1. BSC/KPI NEGERI MESYUARAT PENGURUS NEGERI 1/2006 1B FEBRUARI 2006
DISEDIAKAN OLEH:
ABD RAHAMAN RASID
PENGURUS KANAN
JABATAN PERANCANGAN KORPORAT/PENGURUS PROJEK EIS
1B FEBRUARI 2006

2. SCOPE & OBJECTIVE OF PRESENTATION
Introduction and Background
To explain basic concept on Balanced Scored Card (BSC)
To highlight BPM Destination Statement
To elaborate on BPM Corporate Scorecard
To propose State Scorecard, Branch and Hub
To get feedback from State Manager

3. BALANCED SCORE CARD (BSC)

4. CONCEPT BSC
Formal Definition: A tool that translates an organization’s mission and strategy into a comprehensive set of a performance measures that provides the framework for a strategic measurement and management system
MY DEFINITION: A SYSTEMATIC WAY FOR MANAGEMENT TO PLAN AND EXCUTE STRATEGY FOR THE WHOLE ORGANIZATION

5. WHY BSC?
Traditional reliance on financial measures (e.g: ROA)
The rise rise of intangible assets
The importance of reputation ( part of intangible asses)
Organizations face difficulty in executing strategy

6. Barriers to Strategy Execution
Only 10% organizations execute strategy
Barriers to Strategy Execution
Vision
Barrier
People
Barrier
Management Barrier
Resource
Barrier
Only 25% managers
have incentives linked to strategy
85% executive teams spend less than 1 hour/month discussing strategy
60% of organizations don’t link budgets to strategy
Only 5% workforce understands the strategy
Source: Robert S. Kaplan & David P. Norton

7. BSC: HAS FOUR PERSPECTIVES
FINANCIAL
CUSTOMER
INTERNAL BUSINESS PROCESS
LEARNING & GROWTH

8. BSC: FOUR PERSPECTIVES
FINANCIAL PERSPECTIVE
To succeed financially, how should we appear to our shareholders?
CUSTOMER PERSPECTIVE
To achieve our vision, how should we appear to our customers?
INTERNAL PERSPECTIVE
To satisfy our shareholders & customers, what business processes must we excel at?
LEARNING & GROWTH PERSPECTIVE
To achieve our vision, how will we sustain our ability to change and improve?

9. BALANCED SCORECARD: AN OVERVIEW
Financial
Perspective
Shareholder
Value
Productivity
Strategy
Growth
Strategy
Product/Service Attributes
Relationship
Image
Customer
Perspective
Partnership
Price
Quality
Time
Function
Brand
Manage Customers
Manage
Innovation
Internal
Perspective
Manage Operations
Learning &
Growth
Perspective
Human
Capital
Information
Capital
Organisation
Capital

10. FINANCIAL PERSPECTIVE

11. FINANCIAL PERSPECTIVE Revenue Opportunities
Shareholder
Value
Productivity Strategy
Growth Strategy
Improve
Cost
Structure
Increase
Asset
Utilization
Expand
Revenue Opportunities
Enhance
Customer
Value
Improve profitability from existing customers
Manage capacity
from existing assets
New products
New markets
New partners
Reduce expenses
Improve yields

12. CUSTOMER PERSPECTIVE

13. Customer Value Proposition
CUSTOMER PERSPECTIVE
FINANCIAL PERSPECTIVE
Customer
Profitability
Market Share
Account Share
Customer
Acquisition
Customer
Retention
Customer
Satisfaction
Product/Service Attributes
Relationship
Image
Customer Perspective
Service
Price
Quality
Availability
Brand
Selection
Functionality
Partnership
Customer Value Proposition

14. INTERNAL PERSPECTIVE

15. INTERNAL BUSINESS PROCESS
FINANCIAL PERPECTIVE
CUSTOMER PERPECTIVE
Acquire raw materials
Convert raw materials to finished products
Distribution
Operation
Management
Process
Processes that produce & deliver products & services
Processes that enhance
customer value
Select targeted customers
Acquire targeted customers
Retain customers
Grow business with customers
Customer
Management
Process
INTENAL PERSPECTIVE
Processes that create new
products &
services
Identify new products & services
Manage research & development
Develop new products
Innovation
Management
Process

16. LEARNING AND GROWTH

17. LEARNING AND GROWTH FINANCIAL PERPECTIVE CUSTOMER PERPECTIVE
INTERNAL PERPECTIVE
Attitude
Skill
Knowledge
Human
Capital
System
Database
Network
Information
Capital
LEARNING & GROWTH
Leadership
Culture
Teamwork
Organization
Capital

18. BALANCED SCORECARD: OBJECTIVES, MEASURES, TARGETS & INITIATIVES
FINANCIAL
“To succeed financially, how should we appear to our shareholders?”
INTERNAL
BUSINESS PROCESS
CUSTOMER
“To satisfy our shareholders & customers, what business processes must we excel at?”
Objectives
Measures
Targets
Initiatives
“To achieve our vision, how should we appear to our customers?”
Objectives
Measures
Targets
Initiatives
Objectives
Measures
Targets
Initiatives
Vision &
Strategy
LEARNING &
GROWTH
Objectives
Measures
Targets
Initiatives
“To achieve our vision, how will we sustain our ability to change & improve?”

19. MEASUREMENT

20. MEASURING BUSINESS STRATEGY
PERSPECTIVES
GENERIC MEASURES
Financial
ROI, ROA, ROE
Satisfaction, retention, acquisition, market share
Customer
Response time, new products, cost, product & service quality
Process
Learning & Growth
Employee satisfaction, information system, competency, value system

21. Two Types of Strategic Objectives
MEASURES
Two Types of Strategic Objectives
Use slide to describe lag and lead measures.
3-5 minutes.
Use the slide to describe characteristics of lag and lead measures.
Ask participants which type of measure they feel is the norm within their organisations.
Emphasize that the BSC integrates both lag and lead measures to obtain a more robust view of performance within the organisation relative to the strategic direction.
Discuss when lag and/or lead measures may be appropriate based on the perspective and objective in question. (see following slides)
Outcome (Lag) Measures
Driver (Lead) Measures
Purpose
Focus on the performance results at the end of a time period or activity
Examples
“year-end-budget expense”
“client satisfaction”
“cases per caseworker”
Strengths
Usually objective and easily captured
Issues
Outcome measures reflect success of past, not current, activities and decisions
Purpose
Measure intermediate processes and activities
Examples
“hours spent with clients”
“$ spent on automation”.
Strengths
More predictive in nature
Allows organisations to adjust behaviors for performance
Issues
Based on hypotheses of strategic “cause and effect”
Often difficult to collect supporting data

22. STRATEGY MAP

23. BSC TERMINOLOGY Strategic Objectives
Strategic Theme: Operating Efficiency
Increase
Shareholder
Value
Financial
Learning
More
customer
Improve
Strategic Skills &
Competencies
One Stop
Solution
Defend
Current
Business
Customer
Internal
Create
Product &
Services Offerings
/ Bundles
Strategy Map: Diagram of the
cause-and-effect relationships
between strategic objectives
Exceptional
Value Services
KEY PERFORMANCE INDICATOR (KPI)
Strategic Objectives
Create
Product &
Services Offerings
/ Bundles
Statement of what strategy must achieve and what’s critical to its success
Measurement
# of cross sell business bundles
How success in achieving the strategy will be measured and tracked
Target
8 new business bundle
The level of performance or rate of improvement needed
Develop cross-sell business bundles
Key action programmes required to achieve objectives
Initiative

24. FROM STRATEGY TO ACTION PLAN: LOAN BUSINESS
STRATEGY MAP
BALANCED SCORECARD
ACTION PLAN
Strategy
Objective
Measurement
Target
Initiative
Budget
Identify new customers
Offer new limit to existing customers
ROA
Profitability
Grow Revenue
Increase loan
Loan approval
RM 2 million
Attract new
customer
No. customer
700
Corporate advertisement
Customers
RM10,000
Days taken to approve loan
Fast loan approval
One week
Fast Service
Review New authority limit
Day taken to approve loan
Proposal to Management
Decision making
One week
Enhance Knowledge on corporate loan
Knowledge
Number of training/year
Find suitable courses
2 times
RM4,000

25. INITIATIVE

26. Implement automated case management system and train Every Rep in 99
INITIATIVES
Use slide to review the purpose of
initiatives within the BSC Process.
3-5 minutes.
Review the progression from Objective to Measure/Target to Initiative.
Reveal portions of the slide that are applicable to the discussion as it progresses.
Initiatives Are Defined to Help Close the Performance Gap
OBJECTIVE
Increase Customer Satisfaction
Objectives articulate the components of our strategy
MEASURE / TARGET
Measure
90%
Customer Satisfaction Survey Rating
gap
45%
INITIATIVE
Implement automated case management system and train Every Rep in 99 $M
Target
90% favorable overall
Target
Actual
Measures track our progress toward achieving and communicating the intent of the objective
Initiatives help close the gap between our current and desired performance

27. CASCADING

28. What does cascading the BSC means?
The process of developing BSC at each division and business unit levels
The scorecards must align with organization highest level scorecard by identifying the strategic objectives and measures
Lower level scorecard will also include additional measures and initiatives that reflecting the specific opportunities and challenges faced at that level

29. BALANCED SCORECARD: THE CASCADING PROCESS
Mission, Vision & Value
Strategy
Financial O M T I
Customer O M T I
Internal O M T I
L & G O M T I
CORPORATE
Financial O M T I
Customer O M T I
Internal O M T I
L & G O M T I
DEPARTMENT
Financial O M T I
Customer O M T I
Internal O M T I
L & G O M T I
STATE
Financial O M T I
Customer O M T I
Internal O M T I
L & G O M T I
BRANCH
Team & Personal BSC
Note: O: Objectives M: Measures T: Targets I: Initiatives

30. Three Ways to Cascade
Cascading is accomplished using one of three approaches
Corporate
Business Unit
Shared
Identical Objectives
Contributory
Translated Objectives
Hybrid
Identical, Translated
and Unit Specific
Objectives

31. GLOSSARY
Balanced Scorecard: A tool that translates an organization’s mission and strategy into a comprehensive set of a performance measures that provides the framework for a strategic measurement and management system
Cause and Effect Relationship: A cause and effect relationship identifies the initiatives, responsibilities or activities (causes) necessary to achieve an objective or target (effect)
Customer Value Proposition: Defines who the customer is and what they want
Initiative: Key action programs to achieve objectives or close gap between measures performance and targets. Initiatives are often known as projects, actions or activities.
Lag Indicator: Measures to determine the outcome of an objective that indicate company performance at the end of a period. These are results-oriented and do not reflect a process. Lag indicators often appear in BSC’s outcome-oriented Financial and Customer perspectives.

32. GLOSSARY
Lead Indicator: Measures that indicate progress againts a process or behavior. These measures are helpful in predicting the future outcome of an objective. Lead indicators tend often appear in the Internal and Learning & Growth perspectives.
Measures: Statement of how success in achieving an objective will be measured and tracked. Measures are written statements of WHAT we will track and trend over time, NOT the actual targets such as direction and speed. A measure should include a statement of the unit to be measured (RM, %, rating).
Objective: Concise statement articulating a specific component of what the strategy must achieve/what is critical to its success. Each perspective usually contains 3-6 primary objectives that state a key aspect of the strategy to be achieved over the next 3-5 years. Objectives are best stated as action phrases and may include the means and/or desired results as well as the action. E.g: “ Increase market share through current customers”
Strategy Map: A visual representation of an organization’s strategy and the processes and systems necessary to implement that strategy. A strategy map will show employees how their jobs are linked to the organization’s overall objectives