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Objective - PowerPoint Presentation

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Objective - PPT Presentation

Explain What is the Balanced Scorecard Describe the Three Generations of Balanced Scorecards Explain the Importance of Balanced Scorecard Describe the Various Perspectives of Balanced Scorecard Describe the Various Parameters of Balanced Scorecard ID: 396463

scorecard balanced performance step balanced scorecard step performance organization measures perspective process financial vision steps explain strategy customer design

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Slide1
Slide2

Objective

Explain What is the Balanced Scorecard

Describe the Three Generations of Balanced Scorecards

Explain the Importance of Balanced Scorecard

Describe the Various Perspectives of Balanced Scorecard

Describe the Various Parameters of Balanced Scorecard

Explain What is Performance Management

Explain the Steps in Building a Balanced Scorecard

Describe the Balanced Scorecard System Elements

Explain the Steps for Implementation of BSC

Explain What is the BSC Designer

List the Tips for Implementing Balanced Card

List the Pitfalls of Balanced ScorecardSlide3

Introduction

David Pelham is a major stakeholder in

Globus

Inc., an MNC.Slide4

Introduction

He is greatly interested in the performance of Globus Inc.Slide5

Introduction

So, what gives an overall picture about the performance of a company?Slide6

Introduction

The answer is a ‘Balanced Scorecard’. Slide7

What is the Balanced Scorecard

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.

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 alignmentSlide8

What is the Balanced Scorecard?

The Balanced Scorecard framework is shown in the given diagram.

Vision and Mission

Financial Perspective

Internal Process Perspective

Learning & Growth Perspective

Customer Perspective

The balanced scorecard translates the organization's strategy into four perspectives, with a balance between the following:

between internal and external measures

between objective measures and subjective measures

between performance results and the drivers of future resultsSlide9

History of Balanced Scorecard

In essence the Balanced Scorecard has remained unchanged since these early papers, having at its core a limited number of measures clustered into groups and an underlying strategic focus.

But modern Balanced Scorecard designs also have a number of features that clearly differentiate them from earlier examples.

The changes in the balanced scorecard have been an evolution through three distinct generations’ of Balanced Scorecard design.Slide10

Balanced Scorecard Goes Beyond the Financial Perspective

Let us look at each perspective in detail.

Learning & Growth Perspective

Business Process Perspective

Customer Perspective

Financial Perspective

Customer Perspective

- includes measures such as customer satisfaction, customer retention, and market share in target segments.Slide11

Measures

Parameters

Measures –

the observable parameters that will be used to measure progress toward reaching the objective. For example, the objective of profitable growth might be measured by growth in net margin.Slide12

Parameters: Objectives, Measures, Targets, and Initiatives

These can be organized for each perspective in a table as shown below.

 

Objectives

Measures

Targets

Initiatives

Financial

    Customer    Process   

 

Learning    Slide13

Performance Criteria

Performance Criteria helps to translate job requirements into levels of acceptable or unacceptable employee behaviour.

Hence, ‘performance criteria’ is an important determinant of performance.

It is essential to define ‘Performance Criteria’ for conducting a performance appraisal.Slide14

Principles of a Strategy Focused Organization

Strategy Focused Organization

Translate Strategy

Continual Process

Everyone’s JOB

Organization Alignment

Organization Alignment

Corporate Role

Corporate-strategic Business Unit (SBU)

Strategic Business Unit (SBU) - Shared Services

External Partners

Organization Alignment

Executive LeadershipSlide15

Characteristics of Balanced Scorecard

The core characteristic of the Balanced Scorecard and its derivatives are the presentation of a mixture of financial and operational measures each compared to a 'target' value within a single concise report.

The report is not meant to be a replacement for traditional financial or operational reports but a succinct summary that captures the information most relevant to those reading it.

There are various versions of the tool in circulation which differ due to the methods by which this 'most relevant' information is determined, that is, the design processes used to select the content.Slide16

Design of Balanced Scorecard

There are four steps required to design a Balanced Scorecard which are included in Kaplan & Norton's writing on the subject in the late 1990s, where they assert four steps as being part of the Balanced Scorecard design process:

Step #1

Translating the vision into operational goals

Step #2

Communicating the vision and link it to individual performance

Step #3

Business planning; index setting

Step #4

Feedback and learning, and adjusting the strategy accordinglySlide17

Steps in Building a Balanced Scorecard

2

1

3

Process 1:

Strategy formulation. Prepare vision and mission statements

Process 2:

Identify the Objectives of the organization

Process 3: Deciding for the measurements and Targets. Creating performance indicators.Slide18

Balanced Scorecard System Elements

Engaged Leadership, Interactive Communications and Change Management

Developing a scorecard system is transformational for an organization, as it is about changing hearts and minds. Leaders who are engaged in the discovery process, communication via two-way dialogue, and planning and managing change are important first steps in the process.

Organization Mission, Vision, and Values

Critical to an aligned organization are a well defined mission, a shared vision, and organization values that are built on strong personal values. Most organizations have these components, but often there is no connecting tissue among the components that allow employees to “get it” easily. A compelling and clear “picture of the future” (the shared vision) is where the scorecard development process starts. The employee buy-in follows as hearts and minds are engaged in creating and executing the organization’s strategies.

Performance Information Reporting

Automated data collection and reporting processes are used to visualize performance information and better inform decision making throughout the organization.Slide19

Steps for Implementation of Balanced Scorecard

Step 2: Collaboration:

The next step requires teamwork and collaboration where the different perspectives of different people and their expertise are required. The implementation of a balanced scorecard is not a one-person job and won’t produce buy-in.

Step 8:

Selection of metrics

Step 10:

Periodic reviews

Step 7:

Finishing touches

Step 9:

Roll-out

Step 11:

Evolution

Step 2:

Collaboration

Step 4:

Gain consensus

Step 6:

Expand consensus

Step 1:

Initiation

Step 3:

Gain Inputs

Step 5:

Individual reactionsSlide20

Adaptation of the Balanced Scorecard Framework to Non-Profit and Government OrganizationsSlide21

Typical Balanced Scorecard Project Schedule