measuring organisational strategy using balanced scorecard
TRANSCRIPT
Measuring
Organisational Strategy Using
Balanced Scorecard
06 April 2021
Yasir Ellathody
Introduction to the Balanced Scorecard Balanced Scorecard Basics
4 perspectives
Strategy Map
Strategic Performance Measures & Targets
Strategic Initiatives
Strategic Performance through Cascading
Outlines
Only 5% of the work force understands the strategy
9 of 10 companies fail to execute strategy
85% of executive teams spend less than one hour per
month discussing strategy
Only 25% of organizations have incentives linked to
strategy
60% of organizations don’t link budgets to strategy
Why
Balanced Scorecard?
What is Balanced Scorecard
The Balanced Scorecard (BSC) is a strategic planning
and management tool that organizations use to:
Communicate what they are trying to accomplish
Align business activities with organizational strategy
Prioritize projects, products, and services
Measure and monitor progress
Introduced by Kaplan and Norton- Harvard University professors in 1992
Essentials of
Balanced Scorecard
Vision- your destination
Mission- your purpose of existence
Values – your driving forces
4 perspectives
Strategic Objectives & Strategy Map
Performance Measures
Performance Targets
Strategic Initiatives
Bain & Co listed Balanced Scorecard fifth on its top ten most widely used
management tools around the world
Gartner Group says that over 50% of large US firms have adopted the BSC
BSCs are used extensively in business and industry, government, and non-profit
organizations worldwide
More than half of major companies in the US, Europe, and Asia
Usage trend is increasing including in the Middle East and Africa
Several educational institutions use BSC in strategic planning.
BSC has also been selected by the editors of Harvard Business Review as one
of the most influential business ideas of the past 75 years
Who uses Balanced Scorecard
Four Perspectives
Strategic Objectives
and Strategy Map
Performance Measures
Performance Measures are the critical (key) indicators of progress toward
an intended result.
Measures provide a focus for strategic and operational improvement
Create an analytical basis for decision making
Help focus attention on what matters most
Monitor the implementation and effectiveness of an organization’s
strategies
Determine organization effectiveness and operational efficiency.
Using color codes
Lead, lag, Input, Output, Outcome Measures
For each objective on the strategy map, at least one to two Measure or Key
Performance Indicator (KPI) will be identified and tracked over time.
Stakeholder / Customer Internal Processes
Learning and Growth Investments• % of facility assets fully funded for
upgrading
• % of IT infrastructure investments
approved
• # of new hire positions authorized for filling
• % of required contracts awarded and in
place
• Percentage employee absenteeism
• Hours of absenteeism
• Job posting response rate
• Personnel turnover rate
• Ratio of acceptances to offers
• Time to fill vacancy
• Number of unscheduled maintenance calls
• Production time lost because of maintenance
problems
• Percentage of equipment maintained on
schedule
• Average number of monthly unscheduled
outages
• Mean time between failures
• Current customer satisfaction level
• Improvement in customer satisfaction
• Customer retention rate
• Frequency of customer contact by customer
service
• Average time to resolve a customer inquiry
• Number of customer complaints
Examples of Measures by Perspective
Targets
Desired result of a performance measure
Targets match up with measurements, one to one.
Targets are quantifiable.
Long-term targets are established before short-term targets.
Financial/Budget related targets are established before non-financial
targets.
Initiatives
Strategic Initiatives are specific programs , activities projects (new or
existing) that are designed to help the organization achieve Strategic
Objectives and have significant organization-wide impact.
Group of projects/programs that close the gap between the
current state & desired state.
Should be able to produce clear and measurable impact to
aligned objectives.
Can possess as many initiatives as deemed necessary.
Cascading Enterprise Scorecard
Cascading a balanced scorecard means to translate the enterprise
wide scorecard down to:
1) Corporate scorecards ( Level 1) then to
2) Units ( Level 2) , then to
3) Departments/ sections (Level 3) and then to
4) Individual employees (Level 4)
Cascading translates high-level strategies into lower-level objectives, measures, targets and tasks
This creates organizational alignment
People work together to achieve the same objectives
People in all levels and units understand and work towards the
purpose
People do not work in silos
Cascading Enterprise Scorecard
Cascading -Corporate and Unit-Scorecards
Cascading -Corporate and Employee Scorecards
Performance Monitoring &
Reporting
