Balanced Scorecard Performance Mgt Case

8/8/2019 Balanced Scorecard Performance Mgt Case

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Corporate Performance

Management Case

Adaptation of Balanced Score Card foreffective goal alignment and behaviour

changes

Ref: 2GC Active Managementconsultancy 2007


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The problem

In an ideal world every one in an

organization would know everything about

what is important and why, and be able toselect the right thing to do at any given

moment this rarely happens.

Need links between performance

management of individuals and corporate

management performance


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The Need

Need a goal setting process that is

economical to implement and is effective

in triggering the changes in the behaviourof individuals

The content and process of such a system

needs to be closely aligned to the overall

aims of the organization


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How & what to communicate

Organizational hierarchies have

communication problems how much

information to communicate to whom?Information has to be edited otherwise

communication systems get blocked and

individuals experience information

overload. For communication to beeffective it needs to be concise.


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How & what to communicate

Information asymmetry theories (OliverWillamson et al) imply that at any pointthere is more information available that

could be communicated than anyonewould want to receive.

Design of sophisticated performance

management systems such as BalancedScore Card, have huge implementationcosts


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Use a pragmatic approach

The best approach is to modify existing

performance management systems such

as performance appraisal, to make themmore effective

Use a Performance Management System

to improve awareness of managers

Reduce the detrimental effects of incentive

related pay.


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Need to be effective

Organizations need to provide sufficient,

relevant, and meaningful information to enable

teams and individuals to set objectives against

which they can be measured

Performance management must fit with the

overall strategy of the firm. How it links

individual and corporate goals in a cost

effective, efficient and culturally acceptable way.


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Case

A British subsidiary of a large Japaneseinsurance company that has experiencedrapid growth.

Needed to inform individuals of objectivesand align them with organization &department goals

Needed to create a performancemanagement process that encouragedcorrect individual performance


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Bottom up, simple linkages

Individuals and teams determined their

own objectives

Use of a simple strategic linkage model ofactivities and outcomes enabled each

management team to show subordinates

the focus for the coming year


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Top down clear statements

The Destination Statement a clear one

page description of the company in 3

years time was an excellent mechanism to

inform HR performance management

practices, also helped prevent HR

practices that would cause organization

conflict, and conflicting individualbehaviours


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Effective Pragmatism

Use of different approaches at different

levels produced an efficient, simple, and

flexible system of control

Use of Personal Balanced Score Cards at

every level would have been too

burdensome and not a useful way of

managing the performance of staff.


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What is a Balanced Scorecard?

The concept of the Balanced Scorecard was introducedby Professor Robert Kaplan and Dr David Norton.

Its purpose was to develop a simple framework forperformance measurement and management thatreflected both leading and lagging indicators of

performance in an organisation, rather than simply thelagging financial performance indicators that havedominated for decades.

Key to this approach is the recognition that performancecan be seen from different, yet complimentaryperspectives, the financial, customer, internal and

learning perspectives being regarded as the "classic"ones used.

Performance against related key performance indicators(KPIs) are highlighted using "traffic lights" to convey a lotof performance management information in a

concentrated form.


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What is a balanced scorecard?

A well-designed Balanced Scorecard

creates a clear "line of sight" for

employees between their own activities

and decisions and the strategic objectives

of the enterprise.


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Balanced Scorecard


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Balanced Scorecards


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Balanced Scorecard


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Strategy Deployment

A well-designed Balanced Scorecard

helps employees understand the link

between their own actions and decisions &

the strategic direction of the organisation

they work for. This is achieved by

expressing the strategic direction of the

business in terms of Critical SuccessFactors (CSFs).


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Critical Success Factors

A CSF is best described as "the essence ofwhat an organisation has to achieve if it isto be regarded as successful by its peers"

- whether performance against such CSFsis good or poor is a "second order"consideration. However, once the CSFshave been identified it becomes invaluable

to understand the extent to which amanagement team perceives that it isperforming well against them, or not.


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Performance Management

From these CSFs flow the related performancemeasures and management targets againstwhich performance can be monitored on aroutine basis using a Balanced Scorecard.

However, if there is no response to theperformance indicated by the measures, thenthere is no value in such an approach.

It is therefore essential in any scorecard solution

that the measurements reported upon result invisible action plans that will then turn theBalanced Scorecard into a true managementperformance tool


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Balanced Scorecard softwareRef: Bellis-Jones Hill Group: Performance Management Solutions

Strategy Maps provide the cause-and-effect visual

links behind an organisation's strategy. The

strategy maps within Prodacapo BalancedScorecard communicate how the strategy links

together across the scorecard perspectives to

achieve organisational success.

In addition to being a strategy model theProdacapo Strategy Mapping facility also provides

an internal communication tool helping employees

to understand how they contribute to the

organisation's strategic objectives.


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Strategic Corporate Card


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Balanced scorecard software

Exception reporting

The cockpit view provides a basis forexception reporting. Users can structurethe cockpit view in order to manage theircritical measures. With time a scarceresource among many managers this viewallows focus to be maintained on thefundamentally important measures to anindividual person or department


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Dashboard view

A highly intuitive dashboard display offers a"clear-line-of-sight" between organisationalobjectives, critical success factors and the actualmeasures that need to be reported upon tomanage these and ensure overall performanceimprovement and success.

The dashboard enables users to see at-a-glance

how each measure within each critical successfactor is performing and what the trend for thatmeasure is over the time period underconsideration.


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Dynamic reporting

Users of Prodacapo Balanced Scorecard canclick through from the dashboard view onto anymeasures having initiatives to find and initiativestable. This highlights initiatives associated withkey performance indicators and allows users tounderstand how these initiatives are performing.

Priority of initiatives is highlighted along with

responsibility and status of the particular project.This helps the Prodacapo Balanced Scorecardto become a true performance managementtool.


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Balanced Scorecard software

Trend analysis

Users of Prodacapo Balanced Scorecard

can click through from the dashboard viewonto any measures having initiatives to

find and initiatives table. This highlights

initiatives associated with key performance

indicators and allows users to understandhow these initiatives are performing.


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Performance Management in the

public sector

Government Sector

The pressures for Local Government to deliver improved service

delivery and added value are constantly increasing.

There is a commitment to continuous improvement and

accountability which is driving evermore complex performance

initiatives and Local Government needs to understand the costs

associated with these programmes in order to continue to deliver

Best Value.Activity Based Costing and Management in the government

sector can provide the basis of this costing information for

improved decision-making whilst the introduction of balanced

scorecards can provide a performance management framework

for delivery of improved overall performance.


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At Bellis-Jones Hill we use enterprise performance

management to help our clients in the government

sector to: Understand underlying cost structures in order to

improve efficiencies and value to stakeholder groups

Deliver Best Value initiatives

Benchmark operations to highlight areas forimprovement

Identify value-adding and non value-adding

processes

Formalise performance management frameworksinto Balanced Scorecards in order to understand

cause-and-effect relationships and improve overall

organisational performance

Documents

Balanced Scorecard Performance Mgt Case