Presentation on theme: "THE BALANCED SCORECARD"— Presentation transcript:
1 THE BALANCED SCORECARD Dimensions and PerspectivesByDavid Iornem, PhD
2 What is a Balanced Scorecard? BSC is a measurement toolIt allows the organization to assess progress in implementing strategyIt allows the organization to benchmark itsprogress against great practices outside andinside the organization, and over timeIt provides a diagnostic framework for tracking relationships and impact among strategies
3 What is a Balanced Scorecard? BSC is a communication toolIt allows an organization to articulate its chain of value creation within the organization and to the world at large.• It provides a platform for planning andcommunication of planning activities
4 What is a Balanced Scorecard? BSC is a strategicmanagement tool• It allows an organization to see all of the driversof organizational value and performance in aholistic conceptual framework• It creates a pathway for the creation andimplementation of strategy and measurement ofprogress that is fully aligned throughout theorganization
5 NATURE OF BSCBalanced Scorecard comprises an integrated system of performance measures which derive from, and support organization strategy
6 DIFFERENT FOLKS, DIFFERENT STROKES Different companies need different balanced scorecardsWhy?
7 2. Because they may have different strategies TWO MAIN REASONS1. Because they may identify different measures for their strategy management.2. Because they may have different strategies
8 Differences in Strategy Examples ofDifferences in StrategyDell and McDonald emphasize Operational ExcellenceHome Depot emphasizes Customer IntimacyIntel and Sony emphasize Product Leadership
9 THE BALANCED CONCEPTOrganizations may emphasize a particular perspective, but all have to maintain high standards in all the four perspectives, i.e. a BALANCED approach
10 The 4 Main Perspectives Customer Perspective Financial / Regulatory PerspectiveInternal PerspectiveLearning and Growth Perspective
11 The Four Perspectives of the Balanced Scorecard Innovation and Learning PerspectiveHow should we sustain our ability tochange and improveCustomer PerspectiveHow should we appearto our customersFinancial PerspectiveHow should we appearto our shareholdersVISION/STRATEGYInternal Business Process PerspectiveAt what business practicesmust we excel
12 Perspectives for NGOs and Govt organisations. Mission perspectiveCustomer perspectiveInternal perspectiveLearning and growth perspectiveFinancial perspective
13 Perspectives For a Service Organisations. GrowthLeadershipAcceleration (Transformational Change)CollaborationInnovationExecutionRetention
14 BSC FOR INDIVIDUALSFinancial Perspective – Investments, Savings, Returns on Savings, Risk Mgt.Learning & Growth – Continuing Education, Lifelong Learning, Continuous Education, Personal Capacity Building.Internal Process – Self-Management, Managing Time, Personal Effectiveness.Relationships (Customer) – Networks, Workplace, Wife, Children.
15 Customer Perspective Customer Satisfaction Satisfaction Gap Analysis (Satisfaction vs. Level of Importance)Satisfaction Distribution (% of each area scored)
16 Possible Performance Measures To achieve our vision,what customer needsmust we serve?
17 Financial / Regulatory Perspective Cost / UnitUnfunded Requirements or ProjectsCost of ServicesBudget Projections and Targets
18 Possible Performance Measures To satisfy our constituents,what financial and regulatoryobjectives must weaccomplish?
19 Internal Perspective Cycle Time Completion Rate Cycle TimeCompletion RateWorkload and Employee UtilizationTransactions per employeeErrors or Rework
20 Possible Performance Measures To satisfy our customers,in which business processes must we excel?
21 must we learn, communicate and work together? Learning and GrowthTo achieve ourgoals and accomplishcore activities, howmust we learn, communicate and work together?
22 Possible Performance Measures Employee SatisfactionRetention and TurnoverTraining Hours and ResourcesTechnology Investment
23 Why Measure?To determine how effectively and efficiently the process or service satisfies the customer.To identify improvement opportunities.To make decisions based on FACT and DATA
24 Measurements Should: Translate customer expectations into goals. Translate customer expectations into goals.Evaluate the quality of processes.Track our improvement.Focus our efforts on our customers.Support our strategies.
25 IMPORTANCE OF TARGETS Forrest Gump “If you don’t know where you’re going, you’re probably not gonna get there.” Forrest Gump
26 Targets Need to be set for all measuresShould have a “solid basis”Give personnel something for which to aim If achieved will transform the organization
27 Targets Careful not to develop measures/targets in a fragmented approach: i.e. Asking people to increase customer satisfaction has to be backed up with the knowledge, tools, and means to achieve that target.
28 Initiatives Once measures and targets are established, it is the responsibility of management to determine HOW the organization will achieve its goals.
29 Initiatives . Measures are used to determine the effectiveness of strategic initiatives.
30 WHY IS IT CALLED BALANCED? Balance is in 4 Main Ways:1. Balance between Short and Long Term2. Balance between 4 Perspectives3. Balance between how others see us (perspective) and how we see ourselves (focus)
31 WHY IS IT CALLED BALANCED? (cont) . 4. Balance between measuring CHANGE and the SITUATION at a particular time – similar to difference between Profit Statement and a Balance Sheet.
32 WHY IS IT CALLED BALANCED? (cont) 5. Balance between lag and lead Performance Measures