bsc alignment%26cascading kpi

8/13/2019 BSC Alignment%26Cascading KPI

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HR Divisional Business Drivers andKPI Development Workshop


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HR Divisional Business Drivers & KPI Development Workshop

Program Agenda

Day One

Introduction of Balanced Scorecard Cascading of HR Performance Scorecard Strategy Map Human Resources Identifying Department Key Performance Indicators

Day Two

Writing SMART Key Performance Indicators

HR Performance Appraisal Form Performance Appraisal Process (September till December 2009)


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At the highest conceptual level, the Balanced

Scorecard is a frameworkthat helps organizationstranslatestrategyinto operational objectivesthat drive

both behaviorand performance.

What is a Balanced Scorecard?


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a management and measurement system whosepurpose is to

translate strategy into

a limited set of measures that uniquely communicate

your vision to the organization

Kaplan and Norton

...its key management perspectives are ...

A Balanced Scorecard is


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What is the Balanced Scorecard?

It addresses four basic questions:

Financial Perspective: How are we faring with

shareholder returns? Customers Perspective: How do customers see us and

value our services?

Internal Process Perspective: What must we excel at

to meet customer needs? Learning & Growth Perspective: How can we develop

our people and their capabilities?


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Alignment & Cascading Business Agenda


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The Balanced Scorecard concept..

Finance

Objectives Measures Targets Initiatives

Learning and Growth


Customer


Internal Business Process


VISION ANDSTRATEGY


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ProfitabilityGrowthShareholderValue

The Strategy

Price Service Quality

Capabilityenhancement

ContinuousImprovement

EmployeeEngagement

If we succeed,how will we lookto ourshareholders?

To achieve ourvision, how mustwe look to ourcustomers?

To satisfy ourcustomers, whatmanagementprocesses must weexcel at?

To achieve ourvision, how mustour organizationlearn andimprove?

Infrastructure ProductivityCost

Technology

Financial Perspective

Customer Perspective

Internal Perspective

Learning & Growth Perspective

The BSC is comprised of themes,

objectives, measures, targets,

and initiatives.

The BSC represents the cause and effect

relationships in your strategy.

Translate Strategy: The BSC Translates Strategy into the

Four Perspective Framework

Outcomes

Drivers


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KRAs

STAR

HRA Division

Individual

MeasuresKPIs

Complete Framework for YOUR COMPANY

The Importance of Alignment


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Financial

Perspective

Sustained Shareholder Value

Increase Asset

Utilization

Improve Cost

Structure

Enhance

Customer Value

Expand Revenue

Opportunities

Productivity Strategy Revenue Growth Strategy

Customer

Perspective

Internal

Perspective

Price Quality Availability Selection Functionality Service Partnership

Customer Value Proposition

Brand

Product/Service Attributes Relationship Image

Processes that produce

and deliver products

and services

Operations Management

Processes

Processes that enhance

customer value

Customer Management

Processes

Processes that create

new products and

services

Innovation

Processes

Processes that improve

communities and the

environment

Regulatory & Social

Processes

CREATING

ALIGNMENT

Learning &

Growth

Human Capital Information Capital Organization Capital+ +

Skills Training

Knowledge

Systems Databases

Networks

Culture Leadership

Alignment Teamwork

CREATING

READINESSStrategic Job

Families

Organization

Change Agenda

Strategic IT

portfolio

The Strategy Map Aligns Processes and Intangible Assets to Customerand Financial Outcomes


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The Conclusion

Measurement Must Be Linked To Strategy

Strategy Balanced

Scorecard

Measurement To Communicate, Not To Control

Measurement Communicates

Values, Priorities And Direction

The Premise

The Premise Behind the Balanced Scorecard Is that

Measurement Motivates Behavior


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Objectives

Fast groundturnaround

Statement of

what strategy

must achieve

and whats

critical to itssuccess

Target

30 Minutes 90%

The level of

performance

or rate of

improvementneeded

Cycle timeoptimization

Key action

programs

required to

achieveobjectives

InitiativeMeasurement

On Ground Time On-Time

Departure

How success

in achieving

the strategy

will be

measured andtracked

Strategic Theme:

Operating Efficiency

ProfitabilityFinancial

Learning

Morecustomers

Ground crewalignment

Lowestprices

Fewer planes

Customer

Internal


Strategy Map: Diagram of the

cause-and-effect relationships

between strategic objectives

FlightIs on time

Balanced Scorecard Example


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% Ground crewtrained

% Ground crewstockholders

Objectives Measurement Market Value

Seat Revenue

Plane Lease Cost

FAA On TimeArrival Rating

CustomerRanking (Market

Survey)

On Ground Time On-Time

Departure

Strategic Theme:

Operating Efficiency Initiative

Cycle timeoptimization

program

ESOP

Ground crewtraining

Qualitymanagement

Customerloyalty

program

Target 30% CAGR

20% CAGR

5% CAGR

#1

#1

30 Minutes 90%

yr. 1 70%yr. 3 90%

yr. 5 100%

Profitability

Financial

Learning

MoreCustomers

Ground CrewAlignment

LowestPrices

Fewer Planes

Customer

Internal

Fast GroundTurnaround

FlightIs on Time

Profitability

More Customers

Fewer planes

Flight is on -time Lowest prices


Ground crewalignment

Balanced Scorecard Example


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4. Financial LinkageEvery objective can ultimately be related to financial

results

1. Executive InvolvementStrategic decision makers must validate and ownthe strategy and related measures

2. Cause-and-Effect RelationshipsEvery objective selected should be part of a chain of

cause and effect linkages that represent the

strategy

3. Balance between outcome and leading

measures There should be a balance of outcomemeasures and leading measures to facilitate

anticipatory management

5. Linkage of Initiatives and Measures: Eachinitiative should be based on a gap between

baseline and target.

A good Balanced

Scorecard wi l ltell the story of

you r strategy in

act ionable terms .


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Group Activity

Identify what are the HR objectives complements:

1) Finance

2) Customer

3) Internal Processes

4) Learning & Growth

Work in Groups of 4


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STAR Corporate Role

Department

Derived Value

(Synergy)

Scorecard Cascade

HR

PERFORMANCE

SCORECARD

The process of cascading creates synergy. It must be based on a clear

understanding of the corporate role.

Perspective Strategic Objectives Strategic Measures

Customer Perspective C1 Improve on internal customer satisfaction Rating vs. internal satisfaction (survey)

Targets

Internal PerspectiveI1 Review and improve the effectiveness of HR internal

control systems Percentage of reviews within specified timeframe

Learning and Growth L1 Develop skilled workforce

Fulfillment of specified number of training hours peremployee

Improvement in performance evidence in annualappraisal

Variance of actual against organizational anddepartmental training budget

Finance Perspective

F1 Monitoring HR operating expenses Variance of actual against departmental budget

F2 Monitoring Employee Costing Employment cost per employee Recruitment cost per employee Employee cost over/budget/revenue/profit/operating cost

F3 Monitoring the administrative costing activities Admin cost per employee Admin cost over budget/revenue/profit/operating cost


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Perspective Strategic Objectives Strategic Measures

Customer Perspective C1 Improve on internal customer satisfaction Rating vs. internal satisfaction (survey)

Targets

Internal PerspectiveI1 Review and improve the effectiveness of

HR internal control systems

Percentage of reviews within specified

timeframe


Fulfillment of specified number oftraining hours per employee

Improvement in performance evidencein annual appraisal

Variance of actual againstorganizational and departmentaltraining budget

Finance Perspective

F1 Monitoring HR operating expenses Variance of actual against

departmental budget

F2 Monitoring Employee Costing

Employment cost per employee Recruitment cost per employee Employee cost

over/budget/revenue/profit/operatingcost

F3 Monitoring the administrative costingactivities

Admin cost per employee Admin cost over

budget/revenue/profit/operating cost

The Balanced Scorecard for Human Resource Division


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HR

PerformanceScorecard

Select andDeterminerelevant

HRA KPIs

Use the HR Performance Scorecard to Select and Manage IndividualInitiativesPerspective Strategic Objectives Strategic Measures

Customer Perspective C1 Improve on internal customer satisfaction Rating vs. i nternal satisfaction (survey)

Targets

Internal PerspectiveI1 Review and improve the effectiveness of HR internal control

systems Percentage of reviews within specified timeframe


Fulfillment of specified number of training hours peremployee

Improvement in performance evidence in annualappraisal

Variance of actual against organizational anddepartmental training budget

Finance Perspective

F1 Monitoring HR operating expenses Variance of actual against departmental budget

F2 Monitoring Employee Costing Employment cost per employee Recruitment cost per employee Employee cost over/budget/revenue/profit/operating cost

F3 Monitoring the administrative costing activities Admin cost per employee Admin cost over budget/revenue/profit/operating cost

Head of Human Resources& Administrations

OrganizationalDevelopment

& Training

Compensation& Benefits

RecruitmentIndustrial &EmployeeRelations

Administrations

The Balanced Scorecard aligns priorities throughout the enterprise.


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& Training



Administrations

Human Resources & Administration Department Structure


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Head of Human Resources

& Administrations


& Training



Administrations

Human Resources & Administration Department KPIs

Training costSkill WorkforceTraining

Processimprovement

HR cost Process

improvement

Recruitment cost Process

improvement

Employee relation Process

improvement

Admin cost Process

improvement

Departmental Cost Efficiency Employee CostAdmin Cost Process Improvement (HR policies,

procedures, processes)

Customer Satisfaction Skilled Workforce

i i i l i i l k h


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Corporate Role

Balanced Scorecard Cascading Process

HRPERFORMANCE

SCORECARD

Perspective Strat egic Obj ectives St rategic Measures

CustomerPerspective C 1 I mp ro ve o ni nt er na l cu st om er s a ti sf ac ti on Rating vs.internal satisfaction(survey)

Targets

InternalPerspectiveI 1 R ev ie w an d im pr ov e th e ef fe ct iv en es s o f H R i nt er na l

control systems Percentageofreviews withinspecifiedtimeframe

Learning and Growth L1 Develop ski ll ed workforce

Fulfillmentofspecified number oftraining hours per employee

Improvementinperformance evidenceinan nual appraisal Varianceofactual againstorganizational anddepartmental training

budget

FinancePerspective

F 1 M on it or in g H R o pe ra ti ng e xp en se s Varianceofactual againstdepartmental budget

F 2 M on ito ri ng E mp lo ye eCo st in g Employmentcostper employee Recruitmentcostper employee

Employeecostover/budget/revenue/profit/operating cost

F 3 M on i to ri n g t he a dm in is tr at iv e c os ti n g a ct iv it ie s Admincostper employee

Admincostover budget/revenue/profit/operating cost



& Training



Administrations

IndividualPrioritized List of

KPIs and Initiatives

Vision

Mission

Values

Business Strategy

Performance Outcome

By Whom Cascading Process OUTCOME

HR Di i i l B i D i & KPI D l W k h


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The Value Drivers provide the glue between the four perspectives of the

Balanced Scored by outlining the cause and effect: relationships

Value drives provide thecauseand effect: between the four perspectives

Example: Identify the intermediate drivers that link training and developmentprograms and behaviours to business priorities and financialperformance

Training

LEADING INDICATORS

Training

Employee

Morale

Responsiveness

to Clients

Customer

Satisfaction

Increased

Sales

Total

Return

TotalReturn

LAGGING INDICATORS

Cause Effect

Correlation

Leads to, .

HR Di i i l B i D i & KPI D l t W k h


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Some Goals of the Balanced Scorecard

The Balanced Scorecard is a framework that helps organizations translate

strategy into operational objectives that drive both behavior andperformance

Create a systems approach to form an integrated Strategic ManagementProcess

Provide a clear line of sight to the vision and strategy of the company

Provide a tool for cascading the communication processes:

strategy, and

processes and systems required for implementing the strategy

Draw a cause and effect roadmap to stakeholder valueshareholder,customer, and employee.



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What gets measured gets done.

If you do not measure results, you cannot tell success fromfailure.

If you cannot see success, you cannot reward it.

If you cannot reward success, you are probably rewardingfailure.

If you cannot see success, you cannot learn from it.

If you cannot recognize failure, you cannot correct it.

If you cannot demonstrate results, you cannot win stakeholderssupport is used here.



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Personal

Action Work



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Program Agenda

Day One

Introduction of Balanced Scorecard Cascading of HR Performance Scorecard Strategy Map Human Resources Identifying Department Key Performance Indicators

Day Two

Writing SMART Key Performance Indicators HR Performance Appraisal Form Performance Appraisal Process (September till December 2009)



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What is Performance Management?

It is a communication process that enables the employeeand his/her manager to foster a partnership to improve

performance throughout the year



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Purpose of Performance Managemet

The Performance Management Process is a continous cycle thatsupports a cultural of excellence in service delivery andproductivity.

It enables us to link business objectives to individual objectivesand focus on priorities.

It is a major part of the on-going process of managing peopleand not merely the completion of forms.

Formal process to measure performance, give feedback anddocument performance.

Identify training and development needs. Identify special talent and provide support for advancement.



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Purpose - continued

Identify weaknesses in work processes Recognise strengths and motivates employees

Make assessments about salary increases based onperformance

Direct work and behaviour of a unit or team towardsachieving business targets

Clarify expectations performance and others betweenthe manager and the individual


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Performance Definition

WHATan Individual achieves(Results/Individual Key Performance Indicators)

+

HOWthe Individual achieves it(Competencies)

= PERFORMANCE



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Writing SMARTKey Performance Indicators



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Key Performance Indicators Defined

KeyOnly a subset of all possible viewpoints,those which best reflect the state of an asset,organization or financial entity

PerformanceMetrics related to performingones job, or adhering to a agreed standards

IndicatorNot a closed-loop function, KPIs

are to be used by people to help them take correctaction



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Benefits of Performance Management

Opportunity to receive feedback on performance

Enhanced working relationships between Manager andEmployees

Helps Employee focus on meeting needs of business

Helps Employee grow and develop skills => training needsidentified

Employee can highlight career ambitions/aspirations

Explore and resolve problems/differences

Reduce Employee turnover



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What makes an Objective Effective?

SPECIFIC (both parties know exactly what needs to be achieved)

MEASURABLE (it will be possible to say if the number has reached

100)

ACHIEVABLE (presumably this is within the realms of possibility

from the current base)

RESULTS-ORIENTED (targeted towards achieving the desired

outcome)

TIME-BOUND (the goal has to be achieved by end of Quarter 2)

Setting Targets - Performance Objectives



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Criteria for WellWritten Objectives

Specific

A specific objectives is one that is understandable, clear, conciseand explicit.

For example:

Recruitment of management trainees.

To be clearer, the objective can be rewritten as:

____________________________________________________________________________________________

__________________________________________________________________________________________________________________________________________



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Specific

A specific objectives is one that is understandable, clear, conciseand explicit.

For example: Recruitment of management trainees.

To be clearer, the objective can be rewritten as:

Develop an action plan for the recruitment ofmanagement trainees by shortlisting and assessing the

candidates within 75 days time (from date ofadvertisment in the newspaper.



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Measurable

A measureable objective defines how it will be measured. This canbe in terms of quantity, cost, timeliness, and/or quality.

Example: Deploy HRIS as the main database of employee records.

Well written objective

__________________________________________________________________________________________________________________________________________

______________________________________________




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Measurable

A measureable objective defines how it will be measured. This canbe in terms of quantity, cost, timeliness, and/or quality.

Example:DeployHRIS as the main database of employee records.

Well written objective

Deploy HRIS as the main database of employeesdata (personnel,

history, career training and etc) been updated to current month by

October 2009 according to blue print of the master document plan.(evidence: all filing of paperwork cleared / no back log & ease to

access personnel data of any employee) without any error.




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Achievable

An achievable objective defines how realistic it will be achieved andnot beyond your reach.

Achieve a higher rating in Customer Satisfaction Survey

Example: Well written objective:

________________________________________________________________________________________________________________________________________________________________________________________________




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Achievable

An achievable objective defines how realistic it will be achieved andnot beyond your reach.

Achieve a higher rating in Customer Satisfaction Survey

Example: Well written objective:

To achieve rating of 4 or higher on a 5 point in CustomerSatisfaction Survey conducted by an outside agency by 31st

December 2009.




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ResultOriented

The objectives set must be able to reflect the results of theobjectives.

A less SMART objective might be:

Continuous performance awareness briefing for all employees.

Example: Well written objective

_________________________________________________

___________________________________________________________________________________________________________________________________________________




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ResultOriented

The objectives set must be able to reflect the results of theobjectives.

A less SMART objective might be:

Continuous performance awareness briefing for all employees.

Example: Well written objective

Conduct at least 3 briefing sessions by November 2009 with

a minimum of 80% results reflected in the assessment form.




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s o a us ess e s & e e op e t o s op

Time Bound

The results of your efforts need to be evident to the people whoprovide you with feedback.

Need to be done within a certain time frame.

Example: Support team membersdevelopment plans

Alternative way to state the objective:

__________________________________________________________________________________________________

___________________________________________________________________________________________________________________________________________________




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Time Bound

The results of your efforts need to be evident to the people whoprovide you with feedback.

Need to be done within a certain time frame.

Example: Support team membersdevelopment plans

Alternative way to state the objective:

Identify and complete a specific number of staff development actions tosupport each team members development yearly plan by end ofDecember 2009 with a minimum of 48 hours of trainings.




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Performance RatingsRating 1 : Performance significantly below expectation => Not achieved

Objectives are not met and the person is not responding to Training, Developmentor Coaching. A decision on future employment is required.

Rating 2 : Opportunities for further improvement exist => Partiallyachieved

Objectives are met but does not use the competencies to the required standard.Does not meet all objectives but works hard to use the competencies.

Rating 3 : A well rounded and solid performance => Fully achievedAll objectives are met and the competencies are used to the required standard.

Rating 4 : An excellent performance => Partially exceededAll objectives are met and some are exceeded as the competencies are used to a

high standard.

Rating 5 : An exceptional performance => Significantly exceededAll objectives are significantly exceeded and the competencies used to a very high

standard on a regular basis. The person takes on initiates / new objectives duringthe year which are also met.



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THANK YOU FOR

YOUR PARTICIPATION

bsc alignment%26cascading kpi

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