Balance Scorecard Final

BALANCED SCORECARD PRESENTED BY MEENAKSHI SHARMA SALONI JUNEJA SAHIL

The Balanced Scorecard What is it? Definition: At the highest level, the Balanced Scorecard is a framework that helps organizations translate strategy into operational objectives that drive both behaviour and performance. This system was coined by Kaplan and Norton

The Balanced Scorecard Why do it? • • • • • • • •

To achieve strategic objectives. To provide quality with fewer resources. To eliminate non-value added efforts. To align customer priorities and expectations with the customer. To track progress. To evaluate process changes. To continually improve. To increase accountability

The Five Principles 3. Translate the strategy to operational terms. 5. Align the organization to the strategy. 9. Make strategy everyone’s job. 11.Make strategy a continual process. 13.Mobilize change through executive leadership

Strategic Direction Create Environment For Change

Strategic Performance Management System

Communicate Strategies Define Objectives Implement BSC Balanced Scorecard Measure Performance Improve Processes

Linking it all together….

Evaluate and Adjust Continuous Improvement Redefine Initiatives

The Balanced Scorecard and The Big Picture

•Activity Based Costing •Forecasting •Benchmarking •Market Research •Six Sigma •Total Quality Management

THE FOUR PERSPECTIVES Kaplan and Norton have surveyed several companies to create a model of a balanced scorecard

Financial Perspective

How do we look to shareholders?

Internal Business Perspective

Customer Perspective

How do customers see us?

Balanced

Scorecard

Innovation and Learning Perspective Can we continue to improve and create value?

What must we excel at?

We Use the Scorecard to Articulate Strategic Hypotheses in Cause-effect TermsAnd Realize  the Vision

Financial  Results Customer  Benefits Internal  Capabilities

Knowledge, Skills, Systems, and Tools

To Drive Financial  Success...

Needed to Deliver Unique Sets of Benefits to 

To Build the Strategic 

Equip our 

Financial Perspective

To satisfy our constituents, what financial and regulatory objectives must we accomplish? Possible Performance Measures Cost / Unit Unfunded Requirements or Projects Cost of Service Budget Projections and

Customer Perspective To achieve our vision, what customer needs must we serve? Possible Performance Measures Customer Satisfaction (Average) Satisfaction Gap Analysis (Satisfaction vs. Level of Importance) Satisfaction Distribution (% of each area scored)

Internal Perspective

To satisfy our customers, in which business processes must we excel? Possible Performance Measures Cycle Time Workload and Employee Utilization Transactions per employee Errors or Rework

Learning and Growth To achieve our goals and accomplish core activities, how must we learn, communicate and work together? Possible Performance Measures Employee Satisfaction Retention and Turnover Training Hours and Resources Technology Investment

Strategic Objectives • Once we establish our first anchor (goals), we can develop a set of strategic objectives. • Strategic objectives define what actions must be taken to reach the strategic goals. • Objectives are critical to future success. For example, in order to grow revenues, we must introduce new products and expand our market share.

Measurements • Translate customer expectations into goals. • Evaluate the quality of processes. • Track our improvement. • Focus our efforts on our customers. • Support our strategies.

Targets • 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 strategy, expressing the specifics of the strategy. • When an organization hits its targets, then it has successfully implemented its

Initiative • Sponsored by senior management • Project management team, for example, improving customer service may require a new customer management system • Includes deliverables or milestones • Usually has some time deadlines • Could be difficult to launch – lack of support, no funding, poorly defined, etc.

Performance evaluation

Data-Trends Against Targets

Root Causes

Analysis

Action Plans 1.

Pareto, Detailed Research, etc.

2. 3.

BALANCED SCORE CARD FOR AIRLINE COMPANY

Strategy Map:  Diagram of the  cause­and­effect relationships  between strategic objectives Strategic Theme:  Operating Efficiency Financial

Profitability

Fewer planes

More customers

Statement of 

How success 

what strategy 

in achieving 

must achieve 

the strategy 

and what’s 

will be 

critical to its 

The level of 

Key action 

performance 

programs 

or rate of 

required to 

measured and 

improvement 

achieve 

Measurement

Target

Initiative

Customer Flight  Is on time

Lowest  prices

Objectives

• Fast ground 

Internal Fast ground  turnaround Learning  Ground crew  alignment

turnaround

• On Ground Time • On­Time  Departure

• 30 Minutes • 90%

• Cycle time  optimization

Balanced Scorecard Example Strategic Theme: Operating Efficiency Financial

Profitability

Fewer Planes

More Customers

Customer Flight  Is on Time

Internal Fast Ground  Turnaround

Lowest  Prices

Objectives

Measurement

Target

• Profitability

• Market Value

• 30% CAGR

• More 

• Seat Revenue

• 20% CAGR

• Plane Lease 

• 5% CAGR

Customers

•• Fewer planes • Cost Flight is on ­time On Time Arrival  • #1 Rating • Lowest prices • Customer  • #1 • Fast ground  turnaround

• Ground crew 

Learning  Ground Crew  Alignment

alignment

Ranking (Market  • Survey) On Ground Time • On­Time  Departure

• % Ground crew  stockholders

•  Promotion •  Advt. •Cost          Reduction

• Quality  management

• Customer 

loyalty  • 30 Minutes • program Cycle time  • 90% optimization  program

• % Ground crew  • yr. 1  70% trained

Initiative

yr. 3  90% yr. 5  100%

• ESOP • Ground crew  training

BANKING INDUSTRY

Mission To ensure that the all causes of Unhappiness for Customer are fully Terminated in order for the bank be a Service Leader Customer •Customer Complaints •Customer Feedback Scores •Repeat Contacts •Request Closure beyond 24 Hours

Financial •Cost of Complaints •% of Business through Cross Selling •Average Revenue Per Customer

Internal Processes •Quality •Productivity •% Complaints to Transactions •Branch Contacts with Customers, Delivery Success Rate %

Research, Education & Teaching •Process Improvements •Versatile Training to Branches, Terminator Workshops 08/23/09

Advantages to this Approach üSimple to Use and Understand üBased on Vision and Strategy üMultidimensional •Quantitative and Qualitative Measures •Current and Future üProvides Measurement of and Method for Improving our Services üServes as a Communication Tool

THANK YOU