Balanced Scorecard

Gbemiga Adeosun
 WHAT IS BALANCED SCORECARD ?

 The balanced Scorecard is a strategic planning and

management system used to align business activities to the
vision statement of an organization or more realistically it
attempts to translate the sometimes vague, pious hopes of a
company’s vision/mission statement into the practicalities of
managing the business at every level

 A balanced scorecard is a system that balances the historical

accuracy of financial numbers with the drivers of future
performance

 It is a performance management system that translates

organizational strategy into actions
 The balanced scorecard retains traditional financial measures.
But financial measures tell the story of past events, an
adequate story for industrial age companies for which
investments in long-term capabilities and customer relationships
were not critical for success. These financial measures are
inadequate, however, for guiding and evaluating the journey that
information age companies must make to create future value
through investment in customers, suppliers, employees,
processes, technology, and innovation.“
 Source: Robert S Kaplan and David P. Norton, “ Using the
Balanced Scorecard as a Strategic Management System,”
Harvard Business Review (Jan-Feb 1996)
 You can't tell when you're winning if you don't keep score. The
Balanced Scorecard helps track your hits and misses.
Eric Berkam
 A Balanced Scorecard...

A Balanced Scorecard...
 Measures the progress of an organization toward its strategic
goals by translating their vision and objectives into tactics and
measures across a balanced set of perspectives
 Captures the expectations of customers and measures the
company’s ability to meet them
 Translates Strategy, Mission and Vision into tangible measures
for use by decision makers through to line workers
 Is the culmination of a sophisticated data gathering and analysis
process and system
 Can and will drive the process of change, so it must be right!
 When fully deployed, the balanced scorecard transforms
strategic planning from an academic exercise into the nerve
center of an enterprise.
 Components of the Balanced Scorecard

 Perspectives: Four top-down perspectives on enterprise performance

(Financial, Internal Business Process, Innovation & Learning,
Customer)
 Goals (Strategic Objectives) - strategic vision and business
objectives of the organization/department. What the company needs
to do to accomplish its strategy;
 Key Result Areas (Metrics) - Which areas do you wish to see results
in? Actionable and tangible measurements which support achieving
objectives; this is what makes it real.
 Key Performance Indicators (Objectives) - How do we measure
success? one guideline is to have up to sixteen measurable objectives.
 Performance Standards (Targets)- What is the ideal performance
goal? Performance level expectations set against the strategic plan.
For each metric, set a goal or plan so progress against the objective
can be evaluated.
 The ‘Customer Perspective’
 When choosing measures in this perspective, the
organization must answer two critical questions
 Who are our target customers?
 What is our value proposition in serving them?
Many of the organizations will choose one of the 3
‘disciplines’ : Operational Excellence, Product
Leadership, Customer Intimacy
 Irrespective of the ‘discipline’ chosen, this
perspective will normlly include such measures as:
Customer satisfaction, Customer Loyalty, Market
Share, Customer retention etc
 The Learning and Growth’ Perspective
 The measures here are the enablers for the other
three perspectives.
 Once measures in the customer and internal business
perspectives are identified, one can be certain of
discovering some gaps between the current
organizational infrastructure of employee skills and
information systems and the level necessary to
achieve desired results.
 The measures here will help close the gap and ensure
sustainable performance for the future e. Employee
Skills, Availability of information, alignment to values
etc
 The ‘Financial Perspective
 The measures here tell whether the strategy execution which
is detailed through the measures chosen in the other
perspectives is leading to improved bottom line results

 All energy and capabilities could be focused on improving

customer satisfaction, quality, on-time delivery etc but without
an indication of their effect on the organization’s financial
results, they are of limited value

 Timely and accurate funding data will always be a priority, and

managers will do whatever necessary to provide it

 Some likely measures include Revenue growth, profitability,

Return on investment etc
 Why the Balanced Scorecard

 Encourages innovation
 Expands business units objectives beyond financial measures
 Enhances internal capabilities, investment in people, systems and procedures
to improve future performance
 Captures critical value-creation activities
 Clearly reveals the value drivers for superior long-term financial and
competitive performance
 Serves as a long term strategic management system
 Focuses the whole organization on the few key things needed to create
breakthrough performance.
 Helps to integrate various corporate programs, such as quality, re-
engineering, and customer service initiatives.
 Breaks down strategic measures to local levels so that unit managers,
operators, and employees can see what's required at their level to roll into
excellent performance overall.
 Scorecard Template
..\Documents\BALANCED SCORECARD\INTERNET DOCS\GROUP PMP\200
7 BSCs\MDS\CS 2007 BSC Final\NCSM & RCSMs.ppt
Section 1: The Balanced Scorecard (2010)
Actual 2004 2003
Goal Key Result Areas Key Performance Indicators Threshold Normal Stretch Weightings Rating
Achieved Trend Trend
D im e n s ion
Fina nc ia l

0
C u s tom e r D im e n s ion

0
B us in e s s Proc e s s e s
D im e ns ion

0
L e a rn in g D im e n s ion
I nn ova tion &

0
Notes:
 Implementation Plan
Section 2: *Implementation Plan
BSC Perspective Customer Satisfaction
KRA
Key Drivers
Measurements
Standards

Definition

Description/What Needs
to be Done

Tools Required
Source of Information
Owner
Frequency/Review Time
Other Condiderations
 HR Implementation Plan – Financial
Perspective
KRA Key Drivers Measurements Standards What Needs to be Done Tools Required Review Time Who
Perspectives

Turnover Employee Productivity NPS/Employee No. > Growth over last year, Right Sizing, Training & Set and agree Monthly/ Quarterly HHR. DMDs,
BU/Peer Bench mark Development, Counselling & Optimal Manning HRMs,
Mentoring, Provision of Tools, Level, Training HRSM,
Incentives - Recognition & Curriculum, Monthly CMO,
Reward, Obtain Industry HR reviews, SHRP CTDM,
Statistics for Benchmark; Work reviews, Meeting AOPCM.
scheduling, Performance Status BSC Reviews
Communication.
Financial Dimension

Profitability Employee Productivity Operating > Growth over last year, Control of HR Cost, Outsourcing, Set and agree Weekly/Monthly/ HHR. DMDs,
profit/Employee No. BU/Peer Bench mark Performance Related Optimal Manning Quarterly HRMs,
Compensation, Level, Training HRSM,
Curriculum - (Profit CMO,
Orientation), Monthly CTDM,
HR reviews, SHRP AOPCM.
reviews, Meeting
BSC Reviews

Launch new Products % contribution to NPS; BU specific, - as Set targets; new product plans to Research/Survey, Monthly/Quarterly HHR. DMDs,
 HR Implementation Plan – Customer
Perspective
KRA Key Drivers Measurements Standards What Needs to be Done Tools Required Review Time Who
Perspectives

Employee Improved Survey Feedback, Improvement on Conduct surveys and Survey Instruments, Monthly/Quarterly HHR. DMDs,
Satisfaction Communications, Work Quality of Key HR Previous Survey, Prompt benchmarks, Incentives SPSS, HRMs,
Environment, Processes (Salary, Salary Advise, schemes, Prompt Communication Tools HRSM,
Compensation, Induction, Fringes & Comprehensive Communication, Parenting - WWP Link, CMO,
Recognition & Reward, Benefits, Leave, Induction, Interaction, Coaching, Mentoring Circulars, Intranet, ) CTDM,
Target Setting, HR Appraisal ), Integrity of Communication of BSC, BU Visits, AOPCM.
Admin/Process BSC Targets, Fringes & Benefits, Monthly HR Meetings
Efficiency, Coaching & Leave Rostering,
Mentoring, Induction Timeliness of Appraisal
Customer Satisfaction

BU Improved Survey Feedback, Recruitment Cycle - 2 Conduct surveys and Survey Instruments, Monthly/Quarterly HHR. DMDs,
Satisfaction Communications, , HR Quality of Key HR months, Job Evaluation - benchmarks, Prompt SPSS, HRMs,
Admin/Process Processes, Integrity of 10 working days; Salary Communication, Parenting Communication Tools HRSM,
Efficiency, Training BSC Targets, Advice - 1st April; Cycle Interaction, Improvement in Key - WWP Link, CMO,
time of Pre-employment HR Service delivery, Training on Circulars, Intranet, ) CTDM,
Test - 3 days; Post Job Description BSC, BU Visits, AOPCM.
Training Assessment, Training, Monthly HR
Monthly Circularisation of Meetings
Management Moves,
 HR Implementation Plan – Internal
Process Perspective
KRA Key Drivers Measurements Standards What Needs to be Done Tools Required Review Time Who
Perspectives

Right Sizing Review of strategy & Span of Control; International/ BU/ Review structure of Bus and Strategy; LTP; SHRP; Bi-annual; HRMS, HHR,
structure; Work Manager/Employee Industry specific employee numbers, align with Systems Audit; List of AOPCM,
Process; Ratio; NPS/Employee; current operation; Review current Processes; Systems DMDs,
Benchmark Work employee yield against target; /Work Study; EXCO; CMO
Processes against clean redundant processes from
competition; work systems;

Employee Medical Cost; Travel Medical cost per capita; Benchmark against Collate cost from all Bus; Review Policy on Monthly/Quarterly CMO;
Cost Cost; Salaries; travel cost/man power industry; Peer ranking; retainerships; Firm control on Retainership; Health HRMS, HHR,
Employee No.; cost; Employee medical administration; Intensify promotion AOPCM,
Overtime cost/NPS; Cost per preventive health care; programmes; DMDs,
Employee; Employee Circularise approved transport schedule of approved EXCO;
cost/Total Cost; fares; monitor transport rates;
Internal Business Process

movements/travels; Moderate
rate of transfers; Maintain cap on
overtime

Process Review of Key HR Timeliness & Accuracy Recruitment Cycle - 2 Improve Response Time to BU Process Manual; Quarterly HHR. DMDs,
Review Processes of HR Services; Cycle months, Job Evaluation - requests; Refresher courses for Training; EXCO,
(Recruitment, Salary time of key processes; 10 working days; Salary HR practitioners; Thoroughness HRMs,
Advice, Job Evaluation, Error rate in Salary/ Advice - 1st April; Cycle & Review of Benefit HRSM,
Appraisal, Medical Benefit Advice time of Pre-employment Communication; Finalise Process CMO,
Administration, Value Test - 3 days; Post Documentation CTDM,
Added Training, Training Assessment, AOPCM.
Communication, Monthly Circularisation of
Induction, Fringes & Management Moves; 4%
Benefits, Leave, Error Margin;
Appraisal, Counselling)
 HR Implementation Plan –
Innovation & Learning Perspective
KRA Key Drivers Measurements Standards What Needs to be Done Tools Required Review Time Who
Perspectives

Employee Improved Survey Feedback, Improvement on Conduct surveys and Survey Instruments, Monthly/Quarterly HHR. DMDs,
Satisfaction Communications, Work Quality of Key HR Previous Survey, Prompt benchmarks, Incentives SPSS, HRMs,
Environment, Processes (Salary, Salary Advise, schemes, Prompt Communication Tools HRSM,
Compensation, Induction, Fringes & Comprehensive Communication, Parenting - WWP Link, CMO,
Recognition & Reward, Benefits, Leave, Induction, Interaction, Coaching, Mentoring Circulars, Intranet, ) CTDM,
Target Setting, HR Appraisal ), Integrity of Communication of BSC, BU Visits, AOPCM.
Admin/Process BSC Targets, Fringes & Benefits, Monthly HR Meetings
Efficiency, Coaching & Leave Rostering,
Mentoring, Induction Timeliness of Appraisal
Customer Satisfaction

BU Improved Survey Feedback, Recruitment Cycle - 2 Conduct surveys and Survey Instruments, Monthly/Quarterly HHR. DMDs,
Satisfaction Communications, , HR Quality of Key HR months, Job Evaluation - benchmarks, Prompt SPSS, HRMs,
Admin/Process Processes, Integrity of 10 working days; Salary Communication, Parenting Communication Tools HRSM,
Efficiency, Training BSC Targets, Advice - 1st April; Cycle Interaction, Improvement in Key - WWP Link, CMO,
time of Pre-employment HR Service delivery, Training on Circulars, Intranet, ) CTDM,
Test - 3 days; Post Job Description BSC, BU Visits, AOPCM.
Training Assessment, Training, Monthly HR
Monthly Circularisation of Meetings
Management Moves,
 Challenges
 Let’s discuss challenges we have faced with
BSC implementation in our various businesses
 key Challenges
 Lack of Understanding: Many employees especially those
in ‘remote’ locations are yet to understand/appreciate
BSC ; planning, cascading, information gathering, arriving
at metrics, performance appraisal etc
 Subjectivity: Non validation of BSCs by line Managers
leaving BSC holders to ‘fix’ actual achieved (Still seen as
“payment time”)
 Ambiguity: Some KPIs not explicit as a result of lack of
knowledge
 No regular review of performance/set targets
 BSC holders not taking ownership
 Changes in Market place not communicated to GHR
 No seriousness on the part of BSC holders e.g in
submission
 Way Forward
 Top Management and other Managers to believe/support use of BSCs
 Regular Sessions on BSC (present situation), Personal updating of knowledge
through studying etc
 BUs to resuscitate BSC committee in the various units
 Quarterly or otherwise review of BSCs to be carried out in all Bus
 Line Managers to review direct reportees BSCs
 Early submission of BSCs to P&C unit for validation (why submit initially?)
 BSC holders to be sincere during appraisals and back up achievement with
documented data and information
 Employees to periodically monitor/measure performance
 Very many companies that have implemented the BSC have recorded dramatic
positive Financial gains,
 WE MUST GET IT RIGHT. INTEGRITY REQUIRED