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Indianapolis Life Insurance Company Enterprise Level Balanced Scorecard Workshop I Strategies & Critical Success Factors
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2 Agenda Balanced Scorecard Overview1:30 - 2:00 Vision and Objectives Confirmation2:00 - 2:15 Breakout Session I: Critical Success Factors2:15 - 3:30 –Breakout Groups –Coffee Break –Reconvene & Present Breakout Session II: Measures3:30 - 4:15 –Breakout Groups –Coffee Break –Reconvene & Presentations Discussions & Next Steps4:15 - 5:00
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3 Why Measure? Provide a vehicle to communicate and gain consensus on the vision and strategies Identify roles, responsibilities and accountabilities throughout the organization Assist in prioritizing initiatives to optimize resource allocation Help identify what should be focused on Identify areas for improvement Provide information to support decentralized decision making “You can’t manage what you can’t measure” Bill Hewlett, Hewlett Packard
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4 Measurement Definition : Reporting & Analysis: Given performance signals, what can be done to improve results? How to report & analyze performance measures most effectively? Evaluation & Improvement: What measures reflect strategy execution? Process Strategic Individual QuickContinuous Re-engineerFocus Improvement Portfolio Stakeholder Value Balanced Scorecard Process The Balanced Scorecard is a Continuous Process
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5 Translating the Vision & Strategy A Good Balanced Scorecard Tells the Story of Your Strategy and Vision ? ? ? Tracking & Measuring the Vision Requires... The Vision …describing the destination with much greater precision. t t
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6 Identifying Critical Success Factors Improve Returns Broaden Revenue Mix Broaden Skills (Financial Planning) Improve Customer Information Employee Satisfaction Cross-Sell the Product Line Understand Customer Segments Develop Offerings Increase Customer Confidence in our Advice Align Reward Systems Financial Perspective Customer Perspective Internal Process Perspective Employee & Innovation Perspectives (A Set of Cause and Effect Relationships) Strategy: Revenue Growth
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7 Identifying Performance Measures Improve Returns Broaden Revenue Mix Broaden Skills (Financial Planning) Improve Customer Information Employee Satisfaction Cross-Sell the Product Line Understand Customer Segments Develop Offerings Increase Customer Confidence in our Advice Align Reward Systems Financial Perspective Employees & Innovation Customer Perspective Internal Process Perspective Return on Investment Revenue Mix Revenue Growth Customer Satisfaction Survey Customer Retention Depth of Relation Share of Segment Product Development Cycle Time Revenue from New Products Hours with Customers Cross-Sell Ratio Employee Satisfaction Revenue per Employee Training & Development Index Compensation Benchmark Strategic Information Availability Every Measure Ultimately Ties to a Financial Result Strategy: Revenue Growth
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8 Developing a Scorecard The Vision Strategy Financial Perspective CSF Initiative TargetMeasure “If we succeed, how will we look to our shareholders?” Improve Returns ROI Diversify Mix Revenue Mix Shareholder Value EVA Customer Perspective CSF Initiative TargetMeasure “To achieve our vision, how must we look to our customers?” Delivery Time Cycle Time Quality Quality Index Price Competitive Price Benchmark Internal Process Perspective CSF Initiative TargetMeasure “To satisfy our customers, in which business processes must we excel?” New Products Prod. Development Cycle Time Efficiency %Non-Value Added/Value Added Cross-Selling Cross-Sell Ratio Employees & Innovation CSF Initiative TargetMeasure “To achieve our vision, how will we sustain innovation, & change & develop our people?” Retention Retention Ratio New Products % Revenue from New Products<2yrs High Morale Absenteeism Step 1: Confirm/Define the Shared Vision Step 2: Clarify/Articulate Strategies to Achieve the Vision Step 3: Define Critical Success Factors (CSFs) for Various Perspectives Step 4: Determine Performance Measures Step 5: Establish Short & Long Term Measure Targets Step 6: Define Initiatives to Reach Targets
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9 Measurement Logic Communicating Supporting
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Enterprise Scorecard Development
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11 Defining Measures Performance Scorecards Executive Interviews & Facilitated Sessions “Quigley” Analysis Design Team Findings & Recommendations Business Unit Strategic Plans Long Term Vision of Performance Management across Indianapolis Life “Rollout” Philosophy IS/IT Implications Affiliation Impact E & Y Insurance & Annuities Databases
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12 Confirming the Vision & Strategies VisionStrategies CSFs Measures Definition: Longer-term direction of where Indianapolis Life aspires to be, how and on what basis to compete. Inspirational, and understandable throughout the organization Key Worksteps: Review current vision and strategy statements Revise vision and strategies Present findings to group
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13 Scorecard Template To be an innovative, growing, high performance, public financial services enterprise that makes the future better for all our stakeholders. Our Objectives Our Vision Our Measures of Success Attracting Connecting Developing Empowering Building new and existing distribution systems Co-marketing, private label relationships Affiliations and acquisitions Pricing, persistency, mortality, investments, expenses Create economic value for investors Products and services to meet customer needs Productive, mutually beneficial relationships with distribution partners Employee owners Good corporate citizens Create value for all stakeholders Grow profitably Win through people
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14 Determine Critical Success Factors VisionStrategic Thrusts CSFs Measures Definition: What needs to happen to execute strategy successfully. CSF’s must be: Actionable Associated with Business Decisions Specific and Measurable Key Worksteps: Review Strategies Establish Agreed Upon List of CSFs Necessary to achieve the objective Narrow CSFs
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15 Areas Critical from a Financial Perspective Growth –Revenues –Operating Earnings –Capital Profitability –ROE –ROA –EPS Consistency in results Quality earnings (GFO) Clearly articulated strategies
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16 Areas Critical from a Customer Perspective Accuracy Quality Timeliness Cost effectiveness Support Handling customers with multiple products
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17 Areas Critical from a Process Perspective Business Fundamentals –Issuing –Billing –Paying commissions –Calculating policy values Time, cost and quality Production costs
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18 Areas Critical from a Development & Growth Perspective Empowered personnel Maintaining and enhancing the culture Education and training Retention and development Management skill sets Communication and information sharing Accountability
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19 Exercise - 60 Minutes (CSFs) Breakout Groups 3 Groups Complete Cause & Effect Diagrams Narrow CSF’s to “Vital Few” Return to facilitator 10-Minute break Group “Reporter” Present Findings Questions: 1) What must be done to reach our objectives? 2) What is the relationship between financial and non-financial factors? 3) Are these CSF’s measurable 3) Are these complete and accurate?
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20 Breakout Groups o Jim o Steve o Jack o Karla 1 - Sun Room3 - Board Room2 - Library o Greg o Larry H. o Linda o Gene o Gary o Marc o Jon o Lisa
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21 Critical Success FactorsGroup 1 Financial Customer Processes Learning & Growth Critical Success Factors Objectives: Win through people, Grow profitably, Create value
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22 Critical Success FactorsGroup 2 Financial Customer Processes Learning & Growth Critical Success Factors Objectives: Win through people, Grow profitably, Create value
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23 Critical Success FactorsGroup 3 Financial Customer Processes Learning & Growth Critical Success Factors Objectives: Win through people, Grow profitably, Create value
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24 Next Steps Enterprise Scorecard –Refine measures of success –Complete data dictionary – Formula – Availability – Data Source – Missing Measures Program – Frequency of reporting – Responsibility –Establish targets –Align initiatives (tactics) to measures Cascade Measures –Determine entities for scorecard (measurement logic) –Develop measurement “package” for defining measures Reporting –Identify reporting package (Manual vs. Automatic) –Identify reports (drilldown, composition)
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