Download - Balanced Scorecard Performance Mgt Case
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Corporate Performance
Management Case
Adaptation of Balanced Score Card foreffective goal alignment and behaviour
changes
Ref: 2GC Active Managementconsultancy 2007
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The problem
In an ideal world every one in an
organization would know everything about
what is important and why, and be able toselect the right thing to do at any given
moment this rarely happens.
Need links between performance
management of individuals and corporate
management performance
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The Need
Need a goal setting process that is
economical to implement and is effective
in triggering the changes in the behaviourof individuals
The content and process of such a system
needs to be closely aligned to the overall
aims of the organization
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How & what to communicate
Organizational hierarchies have
communication problems how much
information to communicate to whom?Information has to be edited otherwise
communication systems get blocked and
individuals experience information
overload. For communication to beeffective it needs to be concise.
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How & what to communicate
Information asymmetry theories (OliverWillamson et al) imply that at any pointthere is more information available that
could be communicated than anyonewould want to receive.
Design of sophisticated performance
management systems such as BalancedScore Card, have huge implementationcosts
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Use a pragmatic approach
The best approach is to modify existing
performance management systems such
as performance appraisal, to make themmore effective
Use a Performance Management System
to improve awareness of managers
Reduce the detrimental effects of incentive
related pay.
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Need to be effective
Organizations need to provide sufficient,
relevant, and meaningful information to enable
teams and individuals to set objectives against
which they can be measured
Performance management must fit with the
overall strategy of the firm. How it links
individual and corporate goals in a cost
effective, efficient and culturally acceptable way.
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Case
A British subsidiary of a large Japaneseinsurance company that has experiencedrapid growth.
Needed to inform individuals of objectivesand align them with organization &department goals
Needed to create a performancemanagement process that encouragedcorrect individual performance
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Bottom up, simple linkages
Individuals and teams determined their
own objectives
Use of a simple strategic linkage model ofactivities and outcomes enabled each
management team to show subordinates
the focus for the coming year
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Top down clear statements
The Destination Statement a clear one
page description of the company in 3
years time was an excellent mechanism to
inform HR performance management
practices, also helped prevent HR
practices that would cause organization
conflict, and conflicting individualbehaviours
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Effective Pragmatism
Use of different approaches at different
levels produced an efficient, simple, and
flexible system of control
Use of Personal Balanced Score Cards at
every level would have been too
burdensome and not a useful way of
managing the performance of staff.
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What is a Balanced Scorecard?
The concept of the Balanced Scorecard was introducedby Professor Robert Kaplan and Dr David Norton.
Its purpose was to develop a simple framework forperformance measurement and management thatreflected both leading and lagging indicators of
performance in an organisation, rather than simply thelagging financial performance indicators that havedominated for decades.
Key to this approach is the recognition that performancecan be seen from different, yet complimentaryperspectives, the financial, customer, internal and
learning perspectives being regarded as the "classic"ones used.
Performance against related key performance indicators(KPIs) are highlighted using "traffic lights" to convey a lotof performance management information in a
concentrated form.
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What is a balanced scorecard?
A well-designed Balanced Scorecard
creates a clear "line of sight" for
employees between their own activities
and decisions and the strategic objectives
of the enterprise.
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Balanced Scorecard
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Balanced Scorecards
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Balanced Scorecard
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Strategy Deployment
A well-designed Balanced Scorecard
helps employees understand the link
between their own actions and decisions &
the strategic direction of the organisation
they work for. This is achieved by
expressing the strategic direction of the
business in terms of Critical SuccessFactors (CSFs).
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Critical Success Factors
A CSF is best described as "the essence ofwhat an organisation has to achieve if it isto be regarded as successful by its peers"
- whether performance against such CSFsis good or poor is a "second order"consideration. However, once the CSFshave been identified it becomes invaluable
to understand the extent to which amanagement team perceives that it isperforming well against them, or not.
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Performance Management
From these CSFs flow the related performancemeasures and management targets againstwhich performance can be monitored on aroutine basis using a Balanced Scorecard.
However, if there is no response to theperformance indicated by the measures, thenthere is no value in such an approach.
It is therefore essential in any scorecard solution
that the measurements reported upon result invisible action plans that will then turn theBalanced Scorecard into a true managementperformance tool
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Balanced Scorecard softwareRef: Bellis-Jones Hill Group: Performance Management Solutions
Strategy Maps provide the cause-and-effect visual
links behind an organisation's strategy. The
strategy maps within Prodacapo BalancedScorecard communicate how the strategy links
together across the scorecard perspectives to
achieve organisational success.
In addition to being a strategy model theProdacapo Strategy Mapping facility also provides
an internal communication tool helping employees
to understand how they contribute to the
organisation's strategic objectives.
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Strategic Corporate Card
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Balanced scorecard software
Exception reporting
The cockpit view provides a basis forexception reporting. Users can structurethe cockpit view in order to manage theircritical measures. With time a scarceresource among many managers this viewallows focus to be maintained on thefundamentally important measures to anindividual person or department
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Balanced scorecard software
Dashboard view
A highly intuitive dashboard display offers a"clear-line-of-sight" between organisationalobjectives, critical success factors and the actualmeasures that need to be reported upon tomanage these and ensure overall performanceimprovement and success.
The dashboard enables users to see at-a-glance
how each measure within each critical successfactor is performing and what the trend for thatmeasure is over the time period underconsideration.
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Balanced scorecard software
Dynamic reporting
Users of Prodacapo Balanced Scorecard canclick through from the dashboard view onto anymeasures having initiatives to find and initiativestable. This highlights initiatives associated withkey performance indicators and allows users tounderstand how these initiatives are performing.
Priority of initiatives is highlighted along with
responsibility and status of the particular project.This helps the Prodacapo Balanced Scorecardto become a true performance managementtool.
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Balanced Scorecard software
Trend analysis
Users of Prodacapo Balanced Scorecard
can click through from the dashboard viewonto any measures having initiatives to
find and initiatives table. This highlights
initiatives associated with key performance
indicators and allows users to understandhow these initiatives are performing.
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Performance Management in the
public sector
Government Sector
The pressures for Local Government to deliver improved service
delivery and added value are constantly increasing.
There is a commitment to continuous improvement and
accountability which is driving evermore complex performance
initiatives and Local Government needs to understand the costs
associated with these programmes in order to continue to deliver
Best Value.Activity Based Costing and Management in the government
sector can provide the basis of this costing information for
improved decision-making whilst the introduction of balanced
scorecards can provide a performance management framework
for delivery of improved overall performance.
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At Bellis-Jones Hill we use enterprise performance
management to help our clients in the government
sector to: Understand underlying cost structures in order to
improve efficiencies and value to stakeholder groups
Deliver Best Value initiatives
Benchmark operations to highlight areas forimprovement
Identify value-adding and non value-adding
processes
Formalise performance management frameworksinto Balanced Scorecards in order to understand
cause-and-effect relationships and improve overall
organisational performance