1. Developing a Balanced Scorecard CIPD Norfolk Group, 17 October 2006 Richard Barnes Culturetracker.com

2. What is a “Balanced” Scorecard A strategic and operational tool Owned by the Executive Shared by everyone Balances:- Long and short term Hard and soft measures Leading and trailing indicators Internal/external perspectives Like writing a novel, not writing a list Measures support change, not monitoring

3. It is NOT A new idea An end in itself A playing field for internal politics An “initiative” of Finance, HR, Marketing etc. Boardroom art A make-work exercise

4. Its origins Nolan-Norton Consultants 1990 12 client “Organisation of the Future” study group Based on premise that financial measures were insufficient for a modern business Principles espoused previously by:- Rensis Likert (The Human Organisation, 1960) TQM “gurus” (Deming, Crosby, Juran etc.)* European Foundation for Quality Management (1985) Maisel and McNair parallel models * Original K&N source was part of a TQ programme

5. The EFQM Excellence Model 10% 9% 8% 9% 14% 9% 20% 6% 15% (percentages show how each elements is scored for importance)

6. Customer Balanced Scorecard Financials Learning & growth Business Processes Kaplan and Norton model (1996)

7. Customer perspective Corrective activity Developmental activity Balancing compliance with added value Balanced Scorecard Financial Measures Key performance ratios Financial health Balancing leading with trailing indicators Learning and growth People measures Knowledge measures Balancing soft and hard indicators Business Processes Drumbeat Time, cost, quality Balancing inputs and outputs A question of balance?

9. Building the Balanced Scorecard The key question How do you create value?

10. A strategic tool Starts with strategy Continuous process Needs to become culturally embedded

11. To be successful for our shareholders, we must be (position in market), which means that we must return superior financial results in....... Our customers are the people who will secure these results for us so we must offer our customers superior value by......... To deliver this superior value we must excel in the way we manage the processes for....... These processes are operated by our people. We must provide our people with....... to achieve excellent performance. The story of a scorecard

12. Cause and effect chain Strategic Objective Financial Measure Customer Value Measure Process Measure Employee Measure What How May be reversed

13. Cause and effect chain example Become No 2 player What How Market share F Service span offer C Services delivered per customer P Availability of data E

15. The Balanced Scorecard Where does it fit?

16. Culture and values (leadership/style/relationships etc.) Rewards Targets Measures Projects Alliances Systems Structure Vision Mission and CSFs Strategic Objectives Balanced Scorecard Building Using

17. Example Retail Strategic themes Themes Broadening the offer Focus on Health and Beauty Friendly and Fun Destination of Choice Projects Pharmacy store expansion New store opening process Living the Mission Category management Measures Pharmacy store sales growth Brand Penetration (Market Research) Mystery Shopper Footfall and basket size

18. Customer perspective Basket Size Mystery Shopper index Footfall Complaints Balanced Scorecard Financial Measures Sales Revenue growth Return on Turnover Cost of sales Shrinkage Learning and growth Absence level Stability index Mission involvement index Starfish.net ideas Business Processes Stock Outs New store plan vs. actual Strategic Projects delivery Supply chain process time Sample retail scorecard

19. Joined up thinking?

21. Using the Balanced Scorecard Drill-down into HR systems

22. Performance management AgeWhat is valued? Key processKey OutputCulture Pre-industrial Age Community Loyalty BelongingContributionSocial Industrial AgeObedience Output ComplianceOutputWork-ethic Information Age Knowledge Innovation EmpowermentNew valueMobility

23. Learning and growth Employee satisfaction Employee capability Information availability Knowledge growth Performance and reward management systems Cultural measures from surveys – e.g. leadership, communication, recognition (enablers)

24. Success factors Drill-down into Systems Planning and objective setting Operational targets Budgeting Internal audit Continuous improvement Project management Performance management/appraisal Reporting and meeting regimes Reward and recognition.......

25. “Unfortunately, this year’s low score on morale in the employee survey means our balanced scorecard index is below the threshold for the bonus award” …with grateful thanks to Catbert