In Trav Ate Scorecard Briefings 1

7/31/2019 In Trav Ate Scorecard Briefings 1

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Copyright Intravate 2005

IntravateIntroduction toBalanced Scorecards

Briefing Part 1

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IntravateBalanced Scorecards

Briefings

Part 1

Introduction to the

Fundamentals


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First, a few facts

Less than 10% of strategies effectively formulated are effectively executed

Fortune Magazine

Over 60% of Fortune 1000 either have, or are experimenting with,

Balanced Scorecards

Fortune Magazine

But.estimated that less than 30% of organisations with Balanced Scorecards aregetting any business benefits, due in the main to poor construction

Balanced Scorecard Collaborative Survey

There are numerousmisconceptions & misunderstandings about

balanced scorecardsMost are poorly constructed and

poorly implemented


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Less than 10% of strategies effectively formulated

are effectively executed

In most organisations something is breaking down in thePerformance Management Chain

Establishing Long TermGoals & Strategies

Establishing a StrategicPlan

Translating into AnnualPlans & Targets

Internal Communication &Alignment

Managing effectiveimplementation

Measurement & Reporting

Linked to Staff feedback &rewards

Planning

Reporting


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The Performance Management Trap

More time is spent formulating strategies than setting up performance tracking to report onthem

Often the key strategic goals are intensively targeted and measured at the top level

..but not the key customer, operational and organisational drivers of these endresults.

Hence performance targets further down the organisation are only weakly aligned to key

goals

Also lower level operational and organisational performance is often poorly measured andnot tracked and reported effectively

However What gets targeted & measured.gets managed

Meaning that personal activities and incentives are often locked into the wrong businesspriorities.

.hence, organisations are rarely fully focused or incentivised

around key strategic goals


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Key principles of the balanced scorecard

Alignment of management focus and resource allocation to the

achievement of key goals and strategic objectives:

the strategy focused organisation translating Vision into reality

Performance targeting & measurement of the key drivers of success

To drive the performance of ultimate goals by identifying and targeting theinternal drivers of performance

To deliver long term performance while managing the tensions between

different stakeholders

Shareholders, Customers, Suppliers, Staff

Feedback and learning

is the strategy working? - are we on track to reach our goals ?


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Balanced Scorecard frameworks are away of managing not just a reporting tool !

A management tool used for both planning and performance reporting

Key factor being to agree the correct set of performance drivers,

measures & targets:-

relevant to an organisations vision and strategy, that identifies, targets &measures the drivers of end performance goals as well as the end goals

themselves

brings together 4 core aspects which are necessary to deliver & sustainsuccess

Financial orEnd Goals

Customer &Market Goals

InternalProcess Quality

OrganisationalEffectiveness &

Learning


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Balanced Scorecards manage the tensions between

different stakeholder groups

FinancialHow do we look to our

Shareholders

CustomersHow are we doing with our

customers?

Process QualityTo deliver customer &

shareholder value, what

must we excel at?

OrganisationalWhat competencies,

culture & style do we needto sustain and improve

performance?


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At minimum Balanced Scorecards

broaden your perspective of performance

Financial measures Customer measures

Process Quality

measures

Organisational

measures

Also referred to asDevelopment or

Learning & Growth


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Butit is important to understand the dynamics

between these performance measures

Financial measures Customer measures

Process Qualitymeasures

Organisationalmeasures

Scorecards must identify

critical drivers of performance,not static unrelated performance indicators


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Not a matter of.

.just dreaming up

4 sets of measures

to fill 4 boxes


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Strategy Mapping is the method of identifying Critical

Success Factors via Cause & Effect analysis

Final results are theoutcome of internal activity

ProductivityService effectiveness

Manpower efficiency Competencies Culture

Lag indicator

Lead Indicators

Effect

Causes

Identify the Critical Success

Factors in the organisation -the drivers of desired endperformance

Cause & Effect Strategy

Mapping forces you to identifythese Critical Success

Factors


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Key deliverables from an effectiveBalanced Scorecard framework

1. Aligns short - term targets to longer-term strategies

2. Assists in delivering ultimate strategic performance levels by explicitly targetingand managing the non-financial drivers of performance

3. Aligns departmental and personal objectives to ultimate goals & core strategies

4. Establishes a framework for Business Units, teams and individuals within theorganisation to see and relate to the bigger picture and their role on delivering it

5. Provides regular monitoring and gives early warning of problems long beforetheyimpact on the ultimate outcomes results

6. Creates a feedback loop to learn about, and to improve, the effectiveness ofcurrent strategies

Building and utilising a Scorecard frameworkis strategic management process

I


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