Presented By:

Rakesh Kumar
(049/MBA/07)

Nitin Jaiswal
(041/MBA/07)

Concept Of Balanced Scorecard :-

ROI,
EPS,
Net Profit etc.

Customer Satisfaction,
Employees Skills,
Motivation,
Process Capabilities etc.

FINANCIAL MEASURES

NON-FINANCIAL MEASURES

Definition.

David Chaudron in his article Using the

balance score card to combine view points of
the company success define BSC asA way of measuring organization, business unit
or department success.
A way of balancing long-term & short term
actions.
A way of balancing different measures of
success such as: Financial, Customer, Internal
operation & Human resources system &
Development.
A way of tying strategy to measures to actions.

Need For Balanced Scorecard

MISSION - WHY WE EXIST?
VALUES - WHAT IS IMPORTANT TO US?
VISION - WHAT WE WANT TO BE?
STRATEGY - OUR GAME PLAN

THE GAP ZONE

TOTAL QUALITY MANAGEMENT - WHAT WE MUST IMPROVE

EMPOWERMENT/PERSONL OBJECTIVES - WHAT I NEED TO DO

Need For Balanced Scorecard

MISSION - WHY WE EXIST?
VALUES - WHAT IS IMPORTANT TO US?
VISION - WHAT WE WANT TO BE?
STRATEGY - OUR GAME PLAN
STRATEGIC INTIATIVES - WHAT ARE THE PRIORITIES
TOTAL QUALITY MANAGEMENT - WHAT WE MUST IMPROVE
EMPOWERMENT/PERSONL OBJECTIVES - WHAT I NEED TO DO
STRATEGIC OUTCOMES

Satisfied
Shareholders

Delighted
Customers

Efficient &
Effective
Processes

Motivated &
Prepared
Workforce

Structure of Balanced Scorecard

Strategic objectives

Performance Measure

Financial Perspective
To achieve profitable growth to be amongst
top 5 global companies

Return on capital employed

Quarterly sales growth
Market share

To attain cost competitiveness at world

class level

Operating cost as % of
contribution

Customer Perspective
Retain & increase share of customer
business

% sales to key customers

On-time delivery

Acquire new customers through improved

customer value offerings & customer reach

Revenue growth from new

offerings
Market share in new markets
Customer satisfaction Index

Improved customer satisfaction

Structure of Balanced Scorecard

C

Business Process Perspective

Improve cost effectiveness by enhancing
efficiency & optimizing resource utilization

Wage bill as % of value

addition
Reduced cycle time
% reduction of overhead

Enhance customer loyalty through

improved customer relationship
management

Customer repurchase intention

Cumulative sales volume from
new products

To review product mix & enhance product

range

Learning & Growth Perspective

Create a culture of high performance &
team work

Enhance strategic skills / competencies

% officers rated as high

performers
% of employees in active
teams

% adherence to strategic
Enhance employee well being, Motivation & training plan
Employee satisfaction index
satisfaction

Benefits of Balanced Scorecard

Alignment of strategy with key performance
objectives at all levels.
Measuring & Managing business performance
effectively.
Strategic Feedback
Double loop Feedback
Outcome Metrics

Case : Balance Scorecard

Implementation at Royal Philips NV
Need for Balanced
Scorecard
Changing external
environment
Increased competition
Narrow vision of
employees

In July1999 company
implemented BEST

BEST

Balanced
Scorecard

Policy
Deployment
Customer
Satisfaction
Management

Balanced Scorecard at Philips

Perspective

Critical Success Factors

Key Indicators to measure CSFs

Competence

Knowledge, Technology,
Leadership, Teamwork

Quality improvement team

participation, training days per
employees, % patent protected
turnover

Processes

Drivers of performance

%reduction in process cycle time, No.

of Engineering changes, Capacity
utilization, Order Response time

Customers

Value Proposition

Rank in customer survey, repeat order

rate, complaints, Brand Index

Financial

Value,
Growth,
Productivity

Profits Realized, Income from

Operations, Working Capital,
Operational Cash Flow,

 For implementing the balanced scorecard,

Philips use reporting system
Lotus Notes
One Page strategy document
BBS Online

For Measuring results Philips use

Traffic light system

References
Implementing Strategic Change by
Steven.H.Hoisington & S.A.Vaneswaran
Management Control System by
R.S.Aurora & S.R.Kale
Icfai Case Folio (June 2008)