1. Implementation Of The Balanced Scorecard

2. Question #1
What is your experience level with the Balanced Scorecard in your firm?
Beginner (We know very little about it)
Intermediate (We have started but have stalled in our use of the BSC)
Advanced (We are using the BSC successfully in our firm

3. Today’s Agenda Historical Perspective Future Thinking Implementation
Your Plan

4. Historical perspective

5. Historical Perspective
Partner Compensation drove the plan
Charge Hours
Performance What?
Once a Year… at the most

6. Why Change? Staff is changing…. You are changing…
Business model is changing….
Process must change….

7. Future thinking

8. Balanced Scorecard What is it? Why are we interested?
How do we use it?
Where do we go from here?

9. Background “Harvard Business Review” 1992 R.S. Kaplan and D.P. Norton
Organizational Performance Measurement
Successful Strategy Implementation
Widespread Acceptance

10. 4 Characteristics Top Dow Reflection of the Firm Forward-Looking
External and Internal Measures
Helps you stay focused!

11. Balanced Scorecard for CPA Firms
Myth -or- Possibility

12. The Pay for Performance Theory
Mission
Core Values
Vision
Strategy
Pay For Performance
Strategic Initiatives
Personal Objectives
What we do to exist.
What we believe in.
What we want to be.
Our Game Plan
Behavior Motivation
What we need to do.
What I need to do.
Outcomes
Satisfied
Partners
Happy
Clients
Effective
Processes
Motivated
Employees

13. Facts of Life
Fact #1: Most organizations do not successfully execute their strategy
Fact #2 To successfully execute your strategy, YOU MUST HAVE ONE!

14. Question #2
Do You Have A Written Strategic Plan That Everyone In The Firm Knows About?
Yes No

15. Steps to Success Step 1 - Clearly Defined BUSINESS Strategy Written
Communicated
Supported by IT Plan

16. Steps to Success Step 2 - Find a way to: Communicate Strategy
Measure Success
Motivate and Reward
So you can successfully execute your strategy!

17. Barriers to Success

18. #1 - The Vision Barrier
Most employees don’t understand the business strategy
Employees represent the key asset in a knowledge based business
Communicating and understanding is a key to success

19. #2 - The People Barrier Is compensation linked to performance?
Is performance measured in the “right” way?
Does compensation reinforce achieving strategic objectives?

20. #3 - The Resource Barrier
How are budgets related to strategy?
Long term vs. Short term
Measures and evaluation

21. #4 - The Management Barrier
Where is management attention?
What is being measured?
Financial results, and BEYOND!

22. Question #3 Which Barrier does your firm suffer from? Vision Barrier
People Barrier
Resource Barrier
Management Barrier
All of the Above
None of the Above

23. Breaking Down the Barriers

24. Overcoming the Barriers to Success
The Vision Barrier
Translate Strategic Goals into tasks, performance standards, and desired outcomes.
The People Barrier
“Cascade” scoreboard down to individual level. Reward value creation.

25. Overcoming the Barriers to Success
The Resource Barrier
Budgets keyed to strategic objectives. Priorities toward long term goals.
The Management Barrier
Lead towards the strategy. Check the right things. Balance among conflicting priorities.

26. Balanced Scorecard 101

28. Financial Increase firm profits Increase client profitability
Increase leverage
Personnel
Technology
Services
Increase employee earnings

29. Client Development Define client profiles Client surveys
Average revenue
Cost to obtain
Cost to retain
Lifetime value
Client surveys
You are responsible for setting the rules

30. Internal Operations Revenue per FTE Days in WIP & AR Turn around time
Maintain quality

31. Learning & Growth Define core competencies
Define standards, policies & procedures
Develop a training curriculum
Develop a personal training plan
Mentoring
Cross training

32. IT Is An Internal Business Process
Only Part of One Out of Four Perspectives
Integrated With All Other Components
Driven By Business Objectives
Success Measured By Business Results
Evaluate Your Own Priorities and Successes!

33. No more than FOUR performance measurements in each category!

34. Measure – How?

35. Objectives and Measures
Performance Objectives: Establish WHAT to measure
Performance Measures:
Establish HOW to measure
Leading and Lagging

36. Objectives and Measures
Measurements
Increase Revenue per FTE
Revenue per Staff
Increase client satisfaction and loyalty
Client surveys and visitations
Improve staff training
Individual training plans, tasks accomplished
Streamline internal processes
Number of processes reviewed and documented

37. Cause and Effect Effect: Client retention in excess of 95% Causes:
Timeliness
Customer Service
Relationship Building
If Then (else)

38. Indicators Cause Effect # of proposals outstanding Net income
# of sales calls
Reduced WIP/AR
Defined/Improved Processes
Market Share
Absenteeism
Sales
Employee Satisfaction

39. implementation

40. Critical Success Factors/Measurements Financial
Revenue per FTE aligned with industry metrics
Build New Revenue Source – External Consulting
Average rates per hour that are at market average
Increase Revenue Per FTE to $120
Increase Revenue in Consulting Division by 25%
Increase Rates Per Hour to an average of $80/hour

41. Critical Success Factors/Measurements Clients
Increase the Net Promoter Client Survey score of 5.8
Increase time spent with top 20% of clients
Increase service offerings to the top 20% of clients
Improve Net Promoter Client Score to 7 in 2010
Complete the DOS Conversation with top 20% of clients
Cross sell one new service to 25% of firm's existing clients

42. Critical Success Factors/Measurements Internal Processes
Consistent paperless processes implemented across the firm
Owner/Manager Communication firm wide strengthened
Increased ability to segment client market
Develop written paperless process and decrease paper by 25%
Implement a consistent Owner/Manager monthly meeting
Research and implement a CRM system for the firm by 6/30/2010

43. Critical Success Factors/Measurements Learning/Growth
Each team member has a learning plan
Consistent ongoing training for all staff
Team members have peer interaction and coaching
Develop a learning plan for each team member by 4/30/2010
Implement a monthly lunch and learn book club
Assign a peer mentor for every staff member from a differing location

44. Cascading Scorecards
Translate Firm Goals, Objectives, and Measures to Individual Performance

45. Sample Firm Balanced Scorecard
Perspective
Objectives
Weight
Score 1-10
Value
Financial
Increase Revenue Per FTE to $120
8.33% -
Increase Revenue in Consulting Division by 25%
Increase Rates Per Hour to an average of $80/hour
Client
Improve Net Promoter Client Score to 7 in 2010
Complete the DOS Conversation with top 20% of clients
Cross sell one new service to 25% of firm's existing clients
Internal Processes
Develop written paperless process and decrease paper by 25%
Implement a consistent Owner/Manager monthly meeting
Research and implement a CRM system for the firm by 6/30/2010
Develop a curriculum for each employee
Employee
Hire a learning coordinator
Learning & Growth
Provide a training facility
Firm Totals
100.00%

46. Sample Partner Balanced Scorecard
Perspective
Objectives
Weight
Score 1-10
Value
Financial
Delegate 20% of managed book
8.33% -
Manage head count to $120k per FTE
Manage the increase of the consulting division for 25% growth
Client
Insure client surveys are completed quarterly
Complete DOS survey's with 20% of personal clients
Sell an additional service to 25% of current clients
Internal Processes
Learn the paperless office and lead by example
Lead the monthly manager meeting for stronger communications
Identify reports within the CRM system for firm sales opportunities
Attend 40 hours of internal training
Employee
Lead the initiative of hiring and promoting a learning professional in the firm
Learning & Growth
Develop and teach a module for the managers leadership program
Firm Totals
99.96%

47. Sample Staff Balanced Scorecard
Perspective
Objectives
Weight
Score 1-10
Value
Financial
Increase productions to $175,000
8.33% -
Identify cross sales for 25% of current clients
Target 5 new clients of $5,000 or more
Client
Complete satisfaction surveys on 5 clients
Complete DOS Worksheets on top 5 clients
Identify 1 community service to be involved with in a leadership position
Internal Processes
Serve on paperless committee
Attend the monthly owner/manager meetings
Learn how to use CRM system and use the system as required
Attend 40 hours of internal training
Employee
Complete Boomer P3 Management Training
Learning & Growth
Complete individual learning plan
Firm Totals
100.00%

48. Firm Name Administrative Staff Objectives
Name_____________________Office_________________Date____________
Perspective
Objectives
Total Points
Score
Value
Financial
Produce monthly reports and distribute to partners by 3rd of each month.
8.33
0.00%
Order office supplies and marketing materials - identifying ways to stay within the firms budget each month
Send "welcome packets" to new clients within 24 hours of request
8.34
Client Satisfaction
SUBTOTAL
25.00 -
Answer all phone calls within 2 rings
12.50
Complete the DOS worksheet on 5 clients per month
Internal Processes
Serve on the firms Tax Processing Committee - attending monthly meetings
Complete "back scanning" on clients identified by the partner level.
Insure compliance on firm's policies and procedures
Learning & Training
Attend internatl training on ProFX by 9/1/20XX
Develop and deliver a training course on T&B procedures by 8/15/20XX
Attend a quarterly function at the local Chamber of Commerce
TOTAL
100.00

49. What’s Next Decide whether this approach has value for your firm
Additional learning and research
Decide to implement, and take action

50. Your plan

51. Start with your strategic plan
Don’t start without the total commitment of the MP or CEO
Commitment is different than support
Use a facilitator
Start with the partner group
Use the positive focus and game plans to reduce time
Schedule quarterly meetings in advance
Insure performance funds
Focus on limited objectives
Use graphics for positive visuals around the office

54. Resources

55. Follow our group on Linkedin and Facebook.
Our repertoire of tools for helping CPAs develop leadership and management skills and fulfill their potential:
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Leadership Forum Report – Commentaries from the profession’s thought leaders.
Best Practices Tips – Best management ideas of the month.
Directory of Resources for Accounting Firms – Find what you need.
Follow our group on Linkedin and Facebook.

56. Thank you!