Balance Score Card Introduction
Transcript of Balance Score Card Introduction
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The Balanced ScorecardThe Balanced Scorecard
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Introduction to the Balanced ScorecardWhat is it? Why do it?
Balanced Scorecard FundamentalsThe Four Perspectives Measures, Targets and InitiativesRoles and Responsibilities
Using the BSC as a Management System
Outline
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The Balanced ScorecardWhat is it?
Definition: The Balanced Scorecard is a
management tool that provides stakeholders with a comprehensive measure of how the organization is progressing towards the achievement of its strategic goals.
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The Balanced ScorecardWhat is it?
The Balanced Scorecard:
Balances financial and non-financial measures
Balances short and long-term measures
Balances performance drivers (leading indicators) with outcome measures (lagging indicators)
Should contain just enough data to give a complete picture of organizational performance… and no more!
Leads to strategic focus and organizational alignment.
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The Balanced ScorecardWhy 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.
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The Balanced ScorecardWhy do it?
It works!
“The BSC has forced our management team to focus beyond financial measures… too often in the past we would get sucked into short-term thinking.”
“The BSC dramatically improved our data analysis… we don’t overreact nearly as much as we used to.”
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Mission – What we do
Vision – What we aspire to be
Strategies – How we accomplish our goals
Measures – Indicators of our progress
The Strategy Focused Organization
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Environmental Scan
Strengths Weaknesses
Opportunities Threats
Values
Mission &Vision
Strategic Issues
Strategic Priorities
Objectives, Initiatives, and Evaluation
A Model forStrategicPlanning
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The Five Principles
1. Translate the strategy to operational terms.
2. Align the organization to the strategy.3. Make strategy everyone’s job4. Make strategy a continual process5. Mobilize change through executive
leadership
The Strategy Focused Organization
Source: The Strategy Focused Organization, Norton & Kaplan
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The Balanced Scorecard and The Big Picture
•Activity Based Costing•Economic Value Added•Forecasting•Benchmarking•Market Research•Best Practices•Six Sigma•Statistical Process Control•Reengineering•ISO 9000•Total Quality Management•Empowerment•Learning Organization•Self-Directed Work Teams•Change Management
MissionandVision
BalancedScorecard
StrategicPlanning
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FINANCIAL/REGULATORYTo satisfy our constituents, what financial & regulatory
objectives must we accomplish?
CUSTOMERTo achieve our vision,
what customer needs must we serve?
INTERNALTo satisfy our customers and
stakeholders, in which business processes must we excel?
LEARNING & GROWTHTo achieve our goals, how
must we learn, communicate and grow?
THE BALANCED SCORECARDTHE BALANCED SCORECARD
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Customer Perspective
o Customer Satisfaction (Average)
o Satisfaction Gap Analysis (Satisfaction vs.
Level of Importance)
o Satisfaction Distribution (% of each area scored)
Possible Performance MeasuresPossible Performance Measures
To achieve our vision, what customer needs must we serve?
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Financial / Regulatory Perspective
o Cost / Unit
o Unfunded Requirements or Projects
o Cost of Service
o Budget Projections and Targets
Possible Performance MeasuresPossible Performance Measures
To satisfy our constituents, what financial and regulatory objectives must we accomplish?
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Internal Perspective
o Cycle Time
o Completion Rate
o Workload and Employee Utilization
o Transactions per employee
o Errors or Rework
Possible Performance MeasuresPossible Performance Measures
To satisfy our customers, in which business processes must we excel?
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Learning and Growth
To achieve our goals and accomplish core activities, how must we learn, communicate and work together?
Possible Performance MeasuresPossible Performance Measures
o Employee Satisfaction
o Retention and Turnover
o Training Hours and Resources
o Technology Investment
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Financial / Regulatory Perspective
Objectives Measures Targets Initiatives
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Customer Perspective
Objectives Measures Targets Initiatives
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Internal Perspective
Objectives Measures Targets Initiatives
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Learning and Growth
Objectives Measures Targets Initiatives
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Strategy Map
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The Balanced Scorecard as a Management System
BSC reviewed regularly to enhance operational decision-making
Success of initiatives assessed based on DATA… not opinions
Leading indicators evaluated to confirm accuracy of assumptions
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The Balanced Scorecard as a Management SystemThe BSC is a “Living Document” that
requires regular revision of objectives, measures and initiatives:
How are we doing? Are we measuring the right things? What initiatives do we need to get us
where we want to go? Have our organizational goals
changed?