step by step balanced scorecard system

21
Step By Step Balanced Scorecard System Prepared by : Shaimaa Nabil Diaa-Eldin

Upload: judson

Post on 16-Jan-2016

71 views

Category:

Documents


0 download

DESCRIPTION

Step By Step Balanced Scorecard System. Prepared by : Shaimaa Nabil Diaa-Eldin. Balanced Scorecard System. Introduction. The presentation consists of three sections: Section 1 : chapter one (Performance Measurement and the Need for a Balanced Scorecard)last part. - PowerPoint PPT Presentation

TRANSCRIPT

Page 1: Step By Step Balanced Scorecard System

Step By StepBalanced Scorecard System

Prepared by: Shaimaa Nabil Diaa-Eldin

Page 2: Step By Step Balanced Scorecard System

Balanced Scorecard System

Page 3: Step By Step Balanced Scorecard System

Introduction

The presentation consists of three sections:

Section 1 : chapter one (Performance Measurement and the Need for a Balanced Scorecard)last part.

Section 2 : summary & quick overview on main points of chapter one.

Section 3 : chapter 2 ( Balanced Scorecard as an Enduring Management Tool ) first part only.

Page 4: Step By Step Balanced Scorecard System

Section one: consist of 2 points

**The importance of Cause and Effect: What is make the BSC system unique than other

performance measurement systems is the notion of cause and effect, this feature is the most challenging aspect of the BSC implementation .

A well- designed BSC should describe the organization`s strategy through a series of cause and effect relationships which inherent in the BSC measures .

Page 5: Step By Step Balanced Scorecard System

The BSC is constructed with a series of " if – then " statementsExample:

(An organization adapt a (growth strategy

IF you increase training THEN the quality of the product will increase & IF the quality increases THEN Loyalty of the customers increase & IF Loyalty

increases THEN revenue increase .

Page 6: Step By Step Balanced Scorecard System

**Balance in The balanced scorecard:

It is important to use the term balanced when describing the BSC as a management tool.

The concept balance is central in three areas:1 -Balance between financial and nonfinancial

indicators of success. 2 -Balance between internal and external constituents

of the organization.3 -Balance between lag and lead indicators of

performance.

Page 7: Step By Step Balanced Scorecard System

Section Two : quick overview on chapter 1

Performance measurement and the need for a balanced scorecard

1 - two Fundamental issues :• The problem of effective organizational

performance measurement.• The successful strategy implementation.

1.1 - Measuring organizational performance

Page 8: Step By Step Balanced Scorecard System

*** Financial measurement and its limitations:

1- Not consistent with today`s business realities2- Driving by rearview mirror.3- Tend to reinforce functional silos.4- Sacrifice long- term thinking.5- Financial measures are not relevant to many

levels of the organization.

Page 9: Step By Step Balanced Scorecard System

1.2- the strategy story :

*** Implementing strategy :

1- the vision barrier2- the people barrier3- the resource barrier4- the management barrier

Page 10: Step By Step Balanced Scorecard System

2 The balanced Scorecard

2.1 Origins of the balanced Scorecard.

2.2 What is balanced Scorecard?

• Measurement system.• Strategic management system.• Communication tool.

Page 11: Step By Step Balanced Scorecard System

The balanced scorecard as a measurement system :

1- Customer perspective2- Internal process perspective3- Learning and growth perspective4- Financial measures

Page 12: Step By Step Balanced Scorecard System

3 -The importance of cause and effect

4- Balance in the balanced scorecard:

Balance b/w financial & nonfinancial indicators.Balance b/w internal & external parts.Balance b/w lag & and lead indicators.

Page 13: Step By Step Balanced Scorecard System

Chapter 2Balanced scorecard as an Enduring

Management Tool

Page 14: Step By Step Balanced Scorecard System

1 -The Rising Prominence of Human Capital

• The now prevailing notion that an organization`s people or its human capital represent the critical enabler in the new economy.

• The growth in prominence of human capital make business world gives great emphasis on nonfinancial indicators of performance.

• One study stated that about 35% of the investor`s decision depend on nonfinancial criteria.

• But what is human capital ? And why is it important to the BSC ?

Page 15: Step By Step Balanced Scorecard System

At the early 1990s the expression (employee as an asset) was widely used in the business community.

• Accounting definition of the asset is : an object owned or controlled by the firm that produces future value and possesses a monetary value.

DOES IT FIT TO THE EMPLOYEES?• Another school developed consider the employee as

an human capital than as an asset to be controlled by the organization.

• Thomas Davenport ( People possess abilities, behaviors, personal energy and time. These elements make up human capital.)

Page 16: Step By Step Balanced Scorecard System

For the first time in business history, workers, not the organization, own the means of production and they decide how, where and when to apply them.

Page 17: Step By Step Balanced Scorecard System

2- creating value in the new Economy:

• There is a transition of economy, from an economy based on physical assets to one almost fully dependent on human capital.

• Current research suggest that about 75% of an

organization`s value derived from human capital.

• This transition has major implications for measurement systems.

Page 18: Step By Step Balanced Scorecard System

• Financial measurements like balance sheet and income statement are perfectly appropriate for a world controlled by physical assets only.

• The new economy needs systems of performance measurement which have the capabilities to identify, describe, monitor, and provide feedback on the employees.

Page 19: Step By Step Balanced Scorecard System

3- Using the balanced scorecard to measure value in the new economy :

Kaplan and Norton have suggested a number of differences between intangible assets and physical assets :

• Intellectual assets may not have a direct impact on financial results.

• The value of intellectuals is largely potential it must be transformed.

• Intellectual assets require interdependence for success.

Page 20: Step By Step Balanced Scorecard System

The cause and effect:

which is the most important feature of the BSC enables it as a measurement system to offer how the transformation of intangibles can lead to the fulfillment of strategy and improve financial results.

Page 21: Step By Step Balanced Scorecard System

THANK YOU