WELCOME. BALANCED SCORECARD A NEW MEASURE OF ENHANCING ENTERPRISE EFFECTIVENESS Prof. Ranjan K. Bal Former President, Indian Accounting Association.

WELCOME

BALANCED SCORECARD

A NEW MEASURE OF ENHANCING ENTERPRISE EFFECTIVENESS

Prof. Ranjan K. BalFormer President,

Indian Accounting Association

INTRODUCTIONINTRODUCTION HBR: One of the most influential

management ideas of the past 75 years. New tool for measurement of overall / holistic

corporate performance. Shift from lopsided approach to a balanced

one Translate companies vision and strategy into

tangible objectives and measures. Enhances Enterprise Effectiveness

KPMG studyOn “Measuring Performance of the

Organizations of the Future”

FINDING:

“Over-reliance on summary financial performance measures (Viz. ROI) was hindering an organization’s abilities to create future economic value.”

BSCRobert Kaplan & David Norton

1992 - HBR : “The Balanced Scorecard : Measures that Drive Performance”

1996 – BOOK : “ The Balanced Scorecard :Translating Strategy into Action”

BSC Balances:Financial and Non-financial

performance measures

Evaluates: Short-run and long-run

performance in a single report.

APPLICATION OF BSCMany Fortune 500 Companies

More than 50 Indian Companies

Tata Group Companies

Dr. Reddy’s Lab

Bharati Tele

RPG

Godrej

PERSPECTIVE OF BSC

VISION &

STRATEGY

INTERNAL BUSINESS PROCESSCUSTOMER

FINANCIAL

LEARNING & GROWTH

BSCEnables an Organization to answer the

following questions:

How should it appear to its shareholders ?

How should it appear to its customers ?

What business processes must it excel at ?

How will it sustain its ability to change & improve ?

FINANCIAL PERSPECTIVE

REVENUE / INCOME GROWTH

COST MANAGEMENT

ASSET UTILISATIONROI

CUSTOMER PERSPECTIVE

CUSTOMER RETENTION

CUSTOMER ACQUISITION

CUSTOMER SATISFACTION

MARKET SHARE

Customer is the only valid reason for the existence of a

business.

Peter F. Drucker

INTERNAL BUSINESS PROCESS PERSPECTIVES

VALUE CHAIN:

R & D DESIGN PROD. MARKETING

DISTRIBUTION CUSTOMER SERVICE

Process Innovation Product Reengineering: Quality

Operational Efficiency - IT

HUL & INFOSYS

“Reengineering is the fundamental rethinking and redesign of business processes & products.”

Marketing and innovation should come before worries

about finances.

Peter F. Drucker

LEARNING & GROWTH PERSPECTIVE

EMPLOYEE CAPABILITIES

INFORMATION SYSTEM CAPABILITIES

MOTIVATION , EMPOWERMENT

LEARNING & GROWTHArun Moira: Member, Planning Commission, GOI

To be a leader: - Continuous Learning - Bigger Dream

Stephen Covey: Sharpening the Saw

Ajim Premji on JRD: JRD was a life-long learner.

“Knowledge is being doubled in every 18 months.”

Dedicated employees are key to the success of any

corporation.

Peter F. Drucker

IMPLEMENTING A BSCPROCESS

Identify VisionIdentify StrategiesIdentify PerspectivesIdentify MeasuresCreate Action Plan EvaluateFollow Up

ENVIRONMENT OF SAIL• Steel industry witnessing a boom• Increased steel consumption:

30 Kg Vs. 144 Kg• High bargaining power of buyers• Bargaining power of suppliers• Threat of new entrants & competition• Threat of substitutes

SAIL’s CORPORATE PLAN 2012

•To continue in the business of steel & steel related activities•To enhance market share in growth segments•To improve profits by cost reduction & high value added products•To achieve excellence in quality•To secure availability of key raw materials•To build customer centric processes,systems & procedures

SAIL’s CORPORATE PLAN: Comments

• Shows strategic goals, but inter-relationship is absent

• Comprehensive, but lacks focus• Lacks focus on Product Profitability• No focus on Operational Excellence

• No focus on Attracting & Retaining HR• To develop a Culture of Accountability

& Appreciation

“A manager’s job is to pursue the interests of

the society.”

Peter F. DruckerThe Father of Modern Management

CHANGE“Change is the only constant in to-day’s world.” ISB

“A company can not survive without change.”

K.V.Kamath

THANK YOU