Balanced Scorecards, Competencies and Compensation November 3, 2011

Financial Measures What are they? Problems with them? – Knowledge workers

Strategy CEO failures due to………. –P–Poor strategy? –P–Poor execution/implementation of strategy? So, which one is it?

Balanced Scorecard Overcomes – Limitations of financial measures – Need to account for knowledge workers – Critical need to execute strategy

Balanced Scorecard Overcomes – Limitations of financial measures – Need to account for knowledge workers – Critical need to execute strategy

Balanced Scorecard Starting point – Organization’s strategy – Translate into objectives and measures

Balanced Scorecard – 4 perspectives Financial Customer Internal business process Learning and growth

Balanced Scorecard – 4 perspectives Financial – Traditional component – Measures Revenue growth Cost reduction Productivity improvement Asset utilization

Balanced Scorecard – 4 perspectives Customer – How do they see you? – What do they want from us? – Measures Market share Customer acquisition Customer retention Customer satisfaction Customer profitability

Balanced Scorecard – 4 perspectives Internal business processes – Core processes those that directly impact how we meet customer demands Netflix??? – Measures Depends on what customers demand Low price? Variety?

Balanced Scorecard – 4 perspectives Learning and growth – Types of capital Human capital Information capital Organizational capital – Measures Employee satisfaction Employee retention Employee productivity Competencies to deliver required results

Balanced Scorecard and Compensation Points to consider – Purpose Overall purpose Specific behaviours (un)desired Impact on culture? – Measures Are data available? Are the data accurate? How many?

Balanced Scorecard and Compensation Points to consider – Perspectives (related to measures) All? Equally weighted? Leading or lagging? – TEXT: hours spent with customers by salespeople – Long/short-term performance?

Example

Balanced Scorecard Pro’s – Organizational alignment through shared vision – Short-term and long-term balance – Focuses the organization

Balanced Scorecard Con’s – Complex!!! – Communication is a must

Balanced scorecard Chapters 4, 5, 6, 7, and 8

Scorecards and Dashboards Basic dashboard Electronic dashboard

KSA Job Requirements A B C D E

Competencies “Fit”

New Day for KSA Knowledge – practical or theoretical understanding of a subject – described in terms of mastery levels Skills – Learned capacity Ability – Natural capacity

Competency Combo of K S A that can be observed, measured, evaluated Is a key factor in successful job performance Focus is behavior Competency

KSA Observable behavior Job performance Competency

Competency Models/Frameworks Definition – More “occupation” than “job” – Management, technical, knowledge – Vary by “job” type Professional positions Clerical/administrative positions Managerial positions

Competency Models/Frameworks Behaviors – Customer Focus Builds/maintains customer satisfaction with products and services Focuses on the customer's business results, rather than own Seeks customer feedback and ensures needs have been fully met Delivers products and services when and where the customer needs them Explores options when unable to deliver a requested product or service, and pursues solutions until the customer is satisfied

Competency Models/Frameworks Behaviors – Business Alignment aligns the direction, products, services and performance of a business line with the rest of the organization Integrates executive direction into every decision and consultation Seeks to understand other programs in the department, including their services, deliverables, and measures Advocates for and positively represents other programs and services when working with customers and stakeholders

Competency Models/Frameworks Behaviors – Teamwork Anticipating potential conflicts and addressing them directly and effectively Treating others with courtesy, tact and respect Working effectively with others, regardless of organizational level, background, gender, race or ethnicity Working to resolve disagreements, attempting to persuade others and reach agreements Biding by and supporting group decisions Facilitating team interaction and maintaining focus on group goals

Competency Models/Frameworks Compensation – Matrix Combo of your “level” of competencies and position in pay range – “level” of competencies – Basket approach “level” just one of many factors

Business Strategy Competency Framework Business Results

Professional Associations

Risk and Insurance Management Society

Government

Education

What’s missing?

Private Sector

Competency Modeling 05.ibm.com/employment/hu/ibmhu/c areer.html 05.ibm.com/employment/hu/ibmhu/c areer.html

But which competencies? Review strategy Identify competencies Competency Model/frame work Review strategy

How to identify competencies? Think in terms of areas of knowledge and abilities Analyze “job” Watch stars perform – What areas of knowledge do you see the employees using? – What abilities are required? Interview stars – superior performance is the norm!!!!

Now and later use…… site.com/examples-competency-based- interview-questions-list-of- competencies-skills.html site.com/examples-competency-based- interview-questions-list-of- competencies-skills.html