1 Balanced Scorecard Conference Nikko Hotel, Kuala Lumpur 13-14 July 2004 Best Practice Implementation: CSFs & Lesson Learned Presenter: Ungku Harun Al’Rashid

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Balanced Scorecard ConferenceNikko Hotel, Kuala Lumpur13-14 July 2004

Best Practice Implementation: CSFs & Lesson Learned

Presenter:Ungku Harun Al’Rashid Ahmad

Vice President, Corporate Services Groupand

Managing Director, Knowledge Worker Exchange Sdn Bhd

MULTIMEDIA DEVELOPMENT CORPORATION SDN BHD

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WHAT MAKES THE

IMPLEMENTATION OF THE BALANCED SCORECARD IN THE

ORGANISATION SUCCESSFUL??

IS IT THE DESIGN & IMPLEMENTATION ?IS IT THE PEOPLE ?Or,IS IT THE NATURE/CULTURE OF THE ORGANISATION

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Balanced Scorecard (BSC) BSC Guiding Principles Critical Success Factors While Implementing Scorecards MDC BSC Lesson Learned – Phase (I) : Planning & Design MDC BSC Lesson Learned – Phase (II) : Implementation & Carry Through Summary

AGENDA

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The Premise behind the Balanced Scorecard is that measurement motivates behaviour

The Conclusion

Measurement Must Be Linked To Strategy

StrategyBalancedScorecard

Measurement Communicates Values, Priorities And Direction

The Premise

Premise Behind Balanced Scorecard

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The PEOPLE Barrier

Personal goals, knowledge building, and competencies are not linked to strategy implementation

The VISION Barrier

Strategy is not understood by those who must implement it…and not translated into objectives

The OPERATIONAL Barrier

Key processes are not designed to leverage the drivers of business strategy

The MANAGEMENT Barrier

Management systems are designed for operational control and tied to budgets, not strategy

Strategy

BSC Implementation Barriers

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Strategic Management Phase

Migration Phase

Components and timeline for making strategy a Continual process

Mobilization Phase

Target Setting

Initiative Rationalization

Governance Process Design

Link Strategy & Budgeting

Strategic Initiative Mgt.

3-4 months 2-3 years Steady State

Strategy update Scorecard

update Updates to

planning and budgeting

Link strategy to goals and Incentives

Link Strategy to Performance reviews

Principles of Strategy Focused Organization

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AGENDA

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• WHAT GETS MEASURED GETS DONE• People will do what they are measured on and rewarded to• People must not be held responsible for what is not measured & reported

• KEEP IT SIMPLE• Need to be simple and easy to understand & communicate• Information should be collected honestly

• MEASURES MUST BE MEANINGFUL• To the people who use them• Related to business objective & success factors• Objective & quantifiable• People must be able to visualise and act on it

• MEASURES MUST BE CONTROLLABLE• People being measured must be able to control their outcome

Guiding PrinciplesWhile Scorecarding

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AGENDA

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CSF – ImplementingScorecard

• Must Be Driven from Top of the Organisation

• Effective Communication Throughout the Project

• Require Change of Behaviours

• Linking Rewards to Performance Measures

• Design & Implement Change Management Programmes

• Continuously Managing the Change

• Empower People to Change

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AGENDA

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BSC Implementation:Lesson Learned (I)

Phase I :

Major Challenges DuringPlanning & Design

(1)Business Planning

Process

(2)Non Existence of

Strategy Paper / Doc.

(3)People are Scared to

Be Measured

(4)Wrong Scorecard Team

Or Dept. Champions

(5)Too Many Measures

Identified

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BSC Implementation:Lesson Learned


Process

(2)Non Existence of



Be Measured


Or Dept. Champions


Identified

• Business planning usually underdeveloped, with no owners and takes a long time

• There is no strategic planning unit / person responsible for the strategydevelopment

• Too many people involved in developingthe strategy thus resulting in too manyversions of the strategy documents

• Problem with strategy implementationand carry through

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Process

(2)Non Existence of



Be Measured


Or Dept. Champions


Identified

• Most of the strategy is not stretchableenough – confusion on the terms i.e. programmes, objectives & strategy.

• Less focus on customers and financial.

• Too many initiatives identified. Objectively should focus on key areas /programmes – about 6 – 8.

• Do we have a strategy ??

• Lack of historical data that can be used as a benchmark

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Process

(2)Non Existence of



Be Measured


Or Dept. Champions


Identified

• Individual performance review is notlinked to the organisation’s performance

• Scorecard will clearly define the roles andresponsibility for each employee

• Measures often scares the employeeinstead of motivating them to succeed

• Why bother ?? More information = morework – furthermore, it’s not linked to monetary returns

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Process

(2)Non Existence of



Be Measured


Or Dept. Champions


Identified

• Should have 150% support from CEO andtop management before implementingBSC

• Champions must be credible, senior andhave a good understanding of the organisation / department

• Strong analytical and thinking skills

• BSC Team should comprise of differentlevel of people from different departmentsand background

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Process

(2)Non Existence of



Be Measured


Or Dept. Champions


Identified

• Ideally 6 – 8 measures per employee

• 20 – 40 are chosen – for them more is better!

• Confused with nitty gritty details – i.e.number of meeting attended, hours spentin the meeting

• Perfect measures don’t exist!

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AGENDA

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BSC Implementation:Lesson Learned (II)

Phase II :

Major Challenges DuringImplementation & Carry Through

(1)CEO Commitment on

the Project

(2)Mismatched NumberDuring Data Collation

(3)Problems with Ownerand Communication

(4)Develop a Structured Education Campaign

(5)Managing the Change

Process

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• Need to show more buy-in andappreciation towards this project

• Moved to ‘new toys’

• Doesn’t act or address the Performance issues

• Take it as flavour of the week project;and separate it from the strategy discussion / performance monitoring


the Project





Process

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• Difficulty in aligning scorecard due to different budget cycle / coding

• Budget initiatives doesn’t work parallel withscorecard implementation

• Standard template required to ensuremonthly data / figures are consistentthroughout the whole organisation

• Data collation / performance trackingis not a practice!


the Project

(2)Mismatched Numberduring Data Collation




Process

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• Scorecard team / champions are expectedto perform the job for the staff

• Owners don’t want to take responsibility for KPIs and project

• Structured communication plan has tobe developed

• Continuous communication usingdifferent mode of communication needto be undertaken


the Project





Process

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• Clearly explain the terminology and premises behind the Balanced Scorecard

• Address employee in a small group toinitiate discussion and feedback

• Use laymen terms while explaining and provide them with the manual

• Education campaign must be continuous


the Project





Process

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• Address the how-to

• Inability of the staff to get out of their normmake it hard for change

• Confused because there are too manysteps / forms to be filled up

• You might need to pamper your staff inorder to ensure successful change process – i.e. one-on-one discussion

• Stress on Strategy Focused Organisation- the employees role


the Project





Process

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AGENDA

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SUMMARY

THE SUCCESS OF THE BALANCED SCORECARD

IMPLEMENTATION DEPENDS ON:1. The Strategic Planning Process

2. The Support and Buy-in from the CEO / Senior Management

3. The BSC Project Team / Champions in Managing the Project

4. The People – To Change Their Attitude, Internalise and Deliver the Targets

5. The Communication Plan – Effectiveness & Structure

According to Jim Collins in his book “Good to Great” – To make a breakthrough from a flywheel, all that matters is the culture of discipline -

Disciplined people with disciplined thought executing disciplined action, willturn a company from GOOD to GREAT …

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Thank You

Documents

1 Balanced Scorecard Conference Nikko Hotel, Kuala Lumpur 13-14 July 2004 Best Practice Implementation: CSFs & Lesson Learned Presenter: Ungku Harun Al’Rashid