002 balanced scorecard-cost-value creation

BALANCED SCORED

TOOL FOR VALUE CREATION

Why Need a Balanced Why Need a Balanced Scorecard?Scorecard?The Source of Value Has Shifted From Tangible

to Intangible Assets

Intangible Assets

Tangible Assets

38% 62% 85%

38%

15%

62%

1982 1992 2000 +

percentage of market value related to…

Value Creation: Intangible Value Creation: Intangible AssetsAssets

Intangible Assets Do Not Have A Intangible Assets Do Not Have A Direct Impact on Financial ResultsDirect Impact on Financial Results

They Have Second- or Third-Order They Have Second- or Third-Order ImpactsImpacts

Service Quality

Customer Confidence RevenueCustomer

Retention

Training

InformationTechnology

Value Creation: Intangible Value Creation: Intangible AssetsAssets

Conventional approach to Conventional approach to managing financial & operational managing financial & operational indicators insufficient indicators insufficient

Balanced Approach to Strategy Balanced Approach to Strategy Implementation should includes Implementation should includes focus on:focus on:

customer/stakeholdercustomer/stakeholderLearningLearninggrowth & innovation growth & innovation

BALANCED SCOREDUnderstanding & Understanding &

managing/leveraging inter-managing/leveraging inter-relationships between the relationships between the above areas necessary for above areas necessary for value creationvalue creation

Balanced Scorecard as a Tool for Balanced Scorecard as a Tool for Business ExcellenceBusiness Excellence

Malcolm Baldrige Balanced ScorecardLeadership Learning & Growth

PerspectiveHuman Resource Capital

Business Results

Process Management

Strategic Planning Strategy Map

Learning & Growth Perspective

Internal Process Perspective

Customer Focus Customer Perspective

Targets, Financial Perspective

Balanced ScorecardBalanced ScorecardBalanced Scorecard’s key Balanced Scorecard’s key

objective is not about objective is not about Measurement as the term Measurement as the term would outwardly convey would outwardly convey

Its about Its about Value Value creation -Execution creation -Execution of Strategyof Strategy

BALANCED SCORED

Balanced Scorecard Links Vision & Strategy to Personal

ObjectivesVISION

What we want to beSTRATEGY

Our game plan

STRATEGIC OUTCOMESSatisfied

SHAREHOLDERSDelighted

CUSTOMERSEfficient and Effective

PROCESSESMotivated & Prepared

WORKFORCE

PERSONAL OBJECTIVESWhat I need to do

BALANCED SCORECARDTranslate, Focus and Align

TRANSFORMATION OBJECTIVESWhat we must improve

Strategy Implementation ProcessStrategy Implementation Process

Sustained Strategy

Strategic Direction

Strategic Guidelines Strategy

Stage

Output

Institutionalization of the process

Identification & definition of areas of improvement

Development of solution and

testing

Implementation of solution across all

units

Activity

BusinessHealth Check

Design Process

Rollout Institutionalization

Business Audit AreasBusiness Audit AreasBusiness Health Check Business Health Check

Depending on the critical Depending on the critical needs of a business , at a needs of a business , at a point of time, the Business point of time, the Business Health Check will focus on Health Check will focus on some or all of the following some or all of the following areas:areas:

Business Audit AreasBusiness Audit Areas

Scorecard Design & RolloutScorecard Design & Rollout

BALANCED

SCORECARD

S T R A T E G Y

Mobilize change through

executive leadership

Change people, make

strategy everyone’s

everyday job

Align the organizati

on to create

synergies

Translate the

strategy to operational

terms

Integrate improvement programmes

with scorecard


BALANCED

SCORECARD

S T R A T E G Y

Translate the

strategy to operational

terms

Brand / product development, sales, service, operations, logistics..Activities needed to create the required customer value propositionand differentiation and the desired financial outcomes

Organization infrastructure, skills, capabilities, knowledge of employees, working climate..The ability to execute internal business processes in newdifferentiated ways

Who are the target customers that will generate the revenue growth?

What are the objectives and how do we measure success with them?

What are the financial objectives for growth and productivity?

What are the major sources of growth?

Translate : Strategy into 4 Translate : Strategy into 4 ComponentsComponents

Vision and Strategy

Financial Perspective

Customer Perspective

Internal Perspective

Learning and growth Perspective

•Patent Score for Process Improvements•SWIFT Training to Branches, Terminator Workshops

•Performance within TATs•Quality•Productivity•% Complaints to Transactions•Branch Contacts with Customers, Delivery Success Rate %

Research, Education & Teaching

Translate : Terminator Zero Translate : Terminator Zero UnhappinessUnhappiness

Internal Processes

MissionTo ensure that the all causes of Unhappiness for Customer are Terminated in order for the bank to vie for Service Leadership

•Customer Complaints•Customer Feedback Scores•Repeat Contacts•Request Closure beyond 24 Hours

Customer•Cost of Complaints•% of Business through Cross Selling•Average Revenue Per Customer

Financial

LeadingLeading

Definition

LaggingLagging

InputInput

OutputOutput

OutcomeOutcome

Objective / Objective / QuantitativeQuantitative

ExampleIntermediate outcomes that predicts or drive bottom-line

performance results

Measure Type

Bottom-line performance results resulting from

actions takenAmount of Investments, assets,

equipment, labor hours, or budget dollars usedUnits of a product or service rendered - a

measure of yieldResulting effect (benefit) of the use or application of an

outputEmpirical indicators of

performanceSubjective / Subjective / QualitativeQualitative

Perceptions and evaluations of major customers and

stakeholders

Employee turnover rate

Employee satisfaction rating

Number of Value Meal orders fulfilled

Customer satisfaction rating

Wait time

Customer complaints received as a % of total

customers served

Number of cashiers

Translate: Types of MeasurementsTranslate: Types of Measurements


BALANCED

SCORECARD

S T R A T E G Y

Align the organizati

on to create

synergies

Align: Use Strategy Map to Build Cause & Effect Align: Use Strategy Map to Build Cause & Effect RelationshipsRelationships

Improve ROCERevenue Growth Strategy Productivity Strategy

Build the Franchise

Increase Customer Value

Improve Cost Structure

Improve Asset Utilization

A Motivated and Prepared Workforce

New Revenue Sources

Customer Profitability

Cost per Unit Asset Utilization

Price

Financial Perspective

Customer Perspective

Internal Perspective

Learning & Growth Perspective

Product/Service Attributes

Strategic Competencies

Strategic Technologies Climate for Action

“Build the Franchise”

“Increase Customer Value”

“Achieve Operational Excellence”

(Innovation Processes)

(Customer Management Processes)

(Operations & Logistics Processes)

Customer Value Proposition

Quality

Operational Excellence

Product Leadership

Customer Satisfaction

Customer Acquisition

Customer Retention

Time Function Service Relations Brand

Relationship Image

Market Share

Review

Review

Review

ReviewReview

Review Review

Review

Review

Align : Flow of the Scorecard AlongAlign : Flow of the Scorecard AlongThe OrganizationThe Organization

Production Shift

Scorecard

Packing Shift

Scorecard

Production Daily

Scorecard

Maintenance Daily

Scorecard

Department Weekly

Scorecard

Packing Daily

Scorecard

PC/QC Daily Scorecard

Maintenance Weekly

Scorecard

PC/QC Weekly

Scorecard

Plant Head :Weekly Value Loss Scorecard & Analysis

Manpower Index (SMI)

Non Energy Cash Costs (NECC)

Maintenance Index (MI)

Man HoursUnit of Hardware

Unit of Hardware is a constraint

Man Hours is not a constraint

Man Hour Categories

Standard Hours

Turnaround Hours (Outside of current scope)

Other Hours (Outside of Maintenance Engineering Services)

Contractor Hours

Shell Hours

Skills constraint

Risk constraint

Profit constraint

Equipment constraint

Shell hours constraint

Response Time = Sigma [Job Time Raised – Job Time Closed] No. of Jobs

Availability = (Total m/c hrs) - (m/c downtime hrs) x 100 (Total m/c hrs)

Reliability (MTBF) = (Total m/c hrs) - (m/c downtime hrs) No. of Breakdowns

Maintainability (MTTR) = (m/c downtime hrs) No. of Breakdowns

PM Index = No. of m/c for which PM is carried out No. of m/c due for PM

Crew Utilization = Total earned hrs x 100 Actual available hrs

MMTR = Mean Time To RepairMTBF = Mean Time Between Failures VersusMTBM = Mean Time Between Maintenance?

Backlog Hours = Sigma [Job in queue x standard time]

Cost = Actual Job Cost + Lost Opportunity

Routine Index (MI)

Turnaround Index (MI)

Maintenance Capex

Maintenance Costs

Inspection Costs

Routine Costs

Plant transformations

Extraordinary Costs

Operating Costs

Contractor Costs

Turnaround Cost(Outside of current scope)

Equipment Constraint Hours

Risk Constraint Hours

Skills Constraint Hours

Profit Constraint Hours

Non Constraint Hours

RCA Design %

RCA Installation/ Repair %

RCA Utilization %

RCA Preventative %

RCA Planned %

Maintenance Schedule Adherence

Planning Accuracy = Actual

Hours/Estimated Hours

Align :KPI Roll Down – Oil RefineryAlign :KPI Roll Down – Oil Refinery

Align : Lowest Organism in the Align : Lowest Organism in the Food ChainFood Chain

Mobil – Truck DriversMobil – Truck Drivers Truck drivers were initially skeptical about how they Truck drivers were initially skeptical about how they

could affect any of the corporate strategic themes.could affect any of the corporate strategic themes. They knew that their job was to deliver to customersThey knew that their job was to deliver to customers By driving safely and avoiding accidents truck drivers By driving safely and avoiding accidents truck drivers

could improve performance on all internal measures could improve performance on all internal measures that were identified… lower costs, reliable, on time, that were identified… lower costs, reliable, on time, environmentally friendlyenvironmentally friendly

ICICI-Fire in the BranchICICI-Fire in the Branch Every single mistake by a branch added up to a lot of Every single mistake by a branch added up to a lot of

failures countrywidefailures countrywide Single complaint in a branch will bring the branch to a Single complaint in a branch will bring the branch to a

standstillstandstill Would track to one activity not being done by a single Would track to one activity not being done by a single

personperson Refer to Drawer syndromeRefer to Drawer syndrome

Align : Balanced Scorecard with Align : Balanced Scorecard with Organizational Design Organizational Design

Balanced ScorecardBalanced Scorecard

All complaints to be resolved with root fix Complaints

Get it right first time. Call up a customer if

error is noticed Transactions

Ensure First ContactResolution Contacts

Good Closure Quality Service Requests

Root Cause Analysis & ReviewReduce Service Failure Flow Delivery Failure

Align :Mission Zero UnhappinessAlign :Mission Zero Unhappiness


BALANCED

SCORECARD

S T R A T E G Y

Change people, make

strategy everyone’s

everyday job

Cons

ciou

sU

ncon

scio

us

Incompetent Competent

Direct Delegate

Support Coach

The Four States of Mind!

Cons

ciou

sU

ncon

scio

us

Incompetent Competent

Compliance Culture

Understanding Usage

Minds Path Matrix

……No shortcuts possible...No shortcuts possible...

Change : Minds Path MatrixChange : Minds Path Matrix

Change : Minds Path MatrixChange : Minds Path Matrix

Compliance Culture

Understanding Usage

• People understand that they are “being told” to do something new.

• Why because they don’t see the use of it !!• This is normally viewed as extra non-value added

responsibility. • If you stop checking, they will stop trying.

Change: Minds Path MatrixChange: Minds Path Matrix

Compliance Culture

Understanding Usage

• People don’t think about the new system& processes anymore. It is THEIR system now.

• They fully optimize the usage of data gathered at all levels. • They use the Scorecards to drive improvements in business

performance. • They improve details of the systems as per the requirements.

Success

Hope

ProblemDefinition

Solution Development

Solution Implementatio

n

Culture Change

Pain

The Mind’s Path To Success

Change ManagementChange Management

Change : Keep Scorecards FocusedChange : Keep Scorecards Focused At least one objective/measure per perspectiveAt least one objective/measure per perspective

No more than 15 measuresNo more than 15 measures

Personal scorecard must support supervisor’s Personal scorecard must support supervisor’s scorecardscorecard

Every supervisor must have an objective and Every supervisor must have an objective and measure for coaching and employee developmentmeasure for coaching and employee development

Scorecard must include an objective and Scorecard must include an objective and measure that measure that supports another part of the supports another part of the businessbusiness

•

•Key Issue: RTO returns would sit at the branches, waiting for customer to collect them •Solution: Outbound Calling

•Every deliverable cleared resulted in a happy customer, lesser rework & cost savings•Average Contact Ratio:65%

Data :Nov04-Jun 05

Change : RCA Deliverables Not Change : RCA Deliverables Not ReceivedReceived

Change Management : Link to IncentivesChange Management : Link to IncentivesICICIICICI

Zero Unhappiness BranchesZero Unhappiness Branches

VNCVNC Incremental Performance over Base Incremental Performance over Base

Performance is rewardedPerformance is rewarded Sales Reps often make incentive over and Sales Reps often make incentive over and

above salaryabove salary Performance observed over a quarterly Performance observed over a quarterly

period to avoid monthly manipulationsperiod to avoid monthly manipulations

Change : Assessment Management SystemChange : Assessment Management System

“ “ If you can’t If you can’t measure it, you measure it, you can’t manage can’t manage

it.”it.”

The secret to successful change management is to be able to The secret to successful change management is to be able to assess and measure your progress through the ‘minds path’ assess and measure your progress through the ‘minds path’

Change Management Assessment System Change Management Assessment System

The four mindsets must be measured by Auditing.The four mindsets must be measured by Auditing.Auditing is Auditing is a quantitative measure of a qualitativea quantitative measure of a qualitative

• Audit questionnaires are developed to assess the mindset levels using a structured approach:

1. Closed ended questions for compliance.2. Open ended questions for understanding.3. Demonstrative questions for usage.

• The audit questionnaire answers get converted into a scoring scheme…

• 0 for wrong or not done.• 1 for partially right or partly done.• 3 for correct or demonstrated.

• The percentages of each system performance category are plotted

• The target is 100%.

Change :Assessment Management Change :Assessment Management System (CAMS)System (CAMS)

Installation Status

0%10%20%30%40%50%60%70%80%90%

100%

-5 -4 -3 -2 -1 0 CurrentPeriod

Achi

evem

ent

InstalledPartially InstalledNot Installed System Utilization Status

0%

20%40%

60%80%

100%

-5 -4 -3 -2 -1 Current

Period

Achi

evem

ent

Mechanical Understanding Usage

Installation StatusInstallation Status

Change : Assessment Management Change : Assessment Management System(CAMS)System(CAMS)

Ask the Head

THE PUNY

PAYOFF FROM

OFFICE COMPUTERS

ED IT ORIAL

H

S pecial Report

MA N AGE MEN T'S

NE W EST STEP

C over Story

THE COMPUTER

SLUMP

Special Re po rt

MA NAG EMENT DISCOVERS

THE HUM AN SIDE OF AUTO M AT IO N

Bulletin Boards

NewslettersClasses Training Workshops

Company Intranet

Change : Training & Change : Training & CommunicationCommunication

Change : Training in Problem Solving –Change : Training in Problem Solving –Decision MakingDecision Making

Objective: Objective: The Program intends to provide an insight to The Program intends to provide an insight to

the participants in to the techniques for the participants in to the techniques for confronting the issues and arrive at confronting the issues and arrive at alternatives to resolve them effectively alternatives to resolve them effectively using various tools and techniques.using various tools and techniques.

The program is structured to provide an The program is structured to provide an exposure to the systematic approach to exposure to the systematic approach to logical decision making for attaining most logical decision making for attaining most optimal use of resources and enhanceoptimal use of resources and enhanceeffectiveness.effectiveness.

Change : Training in Problem Change : Training in Problem Solving –Decision MakingSolving –Decision Making

Proposed Program Contents: Proposed Program Contents: Problem SolvingProblem SolvingA conscious, systematic approach for A conscious, systematic approach for

analyzing situations and articulatinganalyzing situations and articulatingproblems, underlying assumptions problems, underlying assumptions and expected outcomesand expected outcomesRoot Cause AnalysisRoot Cause Analysis: A structured : A structured

investigation that aims to identify the investigation that aims to identify the true cause of a problem and the actions true cause of a problem and the actions necessary to eliminate it.necessary to eliminate it.

Covers tools & techniques for problem Covers tools & techniques for problem understanding, cause generation, data understanding, cause generation, data collection, cause-and-effect analysis collection, cause-and-effect analysis


Six Hat Thinking: Six Hat Thinking: Harness lateral Harness lateral thinking capabilities to unearth the thinking capabilities to unearth the resources available and make resources available and make optimal use of them to gain optimal use of them to gain expected outcomes. Avoiding ten expected outcomes. Avoiding ten mental creative locksmental creative locks

Force Field AnalysisForce Field Analysis: Identifying : Identifying potential risks and opportunities potential risks and opportunities inherent in the situationsinherent in the situations

80-20 Analysis or Pareto 80-20 Analysis or Pareto Principle:Principle: Prioritizing & focusing Prioritizing & focusing problem solving exercise on key problem solving exercise on key issuesissues


Decision MakingDecision MakingEven SwapsEven Swaps : A rational method for : A rational method for

analyzing decision options & making analyzing decision options & making swapsswaps

Hidden Traps of Decision MakingHidden Traps of Decision Making & how to avoid them & how to avoid them

Group Decision Making:Group Decision Making: Using Using group decision making techniques like group decision making techniques like consensus & NGT. Avoiding usual traps consensus & NGT. Avoiding usual traps of decision making like Groupthinkof decision making like Groupthink

Decision Implementation: Decision Implementation: Decision Decision implementation plan, monitoring, implementation plan, monitoring, feedback & change managementfeedback & change management


BALANCED

SCORECARD

S T R A T E G Y

Integrate improvement programmes

with scorecard

Scorecard’s Role in TransformationScorecard’s Role in Transformation Scorecard is an indispensable tool to Scorecard is an indispensable tool to

manage & monitor a manage & monitor a transformation/business performance transformation/business performance improvement programmeimprovement programme

Scorecard Implementation needs to be Scorecard Implementation needs to be supported by functional/departmental supported by functional/departmental initiatives initiatives

Scorecard supported by a Scorecard supported by a Transformation Initiative drives Transformation Initiative drives Business ResultsBusiness Results

Goal Objective Measurement

Target Initiative

Achieve operational efficiencies with best practices in

Reduce Operational Service Costs by 50% over the next 5 years

Cost per Outlet Office, Cost per Region, Cost per FTE

5% - Year 110% - Year 215% - Year 3

Activity Based Costing / Management

Reduce identified re-activities within primary processes by 80% over the next 3 years

Waste Volume Charts, Rework Tracking, Cycle Time End to End in S-LX (5 of 7 Regions)

Waste stream reductions of 5% each year, Reworks cut in half for next 3 years, cycle time cut by 75%

Lean / Six Sigma

Integrate : Goals, Measurement & Integrate : Goals, Measurement & Improvement InitiativesImprovement Initiatives

When you first launch your Initiative, you probably want to use an Output Measurement.Once the Initiative is up and running, integrate your measurement to an Outcome to see if the Initiative is really having strategic impact.

InitiativeInitiative Output Output MeasurementMeasurement

Outcome Outcome MeasurementMeasurement

Lean Process / Six Lean Process / Six SigmaSigma

Number of Projects Number of Projects Defined by RegionDefined by Region

Overall reductions in Overall reductions in errors, reworks, and cycle errors, reworks, and cycle timestimes

Employee Employee Competency ModelsCompetency Models

% of Employees who % of Employees who have a Competency have a Competency Model in placeModel in place

Higher skill levels of Higher skill levels of employees using the employees using the modelsmodels

Integrate :Going from Output to Integrate :Going from Output to OutcomeOutcome

Integrate: Retail Integrate: Retail Management Control Management Control

SystemSystemForecastForecast PlanPlan ControlControl ReportReport

Manager Manager RetailRetail

DistributorDistributor

DSMDSMRetailer / Customer Sales Plan

Route plan

Contact Plan

Customer / Retail Card

DSM Daily Score Card

Territory Sales Target

Retail Manager

Contact Plan

Distributor Coverage

Target

DSM Target

DSM Weekly Score Card

DSM Monthly

Score Card

Distributor Weekly

Score Card

Distributor Monthly

Score Card

Review

Distributor Sales Target

Market Intelligence Retail Mgr

Segment Segment ManagerManager

Marketing Department

Review

Review

Segment Mgr Monthly Score Card

Retail Mgr Ride with

Segment Mgr Weekly Score Card

Segment Sales Target

Review

Distributor Daily Score

Card

Review

Direct Sales input

Retail Mgr Daily Score

Card

Review

Review

Review

Review

Segment Mgr Daily

Score CardReview

Review

Review

Distributor Quarterly

ROI Analysis

Marketing Ride with

Retail Mgr Weekly

Score Card

Retail Mgr Monthly

Score Card

Integrate : ICICI Transformation Control Integrate : ICICI Transformation Control System System

Budget for Key Metrics for Mar 05

Daily Measurement of Metrics:Alarm

Express

Daily Review & Course Correction

Weekly comparison of

Budget vs. Actual Root Cause

Analysis

Fortnightly Review

Zero Unhappiness Scorecard & RCA

Improvement Implementation

Plan

Senior Management

Junior &Middle Management

Planning Control Analysis & Review

Focus on Short Interval Measurement, Analysis &Review


BALANCED

SCORECARD

S T R A T E G Y

Mobilize change through

executive leadership

Mobilize : Top Management CommitmentMobilize : Top Management Commitment1.Creating the Climate for Change1.Creating the Climate for Change

Unfreeze the organizationUnfreeze the organizationShow the need for changeShow the need for change

2.2. Creating the Leadership TeamCreating the Leadership TeamBreaking down functional biasBreaking down functional bias

3.3. Creating the Vision and StrategyCreating the Vision and StrategyBSC as a “visioning process”BSC as a “visioning process”BSC to clarify the strategyBSC to clarify the strategy

4.4. Creating Team AccountabilityCreating Team AccountabilityAccountability for cross-functional strategic themes at Executive Accountability for cross-functional strategic themes at Executive

Team levelTeam level

A successful Balanced Scorecard program starts with a A successful Balanced Scorecard program starts with a recognition that it is not a “metrics” project, it’s a recognition that it is not a “metrics” project, it’s a “change” process.“change” process.

Strategic Learning Loop

Initiatives & Programs

test the hypotheses

Output(Results

)

reporting

Management Control Loopfunding

Input(Resource

s)

update the strategy

PERFORMANCE

85% of management teams spend less than one hour

per month on strategy issues

92% of organizations do not report on lead

indicators

60% of organizations don’t link strategy & budgets

78% of organizations lock budgets to an annual cycle20% of organizations take

more than 16 weeks to prepare a budget

STRATEGY

BALANCED SCORECARD

BUDGET

Mobilize :Tight Focus & Extensive ReviewMobilize :Tight Focus & Extensive Review

Mobilize : Red Buttons to Avoid Mobilize : Red Buttons to Avoid Middle Management Team: Lack of Senior Middle Management Team: Lack of Senior

Management CommitmentManagement Commitment Done by One or Two IndividualsDone by One or Two Individuals Held at the Top: For Senior Management OnlyHeld at the Top: For Senior Management Only Too Long a Development Process: “Best Too Long a Development Process: “Best

Becomes the Enemy of the Good”Becomes the Enemy of the Good” Treating the Balanced Scorecard as a Systems Treating the Balanced Scorecard as a Systems

ProjectProject Done Only for CompensationDone Only for Compensation Not Treated as a Change Management ProjectNot Treated as a Change Management Project

ContextContext Focus on Top line. ICICI Bank perceived to be Focus on Top line. ICICI Bank perceived to be

very aggressive on sales , very poor on very aggressive on sales , very poor on service. service.

For bottom-line to improves it was important For bottom-line to improves it was important for the bank to be a service leader.for the bank to be a service leader.

Improved ServiceImproved Service Leads to improved productivity & profit Leads to improved productivity & profit Generates a positive word of mouth. Attracts new Generates a positive word of mouth. Attracts new

customers customers Provides a competitive advantage. Provides a competitive advantage.

More difficult and slower for a competitor to respond More difficult and slower for a competitor to respond to service improvement than to price change. to service improvement than to price change.

Help us retain customers. Help us retain customers. Cheaper to retain customers than to acquire new onesCheaper to retain customers than to acquire new ones




Terminator : Zero UnhappinessTerminator : Zero Unhappiness

Internal Processes

MissionTo ensure that the all causes of Unhappiness for Customer are fullyTerminated in order for the bank to vie for Service Leadership



Financial

Zero Unhappiness Scorecard Branches-Zero Unhappiness Scorecard Branches-Sample Sample

Top Branch CRs# Feb

Budget Feb Actual

Variance J an '05 Dec '04 Nov '04

Ikit not activated 125 50 75 169 245 422Instruction for A/c closure not executed 120 80 40 242 139 182Cash Deposited At Branch Not Credited 90 86 4 121 209 188Address change not done 140 137 3 183 187 189Transfer Of Accounts related issues 65 55 10 88 169 168A/c Not Opened 20 4 16 37 131 101Outstation collection - Dispute in Amt 20 2 18 50 64 66FD Renewal not done - deposits 10 9 1 8 32 23TDS Amount Deducted Disputed 5 5 0 11 13 10Fixed deposit not linked to account 5 0 5 6 10 6Form 15 H Not Entered 0 0 0 0 0 1Cash Deposit In Atm Not Crdited 12 4 8 21 35 56Fixed Deposit Interest Chq Not Received 2 0 2 3 3 8Local Outwrd chq returned physical chq not recd 5 3 2 11 17 24TOTAL 619 435 950 1254 1444Total Quality Budget Feb 1-15Variance J an Dec NovQuality -North 90% 90% 0% 45% 55% 58%Quality -East 90% 83% -7% 69% 58% 70%Quality -West 90% 95% 5% 65% 59% 59%Quality -South 90% 79% -11% 60% 58% 58%Overall Branch Banking 90% 87% -3% 60% 58% 61%Total TAT Budget Feb 1-15Variance J an Total CR beyond 24 hours 0 51 -51 82

Zero Unhappiness Scorecard -Deposits - Branches

Sample ScorecardScorecard presented & reviewed in fortnightly reviewsAll variances are linked to RCAComparison of Monthly Performance Vs. BudgetFocus on Top Service FailuresKey Indicators Focused On : Number of Service Failures, Quality, Service Request Closed within TAT

Scorecard Related RCA : Scorecard Related RCA : Deliverables Not ReceivedDeliverables Not Received

Apart from wrong creation, dispatch/delivery related issues needed focus

•Key Issue: RTO returns would sit at the branches, waiting for customer to collect them •Solution: Outbound Calling

•Every deliverable cleared resulted in a happy customer, lesser rework & cost savings•Average Contact Ratio:65%

Data :Nov04-Jun 05

RCA: Deliverables Not ReceivedRCA: Deliverables Not Received

RCA : Deliverables Not ReceivedRCA : Deliverables Not Received Issue :E-search UpdateIssue :E-search Update

E-search information for certain deliverables not E-search information for certain deliverables not updated/ available resulting in inadequate /incomplete updated/ available resulting in inadequate /incomplete information to customers & Service Request creation information to customers & Service Request creation errorserrors

Initiative :E-Search Update (CTD Initiative)Initiative :E-Search Update (CTD Initiative) Identified mandatory uploads for First Contact Resolution Identified mandatory uploads for First Contact Resolution

related to RPC/ CPC processes related to RPC/ CPC processes Designed and finalized the file formats for all mandatory Designed and finalized the file formats for all mandatory

uploads - easy reading for front enduploads - easy reading for front end National Co-ordinator appointed to tracking e-search National Co-ordinator appointed to tracking e-search

open cases and timely uploadsopen cases and timely uploads I-KIT AOF Rejections,Modification Request I-KIT AOF Rejections,Modification Request

Rejections,Nomination Rejection Letters Nomination Rejections,Nomination Rejection Letters Nomination Registration Request Rejections,Non I-Kit SB/FD-RD AOF Registration Request Rejections,Non I-Kit SB/FD-RD AOF Rejections,Transfer of Account- Rejections,Transfer Cheque Rejections,Transfer of Account- Rejections,Transfer Cheque Returns, ATM Retained Cards,TDS - Form 15G Rejections etc. Returns, ATM Retained Cards,TDS - Form 15G Rejections etc.

4307529

9037555

14793313

21799520

29187237

37593205

Oct-04 Nov-04 Dec-04 J an-05 Feb-05 Mar-05

Terminator Results- Cost Saving Terminator Results- Cost Saving Through Failure ReductionThrough Failure Reduction

Results - Service Failures as % of Results - Service Failures as % of TransactionsTransactions

472116292671624

76392

102705108124

84805 85096 86549

79463 8041055161

0.09%

0.17%

0.26% 0.27%

0.20% 0.20% 0.21% 0.18% 0.17%

0.11%0.12%0.15%

0

20000

40000

60000

80000

100000

120000

Apr-04 May-04

Jun-04 Jul-04 Aug-04 Sep-04

Oct-04Nov-04 Dec-04

Jan-05Feb-05 Mar-05

Months

# of

Crit

ical

Req

uest

s

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

% a

ge to

Tot

al T

rans

actio

ns

# of Critical Requests % Age to Total Transactions (RHS)

Results – Quality of Request Results – Quality of Request HandlingHandling

55%

62% 62% 64% 64%68% 69%

72%68%

77%

88% 87%

30%

50%

70%

90%

Apr-04

May-04

Jun-04

Jul-04 Aug-04

Sep-04

Oct-04 Nov-04

Dec-04

Jan-05

Feb-05

Mar-05

Results-Customer Feedback ScoresResults-Customer Feedback Scores

74%78%

80%

64%

70%

85%88% 87%

63%

67%

75%

83%

56%

62%

77%80%80%82%

80% 81%

76%72%

55%

65%

75%

85%

Q-I '04 Q-II '04 Q-III '04 Jan'05 Feb'05 Mar'05

Phone banking Liability BranchesAsset Branches- Home Loan Asset Branches- Consumer Loan

Indonesian Textile Giant CaseletIndonesian Textile Giant Caselet The company is one of the largest Textile company The company is one of the largest Textile company

in Indonesiain Indonesia Company had been hit heavily by currency crashCompany had been hit heavily by currency crash In order to improve bottom-lines a plan to reduce In order to improve bottom-lines a plan to reduce

the various kind of value losses in production, the various kind of value losses in production, quality, packing, utility etc.quality, packing, utility etc.

Ambitious target of USD 4 Million in Value Loss Ambitious target of USD 4 Million in Value Loss Reduction was setReduction was set

Initiatives like TQM, Setting up Management Initiatives like TQM, Setting up Management Control Systems Organizational re-structuring Control Systems Organizational re-structuring were pioneeredwere pioneered

Balanced Scorecard was used as a strategy Balanced Scorecard was used as a strategy implementation tool to support Strategy implementation tool to support Strategy ImplementationImplementation




Project Zero Value LossProject Zero Value Loss

Internal Processes

MissionTo ensure that the all causes of Unhappiness for Customer are fullyTerminated in order for the bank to vie for Service Leadership



Financial

Weekly CEO Scorecard – Value Weekly CEO Scorecard – Value LossLoss

Total Cost USD 47,493 50,132 52,089 -4,596

Maintenance Cost USD 0 0

Steam Cost USD 1,200 1,080 1,140 1,137 -57

Power Cost USD 51,570 46,413 48,992 50,952 -4,539

Total Value Loss USD 45,636 48,314 70,513 -28,559

Reuse Material Savings/Loss USD 7,000 6,000 5,159 -1,841

Complaint Settlement Cost USD 0 0 0 0

Process Chemicals Loss USD 10,065 10,065 13,287 -3,222

Packing Material Loss USD 10,926 10,926 12,500 -1,574

Waste Loss USD 9,636 10,841 19,802 -10,166

Quality Loss USD 4,974 5,495 6,048 -1,074

Throughput Loss USD 3,035 4,988 13,717 -10,682

VarianceBase Target Plan Actual

Financial perspective

KPI U.O.M Overall This week

Strategy: Reduction of Value Loss became the central agenda

Review

Review

Review

ReviewReview

Review Review

Review

Review

Scorecard Reporting Flow- PlantScorecard Reporting Flow- Plant

Production Shift

Scorecard

Packing Shift

Scorecard

Production Daily

Scorecard

Maintenance Daily

Scorecard

Department Weekly

Scorecard

Packing Daily

Scorecard

PC/QC Daily

Scorecard

Maintenance Weekly Scorecard

PC/QC Weekly

Scorecard

Weekly Value Loss Scorecard & Analysis

Focused: Incredible focus on “value loss reduction” strategy was created by linking scorecards of all departments into the CEO ‘ Value Loss Scorecard’

Weekly Dept. Manager ScorecardWeekly Dept. Manager Scorecard

Organization: Mobilize employees to act in fundamentally different ways, guided by ‘value loss’ strategy with each employee having an individual scorecard & action plan

Packing Superintendent ScorecardPacking Superintendent Scorecard

Superintendents of Departments like Packing had individualScorecards. These flowed into Production Manager’s Scorecard

Utility Generation ScorecardUtility Generation Scorecard

Support functions like Utilities also were giving cost saving targets whichwere monitored through utility scorecard

Cumulative Savings : Planned vs Actual

-400,000

-200,000

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200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000 1

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Project Week

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Results- Cumulative Savings Results- Cumulative Savings

The Strategy Implementation Programme supported by the Balanced Scorecard produced significant Savings for the Company

Approach: Retail Approach: Retail Management Control Management Control

SystemSystemForecast Plan Control Report

Manager Retail

Distributor

DSMRetailer / Customer Sales Plan

Route plan

Contact Plan

Customer / Retail Card

DSM Daily Score Card

Territory Sales Target

Retail Manager Contact

Plan

Distributor Coverage

Target

DSM TargetDSM

Weekly Score Card

DSM Monthly

Score Card

Distributor Weekly

Score Card

Distributor Monthly

Score Card

Review

Distributor Sales Target

Market Intelligence Retail Mgr

Segment Manager

Marketing Department

Review

Review

Segment Mgr

Monthly Score Card

Retail Mgr Ride with

Segment Mgr Weekly Score Card

Segment Sales Target

Review

Distributor Daily Score

Card

Review

Direct Sales input

Retail Mgr Daily Score

Card

Review

Review

Review

ReviewSegment Mgr Daily

Score CardReview

Review

Review

Distributor Quarterly

ROI Analysis

Marketing Ride with

Retail Mgr Weekly

Score Card

Retail Mgr Monthly

Score Card

Distributor Weekly/Monthly Distributor Weekly/Monthly ScorecardScorecard

Retail Manager Weekly/Monthly Retail Manager Weekly/Monthly ScorecardScorecard

Chief of Sales & Marketing- Weekly Chief of Sales & Marketing- Weekly ScorecardScorecard

ResultsResults1.1. GI Contributions increased by Rs. 3 CroresGI Contributions increased by Rs. 3 Crores

Domestic Net Realization (NR) per ton for GI increased by Domestic Net Realization (NR) per ton for GI increased by 12% (from Rs. 19,233 in Sept. 2001 to Rs. 21,513 in Sept. 12% (from Rs. 19,233 in Sept. 2001 to Rs. 21,513 in Sept. 2002)2002)

2.2. Outstanding collection savings of Rs 93 Outstanding collection savings of Rs 93 Lacs @ 12% interest PA Lacs @ 12% interest PA

Outstanding collection from Rs. 483 Lacs Pre-Renoir to Rs. Outstanding collection from Rs. 483 Lacs Pre-Renoir to Rs. 1337 Lacs post-Renoir period 1337 Lacs post-Renoir period

3.3. Incremental contribution of Rs.77 Lacs by Incremental contribution of Rs.77 Lacs by 29% increase in sales in MTB29% increase in sales in MTB

1125 TPM for the H1 of 2002-03 compared to average 1125 TPM for the H1 of 2002-03 compared to average of 874 TPM for the year 2001-02. of 874 TPM for the year 2001-02.

4.4. Outsourcing Savings targeted at Rs. 6 Outsourcing Savings targeted at Rs. 6 CroreCrore

002 balanced scorecard-cost-value creation

Engineering

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