American Red Cross Balanced Scorecard
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Transcript of American Red Cross Balanced Scorecard
The American Red Cross: Performance Measurement Then and Now, and Applying the Balanced Scorecard
By Bicky, Evgenii, Lavender, Natalie, and Sa
Overview
• Balanced Scorecard Method
• American Red Cross• Old Performance Measurement System
• Description & Evaluation
• New Performance Measurement System• Description & Evaluation
• Recommendations & Applying the Balanced Scorecard
Presentation’s Objectives
What is Balanced Scorecard?
1992 1996 2000
Measurement and
Reporting
Alignment and Communication
Enterprise-wide Strategic
Management
Articles in Harvard Business Review:
“The Balanced Scorecard — Measures that Drive Performance” January - February 1992
“Putting the Balanced Scorecard to Work” September - October 1993
“Using the Balanced Scorecard asa Strategic Management System” January - February 1996
1996 2000
Acceptance and Acclaim:
“The Balanced Scorecard” is translated into 18 languages
Selected by Harvard Business Review as one of the “most important management practices of the past 75 years.“
Balanced Scorecard History
Before the Balanced ScorecardBefore the Balanced Scorecard
MISSIONWhy we exist
VALUESWhat’s important to us
VISIONWhat we want to be
STRATEGYOur game plan
STRATEGIC OUTCOMES
SatisfiedSHAREHOLDERS
Delighted CUSTOMERS
Efficient & EffectivePROCESSES
Motivated & PreparedWORKFORCE
Strategy Is a Step In a Continuum
MISSIONWhy we exist
VALUESWhat’s important to us
VISIONWhat we want to be
STRATEGYOur game plan
BALANCED SCORECARDImplementation & Focus
STRATEGIC INITIATIVESWhat we need to do
STRATEGIC OUTCOMES
SatisfiedSHAREHOLDERS
Delighted CUSTOMERS
Efficient & EffectivePROCESSES
Motivated & PreparedWORKFORCE
PERSONAL OBJECTIVESWhat I need to do
With the Balanced ScorecardWith the Balanced Scorecard
Reasons to use BSC
Four Perspectives of the Balanced Scorecard
• An organization's ability to innovate, improve, and learn ties directly to its value as an organization.
• How can we continue to improve and create value for our services?
Learning and Growth Perspective
Business Process Perspective
• Must focus on critical internal operations that enable the organization to satisfy customer needs.
• To satisfy our shareholders, what business processes must we excel at?
Customer Perspective
• Must know if their organization is satisfying customer needs.
• To achieve our vision, how should we appear to our customers?
Financial Perspective
• In the private sector, measure typically focused on profit and market share.
• To succeed financially, how do we appear to our shareholders?
Financial Perspective
Perspectives & Performance Measurement
CUSTOMER
OBJECTIVE MEASURE WEIGHT %
FINANCIAL
OBJECTIVE MEASURE WEIGHT %
BUSINESS PROCESS
OBJECTIVE MEASURE WEIGHT %
LEARNING & GROWTH
OBJECTIVE MEASURE WEIGHT %
• Sets clear goals, objectives, and measures across four critical areas
• Creates interdependency and interrelationship of all four quadrants; balance is key
• Provides leadership with the ability to build organizational consensus around its priorities; creates organizational clarity
• Provides a vehicle that can hold staff and management accountable for their results in a clear and consistent manner
• Can complement any existing strategic planning effort by clearly identifying and prioritizing performance benchmarks and targets
The Balanced Scorecard: Benefits
American Red Cross (ARC)
• Nongovernmental, nonprofit organization whose purpose is to prevent and relieve human suffering
• Has a mission of providing relief to victims of disasters and helping people prevent, prepare for, and respond to emergencies
• Employees (13,000) and volunteers (875,000)
• 850 Chapters
Two Performance Systems in Old Plan
• Re-chartering: Chapters had to answer 33 yes/no questions.
• Standard of Excellence: Designed to improved the chapter performance in the reach of fundraising, revenue per population, service level, and community potential
American Red Cross Strategic Plan• Be America’s partner and a leader in mobilizing
communities to help people prevent, prepare for, and respond to disasters and other life-threatening emergencies.
• Inspire a new generation of volunteers and supporters to enrich our traditional base of support.
• Strengthen our financial base, infrastructure, and support systems to continuously improve our service delivery system.
Two Types of Chapter Performance Standards in the New System • Core Requirements: Chapters should meet these basic
requirements.
• Critical Performance Standards: Fifteen out of thirty standards are mandatory. The chapters are evaluated on:
- Chapters’ past year performance
- Comparison against the performance of its peers
Chapters Evaluation• Highly Performing Chapters: Meet all the core
requirements and exceed both chapter performance standards. Awarded with “Recognition”
• Successful Chapters: Meet all the core requirements and also meet and exceed the performance standards.
• Provisional Chapter: Meet all the core requirements but lag behind in the Critical Performance Standards.
• Charter Review Required: Chapters who fail one or more core requirements.
Evaluation of the New Plan• Ensures uniformity and meet minimum requirements.
• 17 core requirements do not directly support the strategic plan
• Critical Performance Standards good measure of evaluation.
ExampleMultiplier Performance Measurement
1 Percentage of fundraising expenses to related contribution
2 Percent of volunteers indicating ‘Excellent’ overall levels of satisfaction with their volunteer experience
3 Disaster readiness level
Measures that differ?
• Different scales
• What is considered ‘good’?
Measures that differ?
g
Actual Score Performance ScorePerformance Score × Multiplier = Weighted ScoreTotal Weighted Score ÷ Total Possible Weighted Score × 100 = Total Chapter Performance Score
Conclusions:•Hard to focus: too many measures; too many categories•Some measures don’t drive strategy•Just components, no alignment
Recommendations: Applying the Balanced Scorecard
• Objectives need to drive strategy, and be aligned
• Measures need to encourage objectives
Be America’s partner and a leader in mobilizing communities to help people prevent, prepare for, and respond to disasters and other life-threatening
emergencies.
Inspire a new generation of volunteers and supporters to enrich our traditional base of support
Strengthen our financial base, infrastructure, and support systems to continuously improve our service delivery system
Example
Be America’s partner and a leader in mobilizing communities to help people prevent, prepare for, and respond to disasters and other life-threatening
emergencies.
Inspire a new generation of volunteers and supporters to enrich our traditional base of support
Strengthen our financial base, infrastructure, and support systems to continuously improve our service delivery system
Example
Be America’s partner and a leader in mobilizing communities to help people prevent, prepare for, and respond to disasters and other life-threatening
emergencies.
Inspire a new generation of volunteers and supporters to enrich our traditional base of support
Strengthen our financial base, infrastructure, and support systems to continuously improve our service delivery system
Example
Be America’s partner and a leader in mobilizing communities to help people prevent, prepare for, and respond to disasters and other life-threatening
emergencies.
Inspire a new generation of volunteers and supporters to enrich our traditional base of support
Strengthen our financial base, infrastructure, and support systems to continuously improve our service delivery system
Example
Alignment of Objectives
Conclusion