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Cascading the BalancedScorecard to Build

Organizational Alignment

Presented to: Prof. Dr. Ahmad Galal

Prepared by: Tarek Abd El Latif

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Agenda• Lower level BSC.• How to develop an aligned BSC?• Shared Service BSC.• Personal BSC.• Evaluation of the cascaded BSC.• Conclusion.

Chinese President The Chinese President was once asked “How will you be able to feed one million mouths?” His answer was simply: “why don’t we put it as “how I will plan to benefit out from two million working hands”.

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Criteria of the Lower-Level SC

• Most likely it contains a greater number of measures.

• It specifies the necessary details required to achieve success on the corporate measures filled in as part of the business unit, department, and team SC (in other words filling the gap).

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The lower-level SC at Nova Scotia Power Inc.

The measures in each of the three Scorecard excerpts of are not identical, but they are aligned.

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Assisting the Development of Aligned BSC

• Provide clear accountabilities, guidelines, even up to personal assistance; share the expertise that resides on your BSC team across your organization, the BSC team may act as a facilitator as well.

• Use business plans: As these plans contain information on key processes, objectives, initiatives, and costs so they can be refined until they are replaced with the BSC.

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Shared Service BSC• Shared service groups are sometimes called

corporate resources or corporate staff.

• Human resources, accounting and finance, and information technology are all examples of shared service units housed in virtually all organizations.

• These departments provide specialized services to the business units and corporate entity they serve, and should do so at a cost and level of quality superior to external vendors.

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Shared Service BSC (Cont.)• Common problem facing the shared service units

is the lack of specific strategy or difficulty in initiating the process of BSC, but instead focus on meeting the needs of their internal customers.

• How to overcome this problem? Through the service-level agreements (SLAs).

• These documents should contain the details of the specific processes and products supplied by the shared service unit as well as the costs, objectives, and key indicators of desired performance

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Here arises 2 important questions

• Which is better having our own shared service units or should we outsource?

• How to get he commitment & involvement of this unit within the BSC?

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Performance Appraisal Vs Personal BSC

• In fact, the annual performance appraisal process represents a burden for both management and employees alike.

• There are 2 problems in the performance appraisal process:

There is no follow up for these appraisals & the employee get a feedback infrequently.

There is always a suspicion regarding this process; the performance ratings are completely subjective and based purely on a manager’s or supervisor’s limited view of employee performance.

• Alternatively; organizations have to develop (Personal Balanced Scorecards)

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Benefits of the Personal BSC

• Builds awareness of the BSC: an opportunity to apply the BSC concept on a personal level.

• Generates commitment to the SC: as the employees develop their own series of linked objectives & measures this will certainly boost their support.

• Increases comprehension of aligned SC: employees will review the whole BSC in order to develop their own. Thus, cascading supplies an outstanding training opportunity

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Benefits of the Personal BSC (Cont.)

• Offers a clear line of sight from employee goals to organizational strategy: through allowing every employee to demonstrate how their specific actions are making a difference and leading to improved overall results.

• Builds support for the goal-setting process: through sorting the employees’ goals by their relevance.

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Personal BSC Template

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Personal BSC Template (Cont.)

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Steps for completing page 2

1. The individual must develop the objectives, measures, and targets that comprise his or her individual Scorecard. By displaying all linked SC on page 1, with discussion and coaching the development of personal goals should flow quite smoothly.

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Steps for completing page 2

2. The individual must then select the appropriate weights for each measure when determining his or her incentive possibilities. The manager or supervisor will have final approval on the weights and associated targets, ensuring that they appear reasonable and challenging but attainable.

The perspectives are also weighted to denote the areas in which the employee is able to exert the most influence. In this example, perspective weights are equal. Employee targets are discussed further in the review of the Balanced Scorecard’s role in compensation (Chapter Ten).

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Steps for completing page 2

• Finally, the employee may begin to construct a personal development plan (PDP) based on the goals established of their Scorecard. This document may or may not replace the need for a formal PDP, but it will certainly facilitate the development of that document by identifying the key areas of focus for the individual.

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Why it is important to cascade the BSC?

• Driving the Scorecard to every level of the company signals to each employee what the key drivers of success are at your company and provides them with the opportunity to define how they contribute to that success.

• Cascading may create dozens of BSCs within your company. Their value is enormous, provided they align with overall goals and tell a consistent story.

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Reviewing and Evaluating Cascaded BSC

• This step is crucial to avoid unrealistic targets, missing measures, and departments working against each other & to ensure truly aligned BSC.

• Part of the responsibility of this task goes to the BSC team as they have the requisite knowledge to effectively critique objectives and measures, ensuring consistency in form and approach across the organization.

• Conduct Scorecard sharing sessions. Invite employees to review the SCs of their peers and offer their suggestions for clarification and improvement.

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Evaluations of cascaded BSC

These are some points to consider in reviewing the BSC:

• Linkage to related SCs: Each SC should contain objectives and measures that influence the next SC in the chain.

• Linkage to strategy

• Appropriate targets

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Evaluations of cascaded BSC (Cont.)

• Coverage of key objectives: The chief rule of cascading is that of influence.

• Lag and lead indicators: Cascaded SCs should contain an appropriate mix of lagging and leading indicators of performance.

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In conclusion• “The key benefit of cascading is

allowing everyone to know of their importance in the overall strategy of the company and that they are an active and critical part, and it’s not just lip service, it’s real.”

McCord Senior Vice President; Ed Berkman

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Thank you