ru nning , change your measurement toan Outcome to see if the Init iat ive is real ly having s trategic impact.

Initiative Output Measurement Outcome Measurement

Lean Process / Six Sigma Number of Projects Defined by

Region

Overall reductions in errors,

reworks, and cycle times

Activity Based Costing /

Management (ABC/M)

% of Service Center Outlets

with ABC Models in place for

Allocation Costs

Reductions in identified re-activities

per process study

Employee Competency

Models

% of Employees who have a

Competency Model in place

Higher skill levels of employees

using the models


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Initiatives should enable strategic execution

Initiatives Goals or ObjectivesValue Mapping Project Improve identification and delivery of all agency services

across the full stakeholder spectrum

Employee Rotation Program Improve the employee turnover and satisfaction scores

Web Self Service Portal Reduce agency costs and streamline our services for

more direct service delivery

Common Knowledge Center Expand the overall knowledge base so that inter-

functions can learn from one another

Customer Survey and Analysis Tool

Program

Develop a more systematic process across the entire

agency to better connect to our customers

Shared Service Center Tracking

System

Reduce reworks and overlaps between our seven shared

service centers


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Thank you

balanced scorecard v0.1

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