The Balanced Scorecard

A Strategic Implementation Tool for your Organization, HR Department, Chapter and State Council
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Todays Agenda
Overview of the Balanced Scorecard Why the Balanced Scorecard will help execute strategy Strategy Map and Balanced Scorecard Outcomes Discussion Ideas for scorecards
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Executing Strategy...
Is the greatest challenge for organizations Vision
- only 5% of workforce gets it!

People
25% of managers have incentives linked to strategy

Management
85% of executive teams spend less than 1 hour/mo discussing strategy

Resource
60% of organizations dont link budgets to strategy
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Strategic Execution
Bad execution, not bad strategy is the cause of 70% of CEO failures
Execution is not just tacticsit is a discipline and a system

Source: Execution: The Discipline of Getting Things Done, by Larry Bossidy, and FORTUNE Magazine, Why CEOs Fail

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Challenges in Executing Strategy

Financial Management Tools
Balance Sheets Income Statements Statement of Cash Flow

Process Management Tools

Six Sigma Supply Chain Management TQM

Strategy Management Tools ???

Customer Management Tools

CRM Customer Segment Analysis Customer Surveys

People Management Tools

MBO Training Programs HRIS 360 Feedback

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The Balanced Scorecard

Train and Communicate Strategy

Set goals, select performance measures and link measures to incentives

Set target for each goal and re-deploy resources to activities and initiatives to achieve targets

Feed Forward Learning

Provide feedback on performance and learn from results

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The Balanced Scorecard

A robust tool but keep it simple! Makes strategy tangible everyones job! Tracks whats important hits and misses Measurement-lead management Provides feedback for short-term course corrections and long-term learning

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Balanced Scorecard Perspectives

A. Financial
How do we succeed financially?

B. Customer
How do we appear to our customers?

C. Internal Process
At what processes must we excel?

D. Learning and Growth

How do we sustain our ability to change and grow?

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Government / Non-Profit Perspectives

Financial
taxes, donations, grants, maintain bond rating, sound fiscal management, long-term growth

Customer
reduce crime, increase community safety, provide economic opportunity , involved parents, chapter resource

Internal Process
promote business mix, streamline customer interaction, effective instructions, nutritious meals, website management

Learning & Growth

close skills gap, achieve satisfaction levels, tenure, volunteer development

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Balanced Scorecard Perspectives

Financial
How do we appear to our Stockholders? Objectives Measures Targets Initiatives

Customer
How do we appear to our Customers? Objectives Measures Targets Initiatives

Vision & Strategy

Internal Business Process

At what internal processes must we excel? Objectives Measures Targets Initiatives

Learning and Growth

How do we sustain our ability to change & grow? Objectives Measures Targets Initiatives

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Government & Non-Profits

The Mission

To succeed, how should we look to our funders?

To achieve our mission, what benefits do we deliver to our recipients,

To satisfy our funders and recipients, and achieve our mission, at what processes must we excel?

To achieve our vision, how must our people learn, communicate and work together? The mission, rather than financial/shareholder objectives, drive the organizations strategy
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Cascading Scorecards to Build Alignment

Organization

Business Unit

Business Unit

Business Unit

Teams

Individual Contributors
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Financial

Sound Fiscal Mgmt

Budgeting

Long-Term Investment Strategy

Customer The Value Proposition

Product/Services Price Selection The Value Proposition Quality Availability

Relationship Partnership Services

Brand Image

Internal Process

Customer Mgmt Deepen Knowledge about customer Attract Retain Grow Relationship

Innovation New learning Partnerships Future needs

Operational Excellence Admin excellence Network of supplier for Products & services Adaptability

Learning & Growth

Climate for Action Personal Growth

Competencies Functional Excellence Leadership Skills Strategic Readiness

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Scorecard Information
Perspective: Financial / Customer / Internal Process / Learning&Growth Information Type Strategies Are. High Level Goals Example is Increase Market Share

Objectives
Measures Targets

Measures of action plans

Indicates success or failure Desired level of performance for a measure Management actions taken to achieve target
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Increase Customer Satisfaction

Average Customer Rating (scale of 1-10) Achieve 9.9 of 10 Average Customer Rating Train CSR Staff in Problem Resolution Skills
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Initiatives

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SPS Strategy and Balanced Scorecard Our vision is to be the leading integrator of communications equipment and services for voice solutions and data networking applications. Our Purpose for Being is to Provide Our Customers with the Finest Communications Value in the Marketplace.

Financial Financial Responsibility Integrity Beyond Reproach

Strategy Map Strategy Map

Objectives

Balanced Scorecard Measurement Target $xxxM xx%

Action Plan Initiative/Owner JF JF Budget

Grow Revenue

Improve Profitability

Grow Revenue

Revenue Attainment

Increase Profit Margin Profit Margin

Customer Excellent Service Exceptional Customer Value Integrity Beyond Reproach

The Value Proposition

Product/Services Innovation Availability

Relationship Partnership Service Customer Profitability

Brand Image Communicate value

Customer Satisfaction Customer Satisfaction Report9.0 SPS Overall Ivoice Available

Bette Francis

$xx

10 Sites by 11/1/03 MT

Internal Process Excellent Service Exceptional Customer Value Integrity Beyond Reproach

Operational Excellence Manage Customer Relationships

Manage Operations Maximize efficiency Maximize quality of business processes

Markets Enhance external Acquire new relationships relationships Grow/broaden existing relationships Customer Profitability Create Awareness

Competitive Positioning Designs/Quote

2 Replace/Qtr 5/Quote-Complex

CP MT

Learning & Growth Value of the Individual Integrity Beyond Reproach

Sustaining Our Ability to Change & Grow Organizational Readiness Information is Available Tools to do the job

Human Capital Technical Expertise Employer of Choice Understand the strategy and what needs to be done Great People

Platinum Certification Certify Technical Knowledge

Recertify as Platinum Increase Certifications Make application to EOC

B. Francis

Submit 2 applicationsB. Francis

N/A

Live the SPS Values

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Human Resources Mission Statement: The Human Resources Team will lead by example working to build a culture of high-energy, committed professionals who understand that continuous improvement and customer service are primary value competencies integrated into every position while developing SPS as a recognized employer of choice.

Learning & Growth Sustaining Our Ability to Change & Grow Value of the Individual Organizational Integrity Beyond Human Capital Readiness Reproach Technical Expertise Information is Available Employer of Choice Tools to do the job Understand the strategy and what needs to be done Live the SPS Values Great People

Platinum Certification Recertify as Platinum B. Francis Certify Technical Knowledge Increase Certifications Make application to EOC Submit 2 applicationsB. Francis

N/A

Objective Coordinate BP Certification Process

Result/Deliverable Platinum Certification Achieved

Target & Lead Lead: BF Target: 9/1/03

Initiative Develop matrix; assign responsibilities; conduct regular checkpoints

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Sample HR Measures
Lagging Measures Impact of Prior Decisions Budget variance Employee relationship results Executive coaching Employee productivity Cost per hire by job class People expense/Revenues Leading Measures Guide Future Outcomes Employee strategic focus Executive retention Retraining/re-skilling Internal promotion rate Exit Rate of C Players Employee relationship factor

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So Why Consider the BSC?

As an HR Professional -Strategic Thinker Business Leader

As an organization -Welcomes change vital culture today Achieves strategic objectives

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Keys to Success
Educate your Executive and Teams Devise the right metrics Follow through to completion Start small! Report immediately Dont over measure

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Getting Started Customize Your BSC

1. Describe the strategy burning platform?

Strategy Map

2. Measure the strategy

Develop the measures; critical data points

3. Manage the strategy

Gather detailed information about the measure and initiative
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The Successful Scorecard

Is a dynamic process
continues to set higher targets and achieves them

Define jobs strategically

from the perspective of where it fits in with the strategic business goals

Supports joint decision

making about what you do/dont do based on strategic goals

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What we did in NJ
The Balanced Scorecard Clarified
What we wanted to accomplish What we are not going to do Volunteer roles Resources needed Outcomes expected

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Chapter/State Council Scorecard

Serve the Professional STP Provide comprehensive information and tools Help HR professionals develop their knowledge, skills and careers Build HR communities to exchange ideas, develop professional relationships, and increase HR knowledge Advance the Profession ATP Set the agenda for the HR profession Ensure HR is recognized for its contribution to business success Enhance the capability and credibility of the HR profession Building communities for the exchange of leading-edge business ideas and The development of professional relationships

Source: SHRM

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Serve the Professional (STP) Is:

Seminars such as Fundamentals of HR, most white papers, most articles in HRMagazine, majority of activities and sessions held at Annual Conference & Exposition and most other SHRM conferences, certification, most surveys and most of what the Information Center responds to currently
Source: SHRM

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Serve the Professional (STP) Is Not

Messages about the value and contributions of HR to a general business audience, articles/activities/information geared toward the strategic leader
Source: SHRM

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Advance the Profession (ATP) Is:

Helping HR professionals understand their leadership capabilities and potential contributions to their organizations, provide them the tools to enable them to fully engage in the business process, and help them advance in their careers. Advance the Profession is also about helping the business community (and the public broadly) understand the contributions HR can make to organizational success.
ATP is designed to elevate HR professionals to be or become business leaders who significantly contribute to organizational success and are perceived by their non-HR colleagues especially those in the C-Suiteas such.
Source: SHRM

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Advance the Professional (ATP) Is Not:

Intended to teach HR professionals about HR fundamentals. It is not to help or educate HR professionals about how to effectively handle day-to-day HR responsibilities or compliance issues.
Source: SHRM

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Garden State Council Mission Statement

The Garden State Council serves the professional (STP) and advances the human resource profession (ATP) in New Jersey by:

Being a chapter resource (Customer - chapters) Promoting HR Excellence and Standards

business community) (Customer HR community current and potential members)

(Customer HR Professionals;

Creating opportunity for HR professionals to learn and succeed

Providing training and development opportunities for chapter

and council volunteer leaders (Customer volunteers) Advocating the value of SHRM membership (Customer chapters, all
members, potential, business community, volunteers)

Demonstrating the highest ethical professional standards of operations (Customer all)

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The GSC Strategy Map

Perspective Customer
To achieve our vision, how should we appear to our customers

Strategy

Chapters

Members current/potential

Volunteers

Business Community

Internal Process
To satisfy our customers, which operational processes must we excel?

Resource To Chapters

Resource To Professionals

Resource To Business Community

Learning & Growth

How will we sustain our ability to change and improve?

Technology

Alignment

Recognition

Knowledge

Financial
To financially sustain our Mission, on what must we focus? 10/4/03

Budgeting

Sound Fiscal management

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Long-Term Investment Strategy

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Scorecard Exercise
Perspective: Financial / Customer / Internal Process / Learning&Growth
Circle one

Information Type Strategies Objectives

Are. High Level Goals Measures of action plans

Example is A TP or STP Write 1 objective

Measures
Targets

Indicates success or failure

Desired level of performance for a measure Actions taken to achieve target
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Identify a measure; is it a leading or lagging measure?

Set a target

Initiatives

May or may not be required

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Scorecard Exercise
Perspective: Financial / Customer / Internal Process / Learning&Growth Information Type Strategies Objectives Are. High Level Goals Measures of action plans Example is

Measures
Targets

Indicates success or failure

Desired level of performance for a measure Actions taken to achieve target
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Initiatives

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Resources
The Balanced Scorecard, Kaplan & Norton Balanced Scorecard Collaborative, Lincoln, MA, www.bscol.com The Strategy-Focused Organization, Kaplan & Norton www.BetterManagement.com The HR Scorecard, Becker, Huselid, Ulrich Measure Like You Mean It, Michael Hammer The Balanced Scorecard Step By Step: Maximizing Performance and Maintaining Results, Paul R. Niven The Human Resources Scorecard, Measuring the Return on Investment, Jack J. Phillips, Ron D. Stone, Patricia Pulliam Phillips Company Case Studies Networking

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Questions?
Bette Francis, SPHR Strategic Products & Services 973-656-4607 bfrancis@spscom.com
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