BSC/KPI NEGERI
1B FEBRUARI 2006
MESYUARAT PENGURUS NEGERI 1/2006
DISEDIAKAN OLEH:ABD RAHAMAN RASID
PENGURUS KANANJABATAN PERANCANGAN
KORPORAT/PENGURUS PROJEK EIS
SCOPE & OBJECTIVE OF PRESENTATION
Introduction and Background
To explain basic concept on Balanced Scored Card (BSC)
To highlight BPM Destination Statement
To elaborate on BPM Corporate Scorecard
To propose State Scorecard, Branch and Hub
To get feedback from State Manager
BALANCED SCORE CARD (BSC)
CONCEPT BSC
MY DEFINITION: A SYSTEMATIC WAY FOR MANAGEMENT TO PLAN AND EXCUTE STRATEGY FOR THE WHOLE ORGANIZATION
Formal Definition: A tool that translates an organization’s mission and strategy into a comprehensive set of a performance measures that provides the framework for a strategic measurement and management system
WHY BSC?
Traditional reliance on financial measures (e.g: ROA)
The rise rise of intangible assets
The importance of reputation ( part of intangible asses)
Organizations face difficulty in executing strategy
Only 10% organizations execute
strategy
Barriers to Strategy Execution
Barriers to Strategy Execution
Vision Barrier
People Barrier
Management Barrier
Resource Barrier
Only 5% workforce
understands the strategy
Only 25% managers
have incentives linked to strategy
85% executive teams spend less than 1 hour/month discussing strategy
60% of organizations
don’t link budgets to strategy
Source: Robert S. Kaplan & David P. Norton
BSC: HAS FOUR PERSPECTIVES
FINANCIAL
CUSTOMER
INTERNAL BUSINESS PROCESS
LEARNING & GROWTH
To succeed financially, how should we appear to our shareholders?
FINANCIAL PERSPECTIVE
BSC: FOUR PERSPECTIVES
To achieve our vision, how should we appear to our customers?
CUSTOMER PERSPECTIVE
To satisfy our shareholders & customers, what business processes must we excel at?
INTERNAL PERSPECTIVE
To achieve our vision, how will we sustain our ability to change and improve?
LEARNING & GROWTH PERSPECTIVE
BALANCED SCORECARD: AN OVERVIEW
ShareholderValue
FinancialPerspective
Learning &Growth
Perspective
Manage Operations
Manage Innovation
Human Capital
Information Capital
Organisation Capital
CustomerPerspective
InternalPerspective
Manage Customers
Price Quality Time Function Partnership Brand
ImageRelationshipProduct/Service Attributes
Productivity Strategy
GrowthStrategy
FINANCIAL PERSPECTIVE
ShareholderValue
FINANCIAL PERSPECTIVE
Growth StrategyProductivity Strategy
Improve Cost
Structure
Increase Asset
Utilization
Expand Revenue
Opportunities
Enhance Customer
Value
Reduce expenses Improve yields
Manage capacity from existing assets
New products New markets New partners
Improve profitability from existing customers
CUSTOMER PERSPECTIVE
Cu
sto
me
r P
ersp
ect
ive
Price Quality Availability
Selection Partnership
Brand
ImageRelationshipProduct/Service Attributes
CUSTOMER PERSPECTIVE
Functionality
Service
Customer Profitability
Market Share Account Share
Customer Acquisition
Customer Retention
Customer Value Proposition
Customer Satisfaction
FINANCIAL PERSPECTIVE
INTERNAL PERSPECTIVE
INTERNAL BUSINESS PROCESS
OperationManagementProcess
CustomerManagementProcess
InnovationManagementProcess
Processes that produce & deliver products & services
Processes that create new
products &
services
Processes that enhance
customer value
Acquire raw materials Convert raw materials to finished products Distribution
Select targeted customers Acquire targeted customers Retain customers Grow business with customers
Identify new products & services Manage research & development Develop new products
CUSTOMER PERPECTIVE
FINANCIAL PERPECTIVE
INT
EN
AL
PE
RS
PE
CT
IVE
LEARNING AND GROWTH
LEARNING AND GROWTH
Human Capital
Information Capital
Organization Capital
Attitude Skill Knowledge
Leadership Culture Teamwork
System Database Network
CUSTOMER PERPECTIVE
FINANCIAL PERPECTIVE
INTERNAL PERPECTIVE
LE
AR
NIN
G &
GR
OW
TH
Vision & Strategy
Objectives Measures Targets Initiatives
BALANCED SCORECARD: OBJECTIVES, MEASURES, TARGETS & INITIATIVES
FINANCIAL
CUSTOMER
INTERNAL BUSINESS PROCESS
LEARNING & GROWTH
Objectives Measures Targets Initiatives
“To succeed financially, how
should we appear to our shareholders?”
“To achieve our vision, how should we appear to our
customers?”
“To satisfy our shareholders & customers, what
business processes must we excel at?”
“To achieve our vision, how will we sustain our ability
to change & improve?”
Objectives Measures Targets Initiatives
Objectives Measures Targets Initiatives
MEASUREMENT
MEASURING BUSINESS STRATEGY
Financial ROI, ROA, ROE
PERSPECTIVES GENERIC MEASURES
Customer
Process
Learning & Growth
Satisfaction, retention, acquisition, market share
Response time, new products, cost, product & service quality
Employee satisfaction, information system, competency, value system
Purpose
• Focus on the performance results at the end of a time period or activity
Examples
• “year-end-budget expense”
• “client satisfaction”
• “cases per caseworker”
Strengths
• Usually objective and easily captured
Issues
• Outcome measures reflect success of past, not current, activities and decisions
Outcome (Lag) Measures Driver (Lead) Measures
Purpose
• Measure intermediate processes and activities
Examples
• “hours spent with clients”
• “$ spent on automation”.
Strengths
• More predictive in nature
• Allows organisations to adjust behaviors for performance
Issues
• Based on hypotheses of strategic “cause and effect”
• Often difficult to collect supporting data
Two Types of Strategic Objectives
MEASURES
STRATEGY MAP
Strategic Objectives
Create Product &
Services Offerings / Bundles
Statement of what strategy must achieve
and what’s critical to its
success
Target
• 8 new business bundle
The level of performance
or rate of improvement
needed
• Develop cross-sell business bundles
Key action programmes required to
achieve objectives
InitiativeMeasurement
• # of cross sell business bundles
How success in achieving the strategy
will be measured and
tracked
Strategic Theme: Operating Efficiency
Increase Shareholder
Value
Financial
Learning
Morecustomer
Improve Strategic Skills &
Competencies
One StopSolution
Defend Current
Business
Customer
InternalCreate
Product & Services Offerings
/ Bundles
Strategy Map: Diagram of the cause-and-effect relationships between strategic objectives
ExceptionalValue Services
BSC TERMINOLOGY
KEY PERFORMANCE INDICATOR (KPI)
FROM STRATEGY TO ACTION PLAN: LOAN BUSINESS
STRATEGY MAP BALANCED SCORECARD ACTION PLAN
Objective Measurement Target Initiative Budget
ROA
Grow Revenue
Customers
Fast Service
Decision making
Profitability
Increase loan
Attract new customer
Fast loan approval
Knowledge
Review New authority limit
No. customer
Days taken to approve loan
One week
Enhance Knowledge on corporate loan
2 timesNumber of training/year
Find suitable courses
RM4,000
700
Day taken to approve loan
Strategy
One week Proposal to Management
Corporate advertisement
RM10,000
Loan approval RM 2 million
Identify new customers Offer new limit to existing customers
INITIATIVE
Initiatives help close the gap between our current and desired performance
INITIATIVEImplement automated case management system and
train Every Rep in 99
Initiatives Are Defined to Help Close the Performance GapInitiatives Are Defined to Help Close the Performance Gap
Customer Satisfaction
Survey Rating
90% favorable overall
Measure
Target
Target Actual
90%
45%
$M
gap
Measures track our progress toward achieving and communicating the intent of the objective
MEASURE / TARGET
OBJECTIVEIncrease Customer
Satisfaction
Objectives articulate the components of our strategy
INITIATIVES
CASCADING
• The process of developing BSC at each division and business unit levels
• The scorecards must align with organization highest level scorecard by identifying the strategic objectives and measures
• Lower level scorecard will also include additional measures and initiatives that reflecting the specific opportunities and challenges faced at that level
CASCADING
What does cascading the BSC means?
BALANCED SCORECARD: THE CASCADING PROCESSC
OR
PO
RA
TE
Financial
O M T I
DE
PA
RT
ME
NT
ST
AT
EB
RA
NC
H
Note: O: Objectives M: Measures T: Targets I: Initiatives
Team & Personal BSC
Customer
O M T I
Internal
O M T I
L & G
O M T I
Financial
O M T I
Customer
O M T I
Internal
O M T I
L & G
O M T I
Financial
O M T I
Customer
O M T I
Internal
O M T I
L & G
O M T I
Financial
O M T I
Customer
O M T I
Internal
O M T I
L & G
O M T I
Strategy
Mission, Vision & Value
Three Ways to Cascade
Cascading is accomplished using one of three approaches
Shared Identical Objectives
Contributory Translated Objectives
Hybrid Identical, Translated and Unit Specific Objectives
Corporate Business Unit
Balanced Scorecard: A tool that translates an organization’s mission and strategy into a comprehensive set of a performance measures that provides the framework for a strategic measurement and management system
Cause and Effect Relationship: A cause and effect relationship identifies the initiatives, responsibilities or activities (causes) necessary to achieve an objective or target (effect)
Customer Value Proposition: Defines who the customer is and what they want
Initiative: Key action programs to achieve objectives or close gap between measures performance and targets. Initiatives are often known as projects, actions or activities.
Lag Indicator: Measures to determine the outcome of an objective that indicate company performance at the end of a period. These are results-oriented and do not reflect a process. Lag indicators often appear in BSC’s outcome-oriented Financial and Customer perspectives.
GLOSSARY
Lead Indicator: Measures that indicate progress againts a process or behavior. These measures are helpful in predicting the future outcome of an objective. Lead indicators tend often appear in the Internal and Learning & Growth perspectives.
Measures: Statement of how success in achieving an objective will be measured and tracked. Measures are written statements of WHAT we will track and trend over time, NOT the actual targets such as direction and speed. A measure should include a statement of the unit to be measured (RM, %, rating).
Objective: Concise statement articulating a specific component of what the strategy must achieve/what is critical to its success. Each perspective usually contains 3-6 primary objectives that state a key aspect of the strategy to be achieved over the next 3-5 years. Objectives are best stated as action phrases and may include the means and/or desired results as well as the action. E.g: “ Increase market share through current customers”
Strategy Map: A visual representation of an organization’s strategy and the processes and systems necessary to implement that strategy. A strategy map will show employees how their jobs are linked to the organization’s overall objectives
GLOSSARY
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