1. Presentation by M Nguwi Group Human Resources Manager
Balanced Scorecard An Integrated Approach to Performance Management Creating competitive advantage through our people
Presentation by
M Nguwi
Group Human Resources Manager

2. BALANCED SCORECARD LINKING STRATEGIES TO ACTIONS
LINKS FOUR PERSPECTIVES:
Growth &
Profitability
Human Capital
Clients
Operational
Excellence
SOURCE: KAPLAN AND NORTON

3. What is a Balanced Scorecard
At the highest level, it is a framework that helps organisations translate strategy into operational goals/objectives that drive both behaviour and performance.
ORIGIN
Concept developed by Robert Kaplan & David Norton
Essentially A Strategic Management system
Also a Corporate Performance Management System

4. The Balanced Scorecard
Aligns strategies, processes, resources and behaviour
Defines what to measure
Identifies lag and lead indicators metrics
Defines how to measure
Provides objective and feedback to each employee
Operationalise the measures

5. Measurement Communicates Values, Priorities And Direction
The Premise Behind the Balanced Scorecard Is that Measurement Motivates Behavior
Measurement Communicates Values, Priorities And Direction
The Premise
The Conclusion
Measurement Must Be Linked To Strategy
Strategy
Balanced Scorecard
Measurement To Communicate, Not To Control

6. The Balanced Scorecard Is Based on an Understanding of the Basic Building Blocks of the Strategy
1. The economic model of key levers driving financial performance
Financial Perspective
Return on Investment
Revenue Strategy
Productivity Strategy
Sources of Growth
Sources of Productivity
2. The value proposition of target customers
Customer Perspective
Value Proposition
Price
Quality
Time
Function
Image
Relatio-ship
Internal Process Perspective
3. The value chain of core business processes
“Build the Brand”
“Make the Sale”
“Deliver the Product”
“Service Exceptionally”
4. The critical enablers of performance improvement, change and learning
Learning & Growth Perspective
Staff Competencies +
Technology Infrastructure +
Climate for Action

7. We Use the Scorecard to Articulate Strategic Hypotheses in Cause-effect Terms
And Realize
the Vision
Financial Results
To Drive Financial
Success...
Customer Benefits
Needed to Deliver Unique
Sets of Benefits to Customers...
Internal
Capabilities
To Build the Strategic Capabilities..
Knowledge, Skills, Systems, and Tools
Equip our People...

8. BSC Terminology Strategic Theme: Operating Efficiency
Profitability
Financial
Learning
More
customers
Ground crew
alignment
Lowest
prices
Fewer planes
Customer
Internal
Fast ground
turnaround
Strategy Map: Diagram of the
cause-and-effect relationships
between strategic objectives
Flight
Is on time
Goals
Fast ground turnaround
Statement of what strategy must achieve and what’s critical to its success
Measurement
On Ground Time
On-Time Departure
How success in achieving the strategy will be measured and tracked
Target
30 Minutes
90%
The level of performance or rate of improvement needed
Cycle time optimization
Key action programs required to achieve objectives
Initiative

9. Some of the Indicators of Good Balanced Scorecard
1. Executive Involvement Strategic decision makers must validate and own the strategy and related measures
2. Cause-and-Effect Relationships Every objective selected should be part of a chain of cause and effect linkages that represent the strategy
A good Balanced Scorecard will “tell the story” of your strategy in
actionable terms.
3. Balance between outcome and leading measures There should be a balance of outcome measures and leading measures to facilitate anticipatory management
4. Financial Linkage Every objective can ultimately be related to financial results
5. Linkage of Initiatives and Measures: Each initiative should be based on a gap between baseline and target.

10. Some Goals of the Balanced Scorecard
Provide a generic framework to translate strategy into operational terms
Create a systems approach to form an integrated Strategic Management Process
Provide a clear line of sight to the vision and strategy of the company
Provide a tool for communicating the :
strategy, and
processes and systems required for implementing the strategy
Draw a cause and effect roadmap to stakeholder value – shareholder, customer, and employee.

11. How Does the Scorecard Benefit Your Organization?
Improves management effectiveness by having a shared and actionable view of the strategy
Optimizes and ensures strategic outcomes for a given set of resources
Enables employees to work in a coordinated, collaborative fashion towards organizational goals
Speeds time to value through faster more informed decision-making on time and resource allocation
Accelerates the approach, and its accuracy to the strategic destination

12. CONCEPT
Imagine entering the cockpit of a jet airplane and observing that that there is only a single instrument
ability to exploit intangible assets has become far more decisive than their ability to invest in and manage physical assets
Most companies operational and management control systems are built around financial measures and targets
The scorecard introduces four new management processes that contribute to linking long term strategic objectives with short term actions

13. What is on the dashboard?
“The financial success of our organisation
increasingly depends on intangibles:-
our relationship with clients
our organisational effectiveness
our ability to attract, leverage and retain the best people

14. WHERE DO WE START?

15. Guiding Principles of Performance Management
Develop and Articulate a Clear Strategy
Create a Continuous, Flexible Performance Management Process
Actively Communicate Performance Goals and Targets
Establish Specific, Ambitious Targets Based on Benchmarks
Identify and Focus on the “Vital Few”:
Establish a Balanced Measurements Portfolio
Monitor Results at Specific, Regular Intervals to Assess Progress
Align Reward Systems with Measures to Reinforce Desired Behaviours

16. Why is Performance Important?
PERFORMANCE is about RESULTS… measurable results
Need for the organisation to benchmark performance against world class standards
Enables efficient and effective use of resources
Motivate high performers
Identify inadequate performance early

17. CREATING A WINNING STRATEGY
Critical Questions:
Are we doing the right things?
Are we doing it right.

18. Plot your Value Chain First
Identify your customers and what they want?
What is the process to satisfy customer’s wants?
What kind of input to the process do you need?
And who supplies that?
Everyone must understand who our customers are and what their requirements are.

19. What is our Value Proposition?
Existence of our business relies on two important elements;
The value proposition that we offer different stakeholders(clients, shareholders, employees etc.)
The ability to deliver that value, both in the short and long term

20. “If you don’t know where you want to go, it does not matter what root you take.”

21. Managing Strategy: Four processes
Translating the vision
Clarifying the vision
Gaining consensus
Communicating & Linking
Communicating & educating
Setting goals
Linking rewards to performance measures
Feedback & Learning
Articulating the shared vision
Supplying strategic feedback
Facilitating strategy review and learning
Balanced
Scorecard
Business planning
Setting targets
Aligning Strategic initiatives
Allocating resources
Establishing milestones

22. Four Barriers to Strategy
Vision Barrier – strategy not understood by those who must implement it … and not translated into objectives/goals
People Barrier – personal goals are not linked to strategy implementation
Management Barrier – Management systems are designed for operational control and not strategy
Operational Barriers – key processes are not designed to leverage the drivers of business strategy

23. Translate a Strategy into Operational Terms
Financial/Profit & Growth
“To satisfy our stakeholders,
what financial objectives must
we accomplish?
Measures
Goals
Targets
“To satisfy our
shareholders
and customers,
what business
processes must
we excel at?”
Operational Excellence
Goals
Measures
Targets
Vision
and
Strategy
What is the customer
Value Proposition
That will create the
financial rewards
we are seeking
Client
Objectives
Measures
Targets
What do wee need
to change in our
Infrastructure or
intellectual capital
to achieve
Our operational
excellence goals
Human Capital
Objectives
Measures
Targets

24. The Four Perspectives Clients Operational Excellence Human Capital
Feedback / Results
Strategy Implementation
Financial or Profit & Growth
To satisfy our stakeholders,
what financial objectives must
we accomplish?
Strategy Deployment
Clients
What is the customer Value Proposition
That will create the financial rewards we are seeking
Operational Excellence
In which internal business processes must we excel in order to deliver our value proposition as described in the client perspective and finally reach the goals in the financial perspective
Human Capital
What do wee need to change in our
Infrastructure or intellectual capital to achieve
Our operational excellence goals
Actions

25. Internal Business Process Innovation, Learning & Growth
Balanced Scorecard: Evolved Framework
The Vision & Strategy
Financial
To satisfy our shareholders, what financial objectives must we accomplish?
Effect
Customer
Results
To achieve our financial goals, what customer needs must we satisfy?
Internal Business Process
Cause
To satisfy our customers, in which internal business processes must we excel?
Innovation, Learning & Growth
Actions
To achieve and maintain a competitive position, how must the organization learn and improve?

26. A Good Balanced Scorecard Tells The Story of Strategy
To satisfy our shareholders we
must…...
How do we wish to
be perceived by our
customers?
What must
we excel at?
How can we continue
to grow and
create value?
Financial Perspective
Return on
Investment
Increase Revenue
Streams
Reduce Costs /
Improve Productivity
Customer Perspective
Price
Quality
Time
Functionality
Image
Relations
Internal Process Perspective
Make
the
Sale
Setup
the
Service
Service
the
Customer
Build the Brand
Learning and Growth Perspective
Staff
Competencies
Technology
Infrastructure
Change Agenda
Critical Success Factors and Measures need to be developed across the four perspectives

27. Strategy Interpretation – Simplified Business Model of FSC
Figure 5.3
Strategy Interpretation – Simplified Business Model of FSC
Management Actions - Cause
Business Results Required - Effect
Improvement & Learning Perspective
Internal Process Perspective
Customer Perspective
Financial Perspective
Increase Employee
skills and productivity
Cross - sell products and services through lifetime relationships
Build up large customer portfolio with more sales and customers
Achieve dramatic sales goal
Technology enabled revenue growth
Dealing with members efficiently and effectively
High Customer Satisfaction
Achieve lower cost ratio vs competition
Learn and embed compliance disciplines
Develop full range of competitive products
Increase value of members fund in line with all share index
Innovative approach to maximise investment returns

28. Balanced Scorecard Benefits
Improved Long-Term Financial Performance
Improved Level of Customer Satisfaction
Focused Communications on What’s Important
Improved Level of Employee Satisfaction Based on Better Understanding of Value of Individual’s Contributions
Improved Mechanism to Identify Performance Variances of Key Processes

29. Financial Perspective
This indicate if company strategy, implementation and execution are contributing to the bottom line.
Measurement of operating income, returns on capital or more recently EVA.
Strategic themes include revenue growth and mix, cost reduction and, asset utilisation and investment strategy.
Our revenue normally grow from finding new sources or by increasing the client/customer value proposition
Looks at things like;
Revenue growth
Increase market share
Improve cost structure
Reduce admin costs

30. Client Perspective
This is the most important one because it’s the one that facilitates the funding of all others
Some of the most valuable Customer Propositions are;
Product leadership
Customer intimacy
Measure performance in growth and identified market segments:
- customer satisfaction.
- customer retention.
- new customer acquisition.
- fast credit approval.
- market and account share in targeted segments.
- specific measures on the value proposition that the company will deliver to customers in targeted market segments e.g.. short lead times, on time delivery, innovative products and services, anticipation of emergency needs, new products.

31. Operational Excellence
Identify critical internal process in which the business must excel to enable:
-delivery of the value proposition that will attract and retain customers in targeted market segments.
-satisfy shareholder expectations of excellent financial returns.
The measure should focus on internal processes that will have the greatest impact on customer satisfaction and achieving an organisations financial objectives.
Traditional approaches attempt to monitor and improve existing business processes. The scorecard will usually identify new processes at which the organisation must excel to meet customer and financial objectives (innovation).

32. Human Capital
Identifies the infrastructure that must be built to create long term growth and improvement.
Three principle sources:
people reskilling
Management skills compensation competitiveness
systems - enhance IT (real time, accuracy)
organisational procedures - retention, training, skill, satisfaction.
** Unlike buildings and machinery support functions are intangible assets worth nothing unless they succeed in their mission.

33. Some examples of Key BSC themes & measurements
Financial/Profit & Growth
Return On Investment
Revenue growth percentage
Economic Value Added
Market Share
Client
Customer satisfaction
Customer Retention & referrals
maintaining highest reputation
Value
Customer payment patterns

34. Key BSC themes & measurements Examples
Operational Excellence
Error, waste & rework
Reducing Cycle time
Yield
On-time delivery
Project Deadlines
Human Capital
Core Competence deployment rates
Employee Satisfaction
Employee turnover
Training
Rewards, Recognition & Compensation patterns
Quality Improvement rates

35. The Cause & Effect Relationship in the BSC
There is an important sequence between the four perspectives
Financial/Profit and Growth – (Make a profit)
Clients(By satisfying your customers needs)
Operational Excellence(through being able to deliver value)
Human Capital (by having the necessary knowledge and tools available)

36. Linkages to the Group Balanced Scorecard
Influences
Financial/Profit & Growth
Client Service
Financial/Profit & Growth
Client Service
Operational Excellence
Human Capital
Operational Excellence
Human Capital
Group BSC
RFH
Business Unit
BSC
RBF, RFS, RDH,RSB
Support Functions
Teams & Individuals

37. Alignment using the Balanced Scorecard
SBU’s
Corporate
Individual
Financial/Growth & Profitability
Financial/Growth & Profitability
Client
Client
Key Result Areas
Operational Excellence
Operational Excellence
Strategic Capability- Human Capital
Strategic Capability- Human Capital

38. Translating Group Objectives for each Level
Step 1 – a group scorecard defines overall strategic priorities and context
Step 2 – Each SBU develops a develop BSC consistent with the corporate strategic agenda
Step 3 – Each support department develops a scorecard to support the internal customers
Step 4 – Teams and individuals develop scorecards consistent with their SBU and group strategy

39. Linking Objectives/goals may cross over more than one perspective.
We usually start at the top with outcomes and work our way down, looking at what enables (drives) the outcome.

40. Strategic Goals
Establishing strategic goals is the first step in building the Balanced Scorecard.
Strategic goals establish direction in concrete terms. For example: “By the year 2003, we will grow revenues by 45%.”
Strategic goals anchor the rest of the process.
Strategic goals should fit with the vision and mission of the organization.

41. Set Goals for Each Strategic Perspective
Measures
Targets
Client Service
delivery and
demonstrating
value to our clients
Develop effective client care meetings
Client feedback
Average rating of 4
5% of the employees to have gone for customers service training
Human Capital
Develop and utilize
resources
intelligently
Devote substantial time to people development
No: of people trained in essential skills
Financial
Achieving profitable
revenue growth
Grow revenue
By 45%
Revenue growth
Operational Excellence
Developing and driving
improved common
business processes
Time frame
Ensure smooth handover of spectrum
Handover to be effected by end of March 2002

42. Strategic Goals Goals need to be expressed in concrete terms
You can look at past performance or future performance to establish goals
Goals need to be agreed upon and communicated within the organisation.

43. “If you don’t know where you’re going any road will take you there.”
Goals are Roadmaps to the Vision

44. ‘If you can’t measure it, you can’t manage it’

45. ‘Measuring the success(or “failure” of your strategy”
Measure - How performance against set goals is monitored
For each strategic Goal, you need one measurement.
Measurement provides us with feedback on meeting the strategic goals
Most organizations will use many of their existing measurements.
Organizations requiring major change should include driver type measurements.

46. Measurements
A good balanced scorecard should consists both outcome and driver measures
Financial and Customer will have mostly outcome type goals
Operational Excellence and Learning & Growth may include several driver type goals

47. Measurements Outcome measures Drivers
Advantage - objective and easy to capture
Disadvantage - focused on the past, not current
Drivers
Advantage - Predictive and leading the organisation
Disadvantage - Difficult to drive and support

48. Measures: Lag/Lead Comparison

49. Lead/Lad Measures
Leading and lagging indicators only makes sense relative to one particular strategic goal. A lagging measure for one goal may therefore be used as a leading indicator for another objective

50. Targets
The term used to describe what is expected for the measured results/required level of performance
Once you establish measurements, you need to set a target for each measurement.
Targets push the organization to a required level of performance.
Targets put focus on the goal, expressing the specifics of the goal.
When an organization hits its targets, then it has successfully achieved its goals.

51. Targets Establish financial related targets first
Continuously review targets
Target setting enables the organisation to:
- quantify the long term outcomes it wishes to achieve.
-identify mechanisms and provide resources for achieving those outcomes.
-establish short term milestones for the financial and non-financial measure
on the scorecard.

52. Sources for Determining Targets
Strategic goals
Industry benchmarks/best practice
Incremental improvements to existing performance levels

53. Collection process – owner and collector
Reporting Issues
How often should the Balanced Scorecard measures be collected?
Who should collect?
Collection process – owner and collector
Who should trend and analyse the Balanced Scorecard measures?
How often should measures be changed?

54. Best practice in global Corporations
Use a balanced set of performance metrics
Have quantifiable or verifiable (qualitative) goals
Support the values of the organisation
Align goals to strategy, and focus on development
Use multi-rater feedback as part of the process
Have a global philosophy/approach, but allow for local adaptation

55. Everybody Wins
Customers win because… every employee understands the importance of customer satisfaction and the part they each play in delivering it.
Senior management win because… corporate performance is improved through the alignment of effort behind the strategy, and the visibility of the drivers for corporate performance.
Middle management wins because… there is better information at their fingertips to make resource allocation and prioritisation decisions, changes in priorities are communicated more rapidly and consistently, team management is easier and morale improved.
All staff benefit because… they see how they fit in and how to succeed, they know their contribution is recognised and valued and...
We no longer expect a job for life - we do want employability for life!
Skills and competencies of all staff are clearly valued, and can be updated and developed.
The importance of personal development can be clearly recognised and valued, including personal development plans and tracking of progress, and the impact that skills development has on achieving objectives can be appreciated.

56. Executive & Management
Implementation
Project Team:
GF Chinamasa
E Chikaka
L Mkuzvazva
Dube
T Samusodza
C Vengesa
M Nguwi
Mapenzauswa
Presentation to
Executive & Management
Executive & Senior Managers
Other Managers
& Employees
Perf Mgt
Training
& Roll Out
Strategy
Workshop
&
Goal Setting
Contributions by
Executives
And Management
Design
Meetings
The design of the GPPM process has been the result of input from many people from different experiences and backgrounds.
Hewitt Associates, whose expertise in HR in general and in this area in particular is recognized worldwide, was commissioned by the taskforce to assist with this project.
A current state assessment of partner performance management within E&Y around the world was carried out.
More then 40 interviews of key members of the firm (VCs, CMPs, MNC leaders, HR Executives) were conducted by Hewitt and Members of the HR task force to collect views and recommendations on the future state of the process.
A benchmarking study of global partnerships (AA, Hay, Hewitt, Mckinsey, Towers-Perrin ) and global corporations (3H, Whirlpool, Citibank, Nike, Merck) was conducted to assess best practices.
A design workshop was conducted which saw the participation of 38 people representing CMPs, Vice-Chairs, Service Lines, MNCs and SMEs.
Pilots were run in France, the Netherlands and with Global Client Consulting which assisted with tuning the process before global implementation.

57. Implementation Issues & Concerns
Change management comes first
Ensure all employees share in the understanding of our performance management strategy
Employees need to know how the road looks ahead, which route to follow and how far we have come
Pilot project ideal in big organisations
Apart from BSC project team, involvement of Line managers is crucial
Data collection – in developed counties and big organisation software support used
Involvement of both management and employees critical

58. Pitfalls Getting bogged down in too many goals and measures
Vocal, but not real commitment from management or – simply no commitment as all
Failing to realize that the scorecard like any management instrument is based on assumptions e.g if our strategy is based on the assumption that people want quality, and our measures assures us that we have that quality, but people still don’t buy use our products – then maybe it’s time to change the assumption.

59. BENCHMARK INFORMATION Performance Ratios
Financial Institutions

61. Thank You

62. QUESTIONS