BSC Alignment & Cascading KPI

HR Divisional Business Drivers and
KPI Development Workshop

HR Divisional Business Drivers & KPI Development Workshop
Program Agenda
Day One

Introduction of Balanced Scorecard
Cascading of HR Performance Scorecard
Strategy Map Human Resources
Identifying Department Key Performance Indicators

Day Two

Writing SMART Key Performance Indicators
HR Performance Appraisal Form
Performance Appraisal Process (September till December 2009)

At the highest conceptual level, the Balanced
Scorecard is a framework that helps organizations
translate strategy into operational objectives that drive
both behavior and performance.
What is a Balanced Scorecard?
a management and measurement system whose
purpose is to

translate strategy into
a limited set of measures that
uniquely communicate
your vision to the organization

Kaplan and Norton

...its key management perspectives are ...
A Balanced Scorecard is
What is the Balanced Scorecard?
It addresses four basic questions:

Financial Perspective: How are we faring with
shareholder returns?
Customers Perspective: How do customers see us and
value our services?
Internal Process Perspective: What must we excel at
to meet customer needs?
Learning & Growth Perspective: How can we develop
our people and their capabilities?
Alignment & Cascading Business Agenda
The Balanced Scorecard concept..
Finance
Objectives Measures Targets Initiatives
Learning and Growth
Customer
Internal Business Process
VISION AND
STRATEGY

HR
Profitability
Growth
Shareholder
Value
The Strategy
Price
Service
Quality
Capability
enhancement
Continuous
Improvement
Employee
Engagement
If we succeed,
how will we look
to our
shareholders?
To achieve our
vision, how must
we look to our
customers?
To satisfy our
customers, what
management
processes must we
excel at?
To achieve our
vision, how must
our organization
learn and
improve?
Infrastructure
Productivity
Cost
Technology
Financial Perspective
Customer Perspective
Internal Perspective
Learning & Growth Perspective
The BSC is comprised of themes,
objectives, measures, targets,
and initiatives.
The BSC represents the cause and effect
relationships in your strategy.
Translate Strategy: The BSC Translates Strategy into the
Four Perspective Framework
Outcomes
Drivers
Financial Perspective Financial Perspective
KRAs
STAR
HRA Division
Individual
Measures KPIs
Complete Framework for YOUR COMPANY
The Importance of Alignment
Financial
Perspective
Sustained Shareholder Value
Increase Asset
Utilization
Improve Cost
Structure
Enhance
Customer Value
Expand Revenue
Opportunities
Productivity Strategy
Revenue Growth Strategy
Customer
Perspective
Internal
Perspective
Price Quality Availability Selection Functionality
Service Partnership
Customer Value Proposition
Brand
Product/Service Attributes Relationship Image
Processes that produce
and deliver products
and services
Operations Management
Processes
Processes that enhance
customer value
Customer Management
Processes
Processes that create
new products and
services
Innovation
Processes
Processes that improve
communities and the
environment
Regulatory & Social
Processes
CREATING
ALIGNMENT
Learning &
Growth
Human Capital Information Capital Organization Capital
+ +
Skills
Training
Knowledge
Systems
Databases
Networks
Culture
Leadership
Alignment
Teamwork
CREATING
READINESS
Strategic Job
Families
Organization
Change Agenda
Strategic IT
portfolio
The Strategy Map Aligns Processes and Intangible Assets to Customer
and Financial Outcomes
The Conclusion
Measurement Must Be Linked To Strategy
Strategy
Balanced
Scorecard
Measurement To Communicate, Not To Control
Measurement Communicates
Values, Priorities And Direction
The Premise
The Premise Behind the Balanced Scorecard Is that
Measurement Motivates Behavior
Objectives
Fast ground
turnaround
Statement of
what strategy
must achieve
and whats
critical to its
success
Target
30 Minutes
90%

The level of
performance
or rate of
improvement
needed
Cycle time
optimization
Key action
programs
required to
achieve
objectives
Initiative Measurement
On Ground Time
On-Time
Departure
How success
in achieving
the strategy
will be
measured and
tracked
Strategic Theme:
Operating Efficiency
Profitability
Financial
Learning
More
customers
Ground crew
alignment
Lowest
prices
Fewer planes
Customer
Internal
Fast ground
turnaround
Strategy Map: Diagram of the
cause-and-effect relationships
between strategic objectives
Flight
Is on time
Balanced Scorecard Example
% Ground crew
trained
% Ground crew
stockholders
Objectives Measurement
Market Value
Seat Revenue
Plane Lease Cost
FAA On Time
Arrival Rating
Customer
Ranking (Market
Survey)
On Ground Time
On-Time
Departure
Strategic Theme:
Operating Efficiency
Initiative
Cycle time
optimization
program
ESOP
Ground crew
training
Quality
management
Customer
loyalty
program
Target
30% CAGR
20% CAGR
5% CAGR
#1

#1
30 Minutes
90%

yr. 1 70%
yr. 3 90%
yr. 5 100%
Profitability
Financial
Learning
More
Customers
Ground Crew
Alignment
Lowest
Prices
Fewer Planes
Customer
Internal
Fast Ground
Turnaround
Flight
Is on Time
Profitability
More Customers
Fewer planes
Flight is on -time
Lowest prices
Fast ground
turnaround
Ground crew
alignment
Balanced Scorecard Example
4. Financial Linkage
Every objective can ultimately be related to financial
results
1. Executive Involvement
Strategic decision makers must validate and own
the strategy and related measures
2. Cause-and-Effect Relationships
Every objective selected should be part of a chain of
cause and effect linkages that represent the
strategy
3. Balance between outcome and leading
measures There should be a balance of outcome
measures and leading measures to facilitate
anticipatory management
5. Linkage of Initiatives and Measures: Each
initiative should be based on a gap between
baseline and target.
A good Balanced
Scorecard will
tell the story of
your strategy in
actionable terms.
Group Activity
Identify what are the HR objectives complements:
1) Finance
2) Customer
3) Internal Processes
4) Learning & Growth
Work in Groups of 4
STAR Corporate Role
Department
Derived Value
(Synergy)
Scorecard Cascade
HR
PERFORMANCE
SCORECARD
The process of cascading creates synergy. It must be based on a clear
understanding of the corporate role.
Perspective Strategic Objectives Strategic Measures
Customer Perspective C1 Improve on internal customer satisfaction Rating vs. internal satisfaction (survey)
Targets
I1 Review and improve the effectiveness of HR internal
control systems
Percentage of reviews within specified timeframe
Learning and Growth L1 Develop skilled workforce
Fulfillment of specified number of training hours per
employee
Improvement in performance evidence in annual
appraisal
Variance of actual against organizational and
departmental training budget
Finance Perspective
F1 Monitoring HR operating expenses Variance of actual against departmental budget
F2 Monitoring Employee Costing
Employment cost per employee
Recruitment cost per employee
Employee cost over/budget/revenue/profit/operating cost
F3 Monitoring the administrative costing activities
Admin cost per employee
Admin cost over budget/revenue/profit/operating cost
Targets
I1 Review and improve the effectiveness of
HR internal control systems
Percentage of reviews within specified
timeframe
Fulfillment of specified number of
training hours per employee
Improvement in performance evidence
in annual appraisal
Variance of actual against
organizational and departmental
training budget
Finance Perspective
F1 Monitoring HR operating expenses
Variance of actual against
departmental budget
Employee cost
over/budget/revenue/profit/operating
cost
F3 Monitoring the administrative costing
activities
Admin cost over
budget/revenue/profit/operating cost
The Balanced Scorecard for Human Resource Division
HR
Performance
Scorecard
Select and
Determine
relevant
HRA KPIs
Use the HR Performance Scorecard to Select and Manage Individual
Initiatives
Targets
I1 Review and improve the effectiveness of HR internal control
systems
Percentage of reviews within specified timeframe
Fulfillment of specified number of training hours per
employee
Improvement in performance evidence in annual
appraisal
Variance of actual against organizational and
departmental training budget
Finance Perspective
Employee cost over/budget/revenue/profit/operating cost
F3 Monitoring the administrative costing activities
Admin cost over budget/revenue/profit/operating cost
Head of Human Resources
& Administrations
Organizational
Development
& Training
Compensation
& Benefits
Recruitment
Industrial &
Employee
Relations
Administrations
The Balanced Scorecard aligns priorities throughout the enterprise.
& Administrations
Organizational
Development
& Training
Compensation
& Benefits
Recruitment
Industrial &
Employee
Relations
Administrations
Human Resources & Administration Department Structure
& Administrations
Organizational
Development
& Training
Compensation
& Benefits
Recruitment
Industrial &
Employee
Relations
Administrations
Human Resources & Administration Department KPIs
Training cost
Skill Workforce
Training
Proce
ss improvement
HR cost
Process
improvement
Recruitment cost
Process
improvement
Employee relation
Process
improvement
Admin cost
Process
improvement
Departmental Cost Efficiency
Employee Cost
Admin Cost
Process Improvement (HR policies,
procedures, processes)
Customer Satisfaction
Skilled Workforce

Corporate Role
Balanced Scorecard Cascading Process
HR
PERFORMANCE
SCORECARD
Perspective Strategic Obj ectives Strategic Measures
Targets
Internal Perspective I1 Review and improve the effectiveness of HR internal control systems Percentage of reviews within specified timeframe
Fulfillment of specified number of training hours per employee Improvement in performance evidence in annual appraisal Variance of actual against organizational and departmental training budget
Finance Perspective
F2 Monitoring Employee Costing Employment cost per employee Recruitment cost per employee Employee cost over/budget/revenue/profit/oper ating cost
F3 Monitoring the administrative costing activities Admin cost per employee Admin cost over budget/revenue/profit/operating cost
& Administrations
Organizational
Development
& Training
Compensation
& Benefits
Recruitment
Industrial &
Employee
Relations
Administrations
Individual
Prioritized List of
KPIs and Initiatives
Vision
Mission
Values
Business Strategy
Performance Outcome
By Whom Cascading Process OUTCOME
The Value Drivers provide the glue between the four perspectives of the Balanced Scored by outlining the cause and
effect: relationships
Value drives provide the cause and effect: between the four perspectives

Example: Identify the intermediate drivers that link training and development
programs and behaviours to business priorities and financial
performance
Training
LEADING INDICATORS
Training
Employee
Morale
Responsiveness to Clients
Customer
Satisfaction
Increased
Sales
Total
Return
Total
Return
LAGGING INDICATORS
Cause Effect
Correlation
Leads to, .
Some Goals of the Balanced Scorecard
The Balanced Scorecard is a framework that helps organizations translate
strategy into operational objectives that drive both behavior and
performance
Create a systems approach to form an integrated Strategic Management
Process
Provide a clear line of sight to the vision and strategy of the company
Provide a tool for cascading the communication processes:
strategy, and
processes and systems required for implementing the strategy
Draw a cause and effect roadmap to stakeholder value shareholder,
customer, and employee.

What gets measured gets done.

If you do not measure results, you cannot tell success from
failure.

If you cannot see success, you cannot reward it.

If you cannot reward success, you are probably rewarding
failure.

If you cannot see success, you cannot learn from it.

If you cannot recognize failure, you cannot correct it.

If you cannot demonstrate results, you cannot win stakeholders
support is used here.


Personal
Action Work

Program Agenda
Day One

Introduction of Balanced Scorecard
Cascading of HR Performance Scorecard
Strategy Map Human Resources
Identifying Department Key Performance Indicators

Day Two

Writing SMART Key Performance Indicators
HR Performance Appraisal Form
Performance Appraisal Process (September till December 2009)

What is Performance Management?
It is a communication process that enables the employee
and his/her manager to foster a partnership to improve
performance throughout the year
Purpose of Performance Managemet
The Performance Management Process is a continous cycle that
supports a cultural of excellence in service delivery and
productivity.
It enables us to link business objectives to individual objectives
and focus on priorities.
It is a major part of the on-going process of managing people
and not merely the completion of forms.
Formal process to measure performance, give feedback and
document performance.
Identify training and development needs.
Identify special talent and provide support for advancement.
Purpose - continued
Identify weaknesses in work processes
Recognise strengths and motivates employees
Make assessments about salary increases based on
performance
Direct work and behaviour of a unit or team towards
achieving business targets
Clarify expectations performance and others between
the manager and the individual

Performance Definition
WHAT an Individual achieves
(Results/Individual Key Performance Indicators)
+
HOW the Individual achieves it
(Competencies)

= PERFORMANCE
Writing SMART
Key Performance Indicators
Key Performance Indicators Defined
Key Only a subset of all possible viewpoints,
those which best reflect the state of an asset,
organization or financial entity
Performance Metrics related to performing
ones job, or adhering to a agreed standards
Indicator Not a closed-loop function, KPIs
are to be used by people to help them take correct
action
Benefits of Performance Management
Opportunity to receive feedback on performance
Enhanced working relationships between Manager and
Employees
Helps Employee focus on meeting needs of business
Helps Employee grow and develop skills => training needs
identified
Employee can highlight career ambitions/aspirations
Explore and resolve problems/differences
Reduce Employee turnover
What makes an Objective Effective?
SPECIFIC (both parties know exactly what needs to be achieved)
MEASURABLE (it will be possible to say if the number has reached
100)
ACHIEVABLE (presumably this is within the realms of possibility
from the current base)
RESULTS-ORIENTED (targeted towards achieving the desired
outcome)
TIME-BOUND (the goal has to be achieved by end of Quarter 2)

Setting Targets - Performance Objectives
Criteria for WellWritten Objectives

Specific
A specific objectives is one that is understandable, clear, concise
and explicit.

For example:
Recruitment of management trainees.

To be clearer, the objective can be rewritten as:
______________________________________________
______________________________________________
______________________________________________
______________________________________________
______________________________________________


Specific
A specific objectives is one that is understandable, clear, concise
and explicit.

For example: Recruitment of management trainees.

To be clearer, the objective can be rewritten as:

Develop an action plan for the recruitment of
management trainees by shortlisting and assessing the
candidates within 75 days time (from date of
advertisment in the newspaper.


Measurable
A measureable objective defines how it will be measured. This can
be in terms of quantity, cost, timeliness, and/or quality.

Example: Deploy HRIS as the main database of employee records.

Well written objective
______________________________________________
______________________________________________
______________________________________________
______________________________________________


Measurable
A measureable objective defines how it will be measured. This can
be in terms of quantity, cost, timeliness, and/or quality.

Example: Deploy HRIS as the main database of employee records.

Well written objective

Deploy HRIS as the main database of employees data (personnel,
history, career training and etc) been updated to current month by
October 2009 according to blue print of the master document plan.
(evidence: all filing of paperwork cleared / no back log & ease to
access personnel data of any employee) without any error.
Achievable
An achievable objective defines how realistic it will be achieved and
not beyond your reach.

Achieve a higher rating in Customer Satisfaction Survey

Example: Well written objective:
________________________________________________
________________________________________________
________________________________________________
________________________________________________
Achievable
An achievable objective defines how realistic it will be achieved and
not beyond your reach.

Achieve a higher rating in Customer Satisfaction Survey

Example: Well written objective:

To achieve rating of 4 or higher on a 5 point in Customer
Satisfaction Survey conducted by an outside agency by 31st
December 2009.


Result Oriented
The objectives set must be able to reflect the results of the
objectives.

A less SMART objective might be:

Continuous performance awareness briefing for all employees.

Example: Well written objective
_________________________________________________
_________________________________________________
_________________________________________________
_________________________________________________


Result Oriented
The objectives set must be able to reflect the results of the
objectives.

A less SMART objective might be:
Continuous performance awareness briefing for all employees.

Example: Well written objective

Conduct at least 3 briefing sessions by November 2009 with
a minimum of 80% results reflected in the assessment form.

Time Bound
The results of your efforts need to be evident to the people who
provide you with feedback.
Need to be done within a certain time frame.

Example: Support team members development plans

Alternative way to state the objective:
_________________________________________________
_________________________________________________
_________________________________________________
_________________________________________________
_________________________________________________

Time Bound
The results of your efforts need to be evident to the people who
provide you with feedback.
Need to be done within a certain time frame.

Example: Support team members development plans

Alternative way to state the objective:

Identify and complete a specific number of staff development actions to
support each team members development yearly plan by end of
December 2009 with a minimum of 48 hours of trainings.

Performance Ratings
Rating 1 : Performance significantly below expectation => Not achieved
Objectives are not met and the person is not responding to Training, Development
or Coaching. A decision on future employment is required.
Rating 2 : Opportunities for further improvement exist => Partially
achieved
Objectives are met but does not use the competencies to the required standard.
Does not meet all objectives but works hard to use the competencies.
Rating 3 : A well rounded and solid performance => Fully achieved
All objectives are met and the competencies are used to the required standard.
Rating 4 : An excellent performance => Partially exceeded
All objectives are met and some are exceeded as the competencies are used to a
high standard.
Rating 5 : An exceptional performance => Significantly exceeded
All objectives are significantly exceeded and the competencies used to a very high
standard on a regular basis. The person takes on initiates / new objectives during
the year which are also met.

THANK YOU FOR
YOUR PARTICIPATION

BSC Alignment & Cascading KPI

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HR Divisional Business Drivers and

KPI Development Workshop

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BSC Alignment & Cascading KPI