Paramjit Sharma building a balanced scorecard

Paramjit Sharma Imagine an excellent scorecard built by a staff executive or middle management without actively involving the senior management team in the process

Paramjit Sharma The scorecard may be accepted as accurate representation of the organisation, but may not become an integral part of the organizational management process

Paramjit Sharma Therefore, building BSC may require actual involvement of senior management

Paramjit Sharma The first Step for building a successful BSC is to gain consensus and support among senior Management on why the scorecard is being developed Establish objectives for BSC Programme

Paramjit Sharma  Guide the preparation of BSC  Gain Commitment  Clarify the framework for implementation Establish objectives for BSC Programme The objectives would help to…

Paramjit Sharma building the BSC- the process Task 1. Select the appropriate Organizational Unit Task 2. Identify SBU/Corporate Linkages Task 3. Conduct First Round of Interviews Task 4. Synthesis Session Task 5. Executive Workshop Task 6. Sub Groups Meetings Task 7. Executive Workshop: ii nd Round Task8. Develop Implementation Plan Task 9. Executive Workshop: iii rd Round Task10.Finalize the Implementation Plan

Paramjit Sharma Task 1. Select the appropriate Organizational Unit building the BSC- the process Corporate Div ADiv BDiv C SBU1SBU2SBU3SBU4SBU5SBU6SBU7SBU8SBU9 Level I Level II Level III

Paramjit Sharma building the BSC- the process Task 2. Identify SBU/Corporate Linkages Financial Objectives for SBU Growth Profitability Cash flow Harvest Overriding Corporate themes Environment Safety Employees policies Community relations Innovation price Linkages to other SBUs Common customers Core competencies Suppliers Customer Relationship Integrated approach to customers Linkage necessary because One SBU may not Develop at cost of other

Paramjit Sharma building the BSC- the process Task 3. Conduct First Round of Interviews The architect will prepare  Background Materials on BSC  Internal Documents of Organization  Vision, mission and strategy  Submitted to Senior Management  Acquire information about industry  Trends like growth, competitors, customers, technology

Paramjit Sharma building the BSC- the process Task 3. Conduct First Round of Interviews After review of materials, architect(1-3) Conduct interviews for at least 90 mts with senior management  Obtain inputs on 4 perspectives  Introduce the concept  Identifying potential conflicts  Consolidate views and understanding of BSC

Paramjit Sharma building the BSC- the process Task 4. Synthesis Session After interview the architect & design Team discuss  Responses in the interview  Major issues  Likely resistance to BSC  Expected changes in Processes  Develop tentative list of objectives and measures  Basis for first meeting of Top Management  Objectives for 4 perspectives identified  Cause and effect relationship of objectives

Paramjit Sharma building the BSC- the process Task 5. Executive Workshop:1 st Round Architect schedule meeting with top Mgt.  Begin process of consensus on BSC  Group debate on Mission, Vision, Strategy…  Addressing each perspective……..  Show proposed objectives  Videotapes of interviews  Brainstorm on objectives,top ones selected  Dividing executive team into 4 sub-groups  Select 3-4 strategic obj to each perspective along with the measures  Post workshop document is distributed

Paramjit Sharma building the BSC- the process Task 6. Sub Group Meetings Architect schedule meeting with Sub groups for several meetings. The subgroup attempts to accomplish 4 principal objectives 1Refine the wording of the strategic Objectives 2For each objective, identify the measure that best capture and communicate the intentions of objectives 3For each measure, identify the source of information and actions necessary to access information 4For each perspective, identify the key linkage among measures within and between the perspectives

Paramjit Sharma Selecting & Designing Measures Core Financial Measures ROI/EVA Profitability Revenue Growth Cost Reduction/ productivity Core Customer Measures Market Share Customer Acquisition Customer Retention Customer Profitability Customer satisfaction Core Learning & Growth Measures Employee Satisfaction Employee Retention Employee Productivity Internal Processes Innovation Processes Operation Processes Post Sales Processes

Paramjit Sharma building the BSC- the process Task 7: Executive Workshop-IInd Round Involve senior management & their subordinates Debate on organizational, vision, strategy statement and tentative objectives & measures Output of workshop be presented to subgroups Participants offer their comments Prepare draft brochure for communication Formulate stretch targets for each measure

Paramjit Sharma building the BSC- the process Task 8. Develop the implementation Plan New team consisting of leader of each sub group  Formalize the targets  Develop implementation plan  Linking measures with data base  Communicating the Balance Scorecard  Information Metric to be developed

Paramjit Sharma building the BSC- the process Task 9. Executive Workshop 3 rd Round  Senior Team Meets for the third time  Final consensus of Vision, mission, strategy….  Validate the stretch targets fixed by implementation team  Identifies action programmes to achieve targets  Aligning various initiatives to objectives, measures  Communicate implementation to employees

Paramjit Sharma building the BSC- the process Task 10. Finalize the Implementation Plan  To be integrated into management system  Management information system  Management start using BSC  Phase in plan at Place

Paramjit Sharma Frame for implementation Week Activities I Measurement Program Architecture 1Select Organizational Unit 2 Identify SBU/Corporate Linkage II Define Strategic Objectives 3 First Round Interviews 4 Synthesis Session 5 Executive Workshop-1 st round III Select Strategic Measures 6 Subgroup Meeting 7 Executive Workshop: 2 nd Round IV Build Implementation Plan 8 Develop Implementation Plan 9 Executive Workshop:3 rd Round 10 Finalize Implementation Plan Project Plan Interviews Workshop 1 subgroups Workshop 2 Roll out Plan Workshop 3

Paramjit Sharma Systematic process to build consensus & clarity Build management team Communicate the strategy Link reward to achieving strategic objectives Set strategic targets Align strategic targets and initiatives An architect for framing, collect and construct Active support of senior management Clear objective about development of BSC Sustain investment in intellectual and intangible Assets Provide foundation for strategic learning Building a Balance Scorecard…..

Paramjit Sharma questions