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The Balance in Balanced Scorecard

Whitepaper POV The Balance in Scorecard

Authors Name: Prosenjit Sen TIS - Service desk

WIPRO TECHNOLOGIES

TABLE OF CONTENTS

1. The Balance in Balanced Scorecard2. What is a Balanced Scorecard? 3. Balanced Scorecard as a Management System4. How would the Balanced Scorecard help a Service Desk?5. The Balanced Scorecard

1. The Balance in Balanced ScorecardThe success of a business lies not only in managing the present operations in the most optimum manner but also in formulating a roadmap for the future. It is imperative that the organization finds the correct balance between the present operations and the future endeavors, as both are equally important. The best way to accomplish this balance would be to manage a business through measurement, a measurement which would not only help the organization to succeed today but would also pave the road to future success. The Balanced Scorecard (BSC) is such a tool which facilitates the organizations sustained success. This white paper clearly describes what a Balanced Scorecard is, its benefits and how it can be molded to facilitate the application of BSC to the several Service Desk elements in Wipro Technologies.

1.1 What is a Balanced Scorecard? The collision between the irresistible force to build long-range competitive capabilities and immovable object of the historical-cost financial accounting model has created a new synthesis: The Balanced Scorecard (Kaplan.R & Norton.D, 1996, The Balanced Scorecard).Simply put, the BSC helps an organization measure all the crucial levers which eventually propel it towards consistent success. Previously only the financial aspects of the organization were measured, however with the onset of the information age it became evident that the financial measure alone would not provide the requisite inputs for success. The key reason for such a shortfall was the new set of operating assumptions on which the information age organizations were built on.

1.2 Balanced Scorecard as a Management SystemOrganizations would already have a performance measurement system in one form or the other. However the present performance measurement systems are used only to provide tactical level feedback and control short-term operations. The BSC on the other hand adopts a completely different approach to the performance measurement system. The BSC is designed keeping the organizational Vision & Strategy at the very core. The measurement system is designed in such a manner that all stakeholders within an organization are aware of how their individual actions facilitating the achievement of the Vision.

Balanced Scorecard Framework: Translating Strategy into Operational Terms

Financial Perspective: The BSC categorically states that the Financial perspective is extremely important to be measured. However the measures in the scorecard should be modifeied as per the phase in which the organisation resides. The different phases are Growth Phase, Sustain Phase and Harvest Phase. Thus, it is evident that each of the stages requires own financial objectives which are dictated by requirements of a business life cycle. So, financial goals for growth businesses include growth of sales in existing and new markets, from existing and new product. Sustain stage implies traditional financial objectives such as operating income, ROCE, gross margin while financial objectives at harvest stage focus on increasing cash flow.

Customer Perspective: One of the most important aspects which need to be looked into while preparing the BSC is the customer perspective. The designing of the customer perspective enables organizations to align their core customer measures such as satisfaction, loyalty, retention, acquisition and profitability to targeted customers and market segments. It also helps the organizations to clearly identify the Value Proposition that would be offered to their customers. The Value Proposition is core to the customer perspective as this represents the drivers and the lead indicators. The following illustration would depict the relationship between the core measures of the Customer Perspective. Customer Value Proposition is an extremely important part of a service or product that an organisation is offering its clients. In this day and time where the cuctomer has a plethora of choice, one must stand out so as to ensure that your product or service is the one picked by the customer. The generic model for customer value proposition has the three following parts Internal Business Processes: All organisations in one way or the other measure the efficiency of their processes and as a result also go ahead and try and innovate so as to ensure they are in sync with their business enviornment. This approach is good but piecemeal, it will help the organisation survive but would not ensure market leadership. The sharpest difference between the usual measurement system and BSC is the focus on Internal Business process. The balanced score card works toward enabling the organisation to outperform competitors on all business processes and not unique processes. BSC ensures that innovation and improvement in the several processes is proactive rather than reactive. In the BSC the objectives and measures for the internal business process perspective are derived from explicit startegies to meet shareholder customer expectations. This sequential top-down process will ususally reveal entirely new processes at which an organisation must excel. The three key business processes that comprise internal business processes are InnovationOperationsPostsale Service

The Internal Value Chain Model is depicted in the following illustration

Learning & Growth: The final piece of the BSC is the Learning & Growth perspective. The objectives identified in the three previous stages identify where the organization must excel to achieve breakthrough performance. The objectives in the learning and growth perspective provide the infrastructure to enable ambitious objectives in the other three perspectives to be achieved. Objectives in the learning and growth perspective are the drivers of achieving excellent outcomes in the first three perspectives.

How would the Balanced Scorecard help a Service Desk?The BSC would prove to be useful in several ways to any Service Desk. The adoption of BSC would not only complement the processes that are already in place within a Service Desk but the ensuing discussions would also bring out the key performance measures and the desired outcomes (Lead & Lag Indicators). Presently there are performance measurement systems which are being used across the Service Desk spectrum; however these may or may not be aligned to the vision of the business.One of the Top 3 players in the Service Desk SupportThe implementation of the BSC in a Service Desk scenario would have the following key benefits:1. The BSC would align all elements of the Service Desk towards the common vision. The elements may be presently working internally for improvement but without a final holistic Vision. The BSC would create a shared understanding across all of Service Desk.1. The BSC would create a model of the strategy that allows all employees to see how they contribute to organizational success. Without such linkage individuals and departments will only optimize the local performance which may or may not facilitate the achievement of the Service Desk vision.1. The implementation would highlight the key measures that would be instrumental in facilitating the achievement of the vision. The unearthing of these measures would also ensure that consistent focus remains on them and consequent checks would be done to see whether these measures need to be updated, changed or dropped.1. The BSC would also standardize the performance measurement system across all the elements of the Service Desk. Even though the scorecards may not be mirror images for all elements but nevertheless there would be significant similarities.1. As the BSC takes the top-down approach the visibility of the Top Management during the design process ensures that this initiative gathers enough momentum to be taken seriously and with requisite motivation.

Case Study: Implementation of the Balanced Scorecard in a Service Desk EnvironmentThe following is an example where in a BSC was implemented in a service desk environment. This would facilitate the easy understanding of how such a framework could be implemented. Also it would help understand the key features that need to be focused on.The present measurement system for the concerned Service Desk already had strong measures for the financial and customer perspective. However the current measurement system did not have any means of measuring Learning & Growth and Internal Business Processes. The present measurement system is depicted in the following illustration The BSC was built on a detailed matrix of cause and effect relationships, which is called the Strategy Map. The strategy map was jointly developed by the Top Management and the Service Desk delivery team. These cause and effect relationships are the Blue Print of the BSC. These relationships essentially depict how each measure would impact the achievement of the overall business strategy or vision. The following illustration depicts the Strategy Map.

Post the Strategy map was in place for the service desk the measure were put in place for the following the Internal Business Processes and the Learning & Growth perspective. The following tables illustrate the objectives and the measures decided.

Table 1.1: Measures to Gauge Internal Business ProcessesInternal Business Processes

Objectives for ImprovementMeasuresIndicatorsIncentives

Business Processes must excel atBusiness Processes (Quality)# of Managers Attending Training for Six Sigma & LeanLead

Intellectual and Business efficiency# of Projects being completedLag

Business Processes at Grass Root Level # of "Kaizens" being registeredLag

Identify Opportunity Areas in Call HandlingAudit ScoresLead

Reduce Transport Costs# Unscheduled Pick-Ups/ Drops & Cold callsLead

Meet SLA consistentlySchedule AdherenceLead

Reduce Abandon ratesUnplanned Leaves / Schedule Adherence Team every weekLead

Table 1.2: Learning & Growth MeasuresLearning & Growth

Objectives to MeasureMeasuresIndicatorsIncentives

Achieving Employee Satisfaction & GrowthEmployee Interest# of People attending Training Lead

Dependability of Process on Select few# of Cross Trained EmployeesLead

Employee Satisfaction (Reasons)# of Referrals / Employee / EOSLag

Employee Satisfaction (Reasons)Tenure in the OrganizationLead

Effectiveness Of Trainings # of training hours attended/ Employee & Improved Performance after TrainingLag

Employee Alignment with Ethics# of Ethics ViolationsLead

Post inclusion of these two perspectives the complete Balanced Scorecard which was implemented in the Service Desk was as follows.

1.3 The Balanced Scorecard

The weight ages attached to each factor could vary according to the requirements of the project.

Barriers to the Implementation of the Balanced ScorecardReinventing the Wheel: There are already present performance measurement systems in one form or the other in the several elements of Service Desk. As a result of which the implementation of BSC may be looked upon as reinventing the wheel. However as explained earlier in the paper that the BSC is not just another scorecard but a tool which facilitates the penetration of the organizational strategy to all strata and ensures the achievement of the organizational vision.Non Alignment of Vision and Strategy: The probability of a mismatch in the vision and strategy is quite likely, given that there are multiple elements in Service Desk. It would be imperative that all the concerned elements are calibrated and aligned to the overall vision. Involvement of Human Resources: The detailed implementation of the BSC across Service Desk would mean formulating scorecards for the various elements. However the scorecards would only be effective when there is reward or reprimand associated with the achievement or the non achievement of the measures entailed in the scorecard. Hence the scorecard needs to be amalgamated with the human resource processes without which the success of the BSC would be under doubt.Data Credibility: In certain measures within the BSC, data would be needed. It would be of utmost importance that the credibility of the data is unquestionable.

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