MESYUARAT PENGURUS NEGERI 1/2006. BSC/KPI NEGERI. DISEDIAKAN OLEH: ABD RAHAMAN RASID PENGURUS KANAN JABATAN PERANCANGAN KORPORAT/PENGURUS PROJEK EIS. 1B FEBRUARI 2006. SCOPE & OBJECTIVE OF PRESENTATION. Introduction and Background To explain basic concept on Balanced Scored Card (BSC)
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ABD RAHAMAN RASID
JABATAN PERANCANGAN KORPORAT/PENGURUS PROJEK EIS
1B FEBRUARI 2006
Formal Definition: A tool that translates an organization’s mission and strategy into a comprehensive set of a performance measures that provides the framework for a strategic measurement and management system
MY DEFINITION: A SYSTEMATIC WAY FOR MANAGEMENT TO PLAN AND EXCUTE STRATEGY FOR THE WHOLE ORGANIZATION
Only 10% organizations execute strategy
Barriers to Strategy Execution
Only 25% managers
have incentives linked to strategy
85% executive teams spend less than 1 hour/month discussing strategy
60% of organizations don’t link budgets to strategy
Only 5% workforce understands the strategy
Source: Robert S. Kaplan & David P. Norton
To succeed financially, how should we appear to our shareholders?
To achieve our vision, how should we appear to our customers?
To satisfy our shareholders & customers, what business processes must we excel at?
LEARNING & GROWTH PERSPECTIVE
To achieve our vision, how will we sustain our ability to change and improve?
from existing assets
Customer Value Proposition
Processes that produce & deliver products & services
Processes that enhance
Processes that create new
LEARNING & GROWTH
“To succeed financially, how should we appear to our shareholders?”
“To satisfy our shareholders & customers, what business processes must we excel at?”
“To achieve our vision, how should we appear to our customers?”
“To achieve our vision, how will we sustain our ability to change & improve?”
ROI, ROA, ROE
Satisfaction, retention, acquisition, market share
Response time, new products, cost, product & service quality
Employee satisfaction, information system, competency, value system
Learning & Growth
Outcome (Lag) Measures
Driver (Lead) Measures
between strategic objectives
Statement of what strategy must achieve and what’s critical to its success
How success in achieving the strategy will be measured and tracked
Strategic Theme: Operating Efficiency
The level of performance or rate of improvement needed
Key action programmes required to achieve objectives
Strategic Skills &
KEY PERFORMANCE INDICATOR (KPI)
Number of training/year
Initiatives Are Defined to Help Close the Performance Gap
Increase Customer Satisfaction
Objectives articulate the components of our strategy
MEASURE / TARGET
Customer Satisfaction Survey Rating
Implement automated case management system and train Every Rep in 99
90% favorable overall
Measures track our progress toward achieving and communicating the intent of the objective
Initiatives help close the gap between our current and desired performance
What does cascading the BSC means?
Mission, Vision & Value
Team & Personal BSC
Note: O: Objectives M: Measures T: Targets I: Initiatives
Cascading is accomplished using one of three approaches
and Unit Specific
Balanced Scorecard: A tool that translates an organization’s mission and strategy into a comprehensive set of a performance measures that provides the framework for a strategic measurement and management system
Cause and Effect Relationship: A cause and effect relationship identifies the initiatives, responsibilities or activities (causes) necessary to achieve an objective or target (effect)
Customer Value Proposition: Defines who the customer is and what they want
Initiative: Key action programs to achieve objectives or close gap between measures performance and targets. Initiatives are often known as projects, actions or activities.
Lag Indicator: Measures to determine the outcome of an objective that indicate company performance at the end of a period. These are results-oriented and do not reflect a process. Lag indicators often appear in BSC’s outcome-oriented Financial and Customer perspectives.
Lead Indicator: Measures that indicate progress againts a process or behavior. These measures are helpful in predicting the future outcome of an objective. Lead indicators tend often appear in the Internal and Learning & Growth perspectives.
Measures: Statement of how success in achieving an objective will be measured and tracked. Measures are written statements of WHAT we will track and trend over time, NOT the actual targets such as direction and speed. A measure should include a statement of the unit to be measured (RM, %, rating).
Objective: Concise statement articulating a specific component of what the strategy must achieve/what is critical to its success. Each perspective usually contains 3-6 primary objectives that state a key aspect of the strategy to be achieved over the next 3-5 years. Objectives are best stated as action phrases and may include the means and/or desired results as well as the action. E.g: “ Increase market share through current customers”
Strategy Map: A visual representation of an organization’s strategy and the processes and systems necessary to implement that strategy. A strategy map will show employees how their jobs are linked to the organization’s overall objectives