Balance score card

• 1. Balanced Score Card

2. Where it started.. Introduced in 1992 by Drs. Robert Kaplan (Harvard BusinessSchool) and David Norton as a performance measurementframework The Balanced Scorecard is the most commonly used frameworkfor ensuring that companies execute their strategies 3. What is Balance Scorecard? A Balanced Scorecard monitors the performance of all or part ofan organization, towards strategic goals It is used in business, industry, government, and nonprofitorganizations worldwide to align business activities It gives a framework and helps planners identify what should bedone and measured 4. Why Implement a Balanced Scorecard ? Increase focus on strategy and results Align organization strategy with the work people on day-to-day basis Improve communication of the organizations Vision and Strategy To provide a more reliable basis for awarding incentive based pay 5. Why Implement a balanced Scorecard ? To give managers a comprehensive view of the performance of anemployee and business Employee Satisfaction To survive and prosper in todays world It provides feedback to both the internal business processes andexternal outcomes in order to continuously improve strategicperformance and results 6. Four Strategic Perspectives 7. Financial Examines companys implementation and executionof its strategy Three possible stages as described by Kaplan and Norton Rapid Growth Sustain Harvest 8. Customer Customer Satisfaction Retention Marketing Product/Service in the eyes of the customer 9. Internal Business Process Metrics based on this perspective allow the managers to know howwell their business is running Innovation - Measures how well the company identifies the customersfuture needs Operations Measures quality ,costs, technology & plantinfrastructure 10. Learning and Growth Training Forward Focused Concerned with -Human capital-Information capital-Organizational capital 11. Process Formulate business strategy Outline the companys valueDefine business strategy chain activities Identify the strategically requiredOutline a strategy map organizational outcomes Identify workforce requirementsIdentify the required work force behaviors 12. Balanced Score Card 13. Philips Philips is world leader in healthcare, lifestyle and lighting Philips integrates technologies and design intopeople life Mission :Improve the quality of peoples lives through timelyintroduction of meaningful innovations 14. Issues During the mid-90s, Netherlands based Royal Philips reported losses Due to rapid changes in the external environment and growingcompetition of Asian companies like LG and Samsung Led to the Company initiating High manufacturing costs Initiating job cuts Selling unprofitable businesses 15. Why Balance Scorecard ? The initiative to implement the Balanced Scorecard came from the topmanagement at its HQ in the Netherlands Need to shift focus from high-volume business to high-value business They realized they had to make operations Flexible Innovative 16. Implementation This led the Company to introduce a program called BusinessExcellence through Speed and Teamwork (BEST) in July 1999 The Balanced Scorecard was one of the tools of the BEST There were four perspectives in Philips Balanced Scorecard: Competence Processes Customers Finance 17. Implementation They used Balanced Scorecard strategy across Philips divisions withmore than 1,20,000 employees spread across 150 countries They established the Critical Success Factors (CSFs) Philips used the traffic light system to measure the level ofachievement of the key indicators: Green light Target that had been met Amber Performance in line with the target Red A problem area 18. Measuring Results The Balanced Scorecard was used as an instrument to Evaluate actual performance against targets Monitor future plans It enabled employees understand the existing policies and plans for thefuture Achieving revenue growth, employee satisfaction, customer satisfactionwere the common indicators in all business units 19. Balanced Score Card 20. Unified CallSoft It is based in Canada, has been providing Call center and related BPOservices since the past one and a half decade It has operations in over seventeen countries includes United States,Eastern Europe, India and Japan 21. Issues Lately it has been confronting difficulties in tracking and monitoringthe performance of the employee Managers were unable to decide the reason for significant dips inprogress of employees and in revenues volume Need to optimize the service delivery processes 22. Why Balance Scorecard ? Amongst the several options for resolving the issue the topmanagement used Balanced Scorecard approach as it was mostfeasible Implement a rigorous mechanism of checks across several deliverycenters Improving the overall productivity and employee performance 23. Implementation A team was created that had members from all the major divisions topool in their plausible causes for the decline being experienced A criteria was developed for filtering the collected measures and usedto arrive at the most relevant group of KPIs (Key performanceIndicators) The software chosen was such that it permitted arranging thescorecards in the form of cascade 24. Measuring Results Huge cost savingsTotal amount came down by 10%Employee contribution rose by a 40%Motivation levels too increased by 60% Coordination between different delivery centers was achieved There was transparency of the system , thus making it easy to spot theweakest link 25. Measuring Results Cleary defined performance metrics supported by an reward systemhelps in motivating the work force in a call center The managers no longer required to fight with numbers and values By using the values presented on scorecards, they could take quickdecision 26. Balanced Score Card 27. Zenith Systems Zenith is a leading independent IT infrastructure servicesprovider It provides services throughout the UK, Europe andinternationally to more than 80 countries 28. Issues Lack of board clarity Lack of progress Some occasional disharmony Need to focus on strategic performance 29. Implementation 2GC was appointed to assist the Board to create a Corporate BalancedScorecard 2GC helps in addressing the strategic and performance managementissues They worked for 8 months with Executive Board and Quality manager The firm had good financial reporting systems in place 30. Implementation 2GC worked with two main divisions Client Services andBusiness Development An analysis of how the three Balanced Scorecards interactedwith each other was shown 31. Measuring Results The board agreed on a clear set of strategies The two divisions established a clear statement The managers for the first time developed long-term view of theobjective ,the organization was trying to achieve Reporting on relevant information back to the centre 32. Conclusion Balanced scorecard is a powerful strategic tool It represents a fundamental change in how an organization ismeasured and held accountable for results It also poses threats to an established corporate culture and haspotential weaknesses if it isnt executed properly