1 Transforming Jeddah Chamber of Commerce Into a Strategy-Focused Organization Using the Balanced Scorecard Presented By Dr. Mohamed Moustafa Mahmoud

1 Transforming Jeddah Chamber of Commerce Into a Strategy-Focused Organization Using the Balanced Scorecard Presented By Dr. Mohamed Moustafa Mahmoud Dr. 3M

3 Introduction Jeddah Chamber of Commerce & Industry (JCCI) The first chamber in the Kingdom of Saudi Arabia founded in 1944 32,000 active members from a base of 102,000 total memberships since inception. 326 full-time employees + 87 seconded to local government departments

4 Introduction During the past three years, JCCI has embarked on an ambitious plan to transform itself into a true business partner, building on its internal strengths, forging new partnerships and continually learning from world-class organizations across the world. The aim was to transform the Chamber from a passive body offering basic membership services into the key driver for economic growth and business development in Jeddah Governorate in order to make the Region the true Commercial and Cultural Gate for the Islamic World.

5 Low employee morale Low productivity Outdated structure Lack of systems and procedure Poor IT infrastructure Over-centralization and lack of empowerment of front line staff Overstaffed and understaffed departments Rigid routines Lack of customer focus Resources allocation does not match expectation of membership Lack of critical employee competencies Increasing cost of offering services The Burning Platform Internal Heat

6 Growing unemployment and Gov pressure for Saudization WTO Increasing public criticism of the Chambers inefficiency It was widely perceived that JCCI, which was once the leading chamber in the Kingdom, is now falling far behind. The Burning Platform External Heat

7 Causes of low performance improper organizational structure Weak strategy execution capability Reorganization BSC Restructure to fit new strategy and align the organization towards strategy implementation

8 Feb 2003 Executive Board Strategic Review Re-examine our current status (SWOT and Force Field Analysis) Formulation of JCCI new strategy document

9 Assessing the status quo A comprehensive Stakeholder Satisfaction Survey was conducted by a third party consultant Results were analyzed by a focused group Provided base values for BSC Customer Satisfaction KPIs.

10 Measuring the Process A team of industrial engineers from the KAAU university was commissioned to analyze the processes of offering our key services and to perform Activity-Based Costing (ABC) for the purpose of identify the true cost of offering these services and uncover areas for process improvement. Activity-Based Costing (ABC)

11 Facilitators Activists Basics Increasing activism Source: Benchmarking of Chambers of commerce, Swicorp analysis Benchmarking World Best practices

12 Basic activities Represent and lobby for member companies Provide basic administrative and information services to companies Facilitators Activists Basics Increasing activism Basic training programs Extensive array of pertinent information for local companies (market, legal, regulatory, etc.) Comprehensive information about doing business in the city for foreign entities Organized activities to promote the city and its business environment (trade fairs, conferences, etc.) Access to economic and sector studies / reports Extensive training programs targeting all chamber customer groups Consulting services to companies (strategic, marketing, international growth, etc.) Access to wide range of support networks (mentors, potential investors, clients, etc.) Extensive support services to SMEs (business planning, business building, etc.) Access to sources of financing (venture capital, loans) JCCI Benchmarking World Best practices

13 Rallying the Troops A series of intensive workshops involving all top 70 managers and heads of units was led by the Chairman of the Board over a period of two month to: 1.Solicit managers input and buy-in to the strategy 2.Build a competency profile of each through extensive written assignments, psychometric profiling, and ability tests; and 3.Infuse a higher level of enthusiasm in top and middle management.

14 Mission Vision Values Stakeholders Stakeholder Value Proposition Strategic Themes Strategic Objectives Key Performance Indicators Annual Action Plans JCCI Strategy Document

15 The appointment of the new Chairman of the Executive Board (Eng. Adel Fakeih), a visionary executive leading the largest food manufacturing and distribution company in the Middle East, added momentum and top management support to the change process.

16 Mobilizing the Community New Strategy road show Presentations Government officials businessmen communities foreign consulates and commercial attaches, local professional societies. To: get their input and buy-in to the strategy, open the channels for maximum community participation establish new initiatives sponsored by community advocates

17 The Strategy We aim to be the ideal business partner for the business community in Jeddah by being an efficient provider of information; an ideal forum for networking; and a think- tank generating ideas, business opportunities and innovative funding alternatives.

18 To be the key Driver for economic growth and business development in Jeddah in order to make it the true Commercial and Cultural gate for the Islamic World The Destination

19 We will reach our destination through being a role model organization inspiring positive change in private and public organizations and driving economic development through public and private partnerships. A Model Organi -zation The Journey

20 We will transform the JCCI into a premier public service organization that is seen as the advocate for business and commerce and a high gear driver of economic growth that serves as a catalyst for positioning Jeddah as the favored destination for business, family entertainment, and private education in the whole Gulf Region. Advocat e for the Busines s Commu nity The Journey.. Cont.

21 We will adhere to a balanced culture of ethics, high drive and an attitude of Public service. We will support the development of our people so as to enable their personal growth and achieve higher efficiency in JCCI A Culture of High Ethics The Journey.. Cont.

22 During our journey we will promote a work culture which is based on the following principles: We will be customer focused and will strive to continually improve our processes. We will encourage innovation spirit and will invest in developing our human resources. We are open to communicate and cooperate with all organizations who are interested in economical and social development. We are keen to learn form all similar local and international institutions We will be achievement-focused and will manage our operations using scientific methods. We will link rewards with achievement of specific targets.

23 Identifying Key Stakeholders Government Members BusinessCommunity Community at Large at Large ForeignEntities

24 Start with the End in Mind Stakeholder Value Proposition (SVP) in writing The value propositions commit the Chamber to offer concrete values to its customers. It holds us accountable in front of our constituents. It provides the context for the intangible assets of the Chamber to create value. They describe the desired outcome from the strategy.

25 Stakeholder Value PropositionMembers of the Stakeholder Class Stakeholder Class JCCI is the voice of its member business community and the efficient provider of essential services. Various membership classes (retail, manufacturing, insurance, etc) Members JCCI is a role model organization and a catalyst for enhancing the success of existing businesses, attracting new and successful investments that create job opportunities and for improving the business environment and the quality of life. Jeddah city, citizens & business community [Residents, Visitors, Job Seekers, Entrepreneurs] Business Community & Community at large JCCI is an effective support for government effort to strengthen the role of private sector and a means for bringing its views & concerns, thus supporting the efforts of the regulators to modernize and update the rules & policies. Relevant Ministries [Municipality, Labor Office; Dept of Commerce, Tourism Dept, Hajj Dept, ] Government JCCI is the best means for connecting potential foreign investors to the local business community and, thus facilitating and expanding foreign trade. Consulates, Foreign Investors, Visiting delegates Foreign Entities Stakeholder Value Proposition (SVP)

26 Strategy Map Strategy Map describes JCCI strategy and delineate the key Strategic Objectives and Strategic Themes in the four BSC perspectives The Strategy Map showed the cause-and-effect relationships among objectives.

27 Strategy Map A very effective tool to Describe and explain our strategy to stakeholders and employees Provide a platform for the executive to discuss the direction and the priorities of the Chamber.

28 Strategic Map - Linkage Model Grow and diversify revenue base Develop sustainable Contribution Program Ensure viable fiscal position thru financial management & cost control Increase attractiveness of Jeddah for trade & Investment Improve satisfaction of members Improve Business Environment & Quality of Life Government Support Government Efforts at Growth, Development & modernizing Enhance technology capability and improve alignment Build a unified culture & climate for action Build a diverse talented team Internal Processes Perspective Learning & Growth Perspective Financial Perspective Trading Partners & Foreign Investors Community Members Stakeholders Perspective Government Increase Level of Automation Increase Flow of Information & Chances of Effective Encounters Increase Range & effectiveness of community support services Increase effectiveness of policy analysis Increase range & effectiveness of member Services C1 C2C3C4 P1P2P3 P4P5 LG1LG2LG3 F1F2F3

29 Key Performance Indicators (KPI) To track progress in achieving objectives lag KPIs (e.g., member satisfaction index) lead KPIs (e.g. number of services offered through internet)

30 C4 Stakeholders satisfaction C41 Members satisfaction index C42 Services recipients satisfaction index C43Increase in the size of membership C44 % of member who upgraded their membership class Key Performance Indicators (KPI)

31 Setting KPI Target Levels To communicate the expected performance level and focus the Chamber on improvement Target 2004 2003 Base Value FormulaUnit of Measure KPI C44 8%4.5% no of upgrades total membership * 100(%) % of member who upgraded their membership class

32 Performance MeasuresStrategic Objective Perspective Targeted 1426 H Actual 1425 H Measure Unit MeasureCodeObjectiveCode 70%64%Percentage Members satisfaction index C11 Increasing Stakeholders satisfactionC1 Customers 90%89%Percentage Services recipients satisfaction index C12 15%9%PercentageIncrease of members numberC13 84.5% % of members who upgrades their membership class C14 70%59%Percentage Satisfaction index of members of committees and boards C21 Improving business environmentC2 52Changes No. of regulations changes initiated by JCCI C22 6.0001.856 Saudi persons No. of Saudi employed through Chamber support C23 50 Opportunitie s No. of new job opportunities identified & marketed C24 10016Businesses No. of small businesses incepted by Chamber support C25 75%-Percentage Satisfaction index of participants in Chamber activities C31 Improving quality of life in JeddahC3 10-Companies No. of companies starting social responsibility programs through Chamber support C32 80%75%Percentage Satisfaction index of delegations, business partners & consuls C41 Increasing Jeddah attraction of trade & investment C4 159ActivitiesNo. of activities done by Chamber for activating foreign tradeC42 75%71%PercentageSatisfaction index of concerned government officials & agenciesC51 Support of Government agencies for development process C5 Setting KPI Target Levels

33 650592ActivitiesNo. of activities organized by the ChamberP11 Improving the effectiveness of internal Processes P1 Process 450.000 376.5 71 Man/hour Size of participation in activities organized by the Chamber P12 2522 Info. category No. of new info. Categories provided by the Chamber P21 Raising the volume & flow of information P2 4740 Publicatio ns No. of the Chamber new & updated publications P22 3ServicesNo. of Chamber services available via InternetP31 Improving the quality & expanding the scope of services provided P3 2037ServicesNo. of new services addedP32 1.000888 Articles/ coverage No. of positive articles and media coverage on Chamber P33 70%60% Percentag e Satisfaction index of Chamber dep.'s with support dep.'s services P34 2312StudiesNo. of studies made by the ChamberP41 Upgrading research, analysis & consultation capabilities P4 70%60% Percentag e Index of employee satisfaction with work environment (Gallup Index) L11 Creating positive work environment L1 Learning & Growth 30%14% Percentag e Percentage of employees whose objectives are linked with BSC L21 Building capabilities and aligning performance with strategy L2 9%- Percentag e Percentage of employees whose bonus is linked with performance L22 90%88% Percentag e Percentage of implementation of training programs planned for Chamber staff L23 75103 Agreemen ts No. of cooperation agreements with local & int'l experts L31 Creating intellectual alliances L3 7% Percentag e Saving on allotted expenditureF11 Ensuring stable financial position F1 Finance 12.15 3.595 SR Value of Grants, donations, & in kind & cash sponsorship obtained by Chamber F21 Expanding & diversifying income base F2 8%7% Percentag e Growth of total revenues F22 Setting KPI Target Levels

34 Cascading the Strategy Cascading ObjectivesKPI aggregation formula Chamber Department Section

35 GoAgile www.horizonsoftware.comwww.horizonsoftware.com

36 Strategic Initiatives C1C2C3C4P1P2 Establish Employment Office E-Chamber Build a Small Business Incubator Disable employment Conference & Job Fair Development of Jeddah Barbour Founding Syadah Khadijah Center Objectives Strategic Initiatives

37 Founding Syadah Khadijah Center Development of Jeddah Barbour Disable employment Conference & Job Fair Build a Small Business Incubator E-Chamber Establish Employment Office P2P1C4C3C2C1 Objectives Strategic Initiatives 120,000 560,000 1,500,000 570,000 2,500,000 1,750,000 Strategic Budgeting

38 Weekly Key Activities Reports Big Rocks of The Week Mission Roles SMART Objectives Weekly Big Rocks Review

39 Strategy Navigation Dashboard

40 Aligning Structure with Strategy As the new vision requires more focus on customers needs, it became evident that the existing organization structure does not provide the ideal fit for the new strategy nor does it optimally support the delivery of the values which we are committed to offer to our stakeholders. Grow and diversify revenue base Develop sustainable Contribution Program Ensure viable fiscal position thru financial management & cost control Increase attractiveness of Jeddah for trade & Investment Improve satisfaction of members Improve Business Environment & Quality of Life Government Support Government Efforts at Growth, Development & modernizing Enhance technology capability and improve alignment Build a unified culture & climate for action Build a diverse talented team Increase Level of Automation Increase Flow of Information & Chances of Effective Encounters Increase Range & effectiveness of community support services Increase effectiveness of policy analysis Increase range & effectiveness of member Services Sectors Committees Secretary General Chairman Board Committees Deputy Secretary General Board of Directors GM Jed. Marketing Board GM Jed. Small Bus Deve. Center GM Khadeejah Center GM Jed. Manpower Deve. Center Centers Boards Chairmen GM Support Services Division GM Info. & Members Services Division GM Business Sectors Support Division Management Development Advisor Media Advisor Social Responsibility Dep Public Affairs Dep Trade Sector Sup. Dep Transport Sector Sup. Dep Tourism & Omrah Sec. Sup. Dep Prof. Sector Sup. Dep Industrial Sector Sup. Dep Envir. & Health Sector Sup. Dep Real Est. & Contract Sect. Sup. Dep Serv. Sector Sup. Dep GM Intl Affairs Division Member. & Attest. Dep IT Dep Research & Reports Dep Public Relations Dep Finance Dep Facilities & Operation Dep H.R Dep Real Estate Services Dep Businesswomen Relations Dep Home based Bus. Support Dep Specialized Women Activities Dep Women Training Dep Financial Consult. Dep Invest. Opport. Studies Dep Small Bus. Support Dep Gov. Policies & Procedures. Dep Manpower R&D Dep Edu. & Train Sector Support Dep Postgrad. Studies Dep Training Prog. Dep Saudis Employ Dep Activities Dep Jed. Marketing Dep Exhibitions Dep Marketing Serv. Dep Intl Trade & Inves. Attr. Dep Intl Relations Dep Intl Agreements Dep GM Legal Affairs Division Entrep. Spon. Dep Chairmans Office Info Systems Dep Settlement & Arbit. Dep Legal Studies Dep Contracts & Consult. Dep Protests Office To be the key Driver for economic growth and business development in Jeddah in order to make it the true Commercial and Cultural gate for the Islamic World

41 A comparative study of leading chambers revealed the need to move towards a lean model and the creation of specialized autonomous centers (subsidiaries) that receive a shared support services from the Chamber s HQ, while focusing on a specialized strategic mission. Aligning Structure with Strategy

42 Jeddah Manpower Development Center Jeddah Small Business Development Center Jeddah Marketing Board Mrs. Khadijah Center for Businesswomen Established Four Autonomous Centers

43 Member business were clustered into 9 key sectors 1.Trade 2.Manufacturing 3.Tourism 4.Healthcare/Environment 5.Logistics/Transportation 6.Services/Insurance 7.Real Estate/Urban Development/Construction 8.Professionals 9.Training/Education /Employment Established 9 Business-Focused Support & Development Units Each Support & Development Unit offered 33 key services for its members Legislation Lobbying Networking and cross- collaboration Promoting quality standards and consumer protection Promoting Business code of ethics Promoting international professional societies Supporting workforce localization program Sector-specific research/statistics Conduct sector benchmarking studies (e.g., salary survey) Local and international exhibitions Sector Web site 33) ..

44 Training/Edu. /Employment Professionals Real Estate/Urban Dev/Const Services/Insurance Logistics/Transportation Healthcare/Environment Tourism Manufacturing Trade (retail, wholesale) 33 7654321 33 Business-focused Support & Development Services Score Carding JCCI Business Support

45 Government Relation Management Officers 47 Local and Central Government Agencies 1.Commerce 2.Industry 3.Education 4.Health 5.Labor 6.Foreign Affairs 7.Tourism 8.Municipality 9.University 10.Immigration 11. 47. Each GRMO offer 21 services Contact data base Library of polices and regulations Meet the official events Invite to Chamber events Arrange for filed visits Lobbying (draft legislations) Improving quality of Government services Maintain correspondence file Circulating Chamber publications 21) ..

46 Score Carding JCCI Government Relation Management 21 Relation Management Activities Municipality Tourism Foreign Affairs Labor Health Education Industry Commerce 21 7654321

47 Sectors Committees Secretary General Chairman Board Committees Deputy Secretary General Board of Directors GM Jed. Marketing Board GM Jed. Small Bus Deve. Center GM Khadeejah Center GM Jed. Manpower Deve. Center Centers Boards Chairmen GM Support Services Division GM Info. & Members Services Division GM Business Sectors Support Division Management Development Advisor Media Advisor Social Responsibility Dep Public Affairs Dep Trade Sector Sup. Dep Transport Sector Sup. Dep Tourism & Omrah Sec. Sup. Dep Prof. Sector Sup. Dep Industrial Sector Sup. Dep Envir. & Health Sector Sup. Dep Real Est. & Contract Sect. Sup. Dep Serv. Sector Sup. Dep GM Intl Affairs Division Member. & Attest. Dep IT Dep Research & Reports Dep Public Relations Dep Finance Dep Facilities & Operation Dep H.R Dep Real Estate Services Dep Businesswomen Relations Dep Home based Bus. Support Dep Specialized Women Activities Dep Women Training Dep Financial Consult. Dep Invest. Opport. Studies Dep Small Bus. Support Dep Gov. Policies & Procedures. Dep Manpower R&D Dep Edu. & Train Sector Support Dep Postgrad. Studies Dep Training Prog. Dep Saudis Employ Dep Activities Dep Jed. Marketing Dep Exhibitions Dep Marketing Serv. Dep Intl Trade & Inves. Attr. Dep Intl Relations Dep Intl Agreements Dep GM Legal Affairs Division Entrep. Spon. Dep Chairmans Office Info Systems Dep Settlement & Arbit. Dep Legal Studies Dep Contracts & Consult. Dep Protests Office

48 Maximizing Community Participation Professional Volunteering Advisory Boards Advisory Boards Advisory Boards Advisory Boards Advisory Boards Sectorial Committees Advisory Boards Advisory Boards of Trustees Advisory Boards Advisory Boards Centers Executive Boards Task Force Task Forces File Pioneer File Pioneers

49 Corporate Governance (CG) Levels of Authorities Standard Operating Procedure Service Level Agreements

50 E-Chamber

51 Removing the physical barriers (Open Space Office). Culture Change & People Development

58 Responsibility Matrix & Job Descriptions Remuneration framework Competency Framework Personal Development Planning Job Evaluation Integrated Human Resources Development System Performance Management System Base Pay Structure 6,000 8,000 9,000 10,000 15,000 20,000 25,000 30,000 654321 Levels Annual Base Rate ) 7 Performance Feedback C l i e n t F o c u s D e l i v e r i n g R e s u l t s B u s. & F u n c t. E x p. I n n o v a t i o n D r i v e f o r E x c e l l e n c e I n t e g r i t y a n d E t h i c s T e a m w o r k L e a d i n g P e o p l e

59 360-Degree Profiling:

60 1.I know what is expected of me at work. 2.I have the materials and equipment I need to do my work right. 3.At work, I have the opportunity to do what I do best every day. 4.In the last seven days, I have received recognition or praise for good work. 5.My supervisor or the person I report to seems to care about me as a person. 6.There is someone at work who encourages my development. 7.In the last six months, someone at work has talked with me about my progress. 8.At work, my opinions seem to count. 9.The mission/purpose of my company makes me feel my job is important. 10.My associates (fellow employees) are committed to doing quality work. 11.I have a best friend at work. 12.The last year, I have had opportunities at work to learn and grow. Taking the Pulse Gallup 12 key factors for employee satisfaction "First Break All the Rules: What the World's Greatest Managers Do Differently" by Marcus Buckingham and Curt Coffman (Simon & Schuster, 1999).

61 Measurable Results KPIUnitTarget 1426 H Actual 1426 H % growth in membership%5.59 No of regulations modified through JCCI lobbying Laws22 No of Saudis employed through JCCIEmployee12001856 No of events conducted at the ChamberEvent9001286 Participation in JCCI eventsParticipant- Hour 250,0000376,571 New/updated JCCI publicationsPublication6065 No of new services offeredService4560 No of JCCI positive coverage in the mediaArticles200888 No of collaborative agreements signed with local and international partners/experts Agreement30103 Monetary and in-kind donation receivedSaudi Riyals 6,000,00012,153,595

62 1.Internal resistance to change 2.The lack of clear Corporate Governance and Level of Authorities at the start 3.Should done more experimentation of new concepts. 4.Launching too many initiatives and organizational changes at one time 5.Quarterly BSC reports were time consuming 6.Did not give proper consideration to staffing level. Challenges

63 {Strategy Maps} + {Balanced Scorecard} + {Strategy-Focused Organization} = Breakthrough Results Learned Lessons to Other Chambers Kaplan & Norton

64 Weak strategy Execution capability BSC Customer Survey Government Members BusinessCommunity Community at Large at Large ForeignEntitiesStakeholders Mission Vision Values Strategy Document JCCI is the best means for connecting potential foreign investors to the local business. Consulates, Foreign Investors, Foreign Entities JCCI is an effective support for government effort to strengthen the role of private sector and Relevant Ministries Government JCCI is a role model organization and a catalyst for enhancing the success of existing Jeddah city, citizens & business Business Community & Community at large JCCI is the voice of its member business community and the efficient provider of essential services. Various membership classes (retail, Members Stakeholder Value PropositionMembers of the Stakeholder Class Stakeholder Class Stakeholders Value proposition Grow and diversify revenue base Develop sustainable Contribution Program Ensure viable fiscal position thru financial management & cost control Increase attractiveness of Jeddah for trade & Investment Improve satisfaction of members Improve Business Environment & Quality of Life Government Support Government Efforts at Growth, Development & modernizing Enhance technology capability and improve alignment Build a unified culture & climate for action Build a diverse talented team Increase Level of Automation Increase Flow of Information & Chances of Effective Encounters Increase Range & effectiveness of community support services Increase effectiveness of policy analysis Increase range & effectiveness of member Services Strategy Map C4 Stakeholders satisfaction % of member who upgraded their C44 Increase in the size of membershipC43 Services recipients satisfaction index C42 Members satisfaction index C41KPI no of upgrades total membership * 100 Formula 8%4.5%(%) % of member who upgraded their membership class Targ et 2004 2003 Base Value Unit of Measu re KPI C44 Setting Target levels Cascading ObjectivesKPI aggregation formula Chamber Department Sectioncascading Electronic Dashboard P2P2 P1P1 C4C4 C3C3 C2C2 C1C1 Objectives Strategic Initiatives A B C D E F G Initiatives-Objectives Matrix P2P2 P1P1 C4C4 C3C3 C2C2 C1C1 Objectives 120,000 560,000 1,500,000 570,000 2,500,000 1,750,000 Strategic Budgeting Monitoring Performance BRs

65 improper organizational structure Reorganization 4 autonomous centers Municipality Tourism Foreign Affairs Labor Health Education Industry Commerce 2121 7654321 Government Relation Management Officers Community Participation Sectorial Committees File Pioneer Task Force Board Trustees Advisory Boards Centers Executive Boards Corpo rate Gover nance (CG) C l i e n t F o c u s D e l i v e r i n g R e s u l t s B u s. & F u n c t. E x p. I n n o v a t i o n D r i v e f o r E x c e l l e n c e I n t e g r i t y a n d E t h i c s T e a m w o r k L e a d i n g P e o p l e Base Pay Structure 6,000 8,000 9,000 10,000 15,00020,000 25,000 30,000 654321 Levels Annual Base Rate) 7

66 Committed Visionary Leadership

67 Thank you

Documents

1 Transforming Jeddah Chamber of Commerce Into a Strategy-Focused Organization Using the Balanced Scorecard Presented By Dr. Mohamed Moustafa Mahmoud