A Presentation On THE BALANCED SCORE CARD

By: Noopur Verma Shruti Pathak Swapnil Donde Vibhuti Vartak

Balanced Score Card: An Introduction

The Balanced Scorecard (BSC) is a strategic performance management tool - a semistandard structured report, supported by proven design methods and automation tools, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions.

It is a system of combining financial and nonfinancial measures of performance in one single scorecard.

Introduction (Contd.)
A BSC is a management system for translating strategy into action or strategy implementation.

Functions of a BSC
1. Translating strategy and strategy objectives into actionable goals and initiatives. 2. Communicating strategy and strategic objectives throughout the organization. 3. Setting achievable targets and initiating processes to achieve those targets. 4. Reviewing performance and feedback to executives about the status of strategy implementation and business success.

Reasons to use the BSC

It is a comprehensive tool. It is a logical tool. It articulates the strategy of growth with business excellence. It helps employees. It facilitates performance review and feedback.

The Process of Designing a BSC

1. Translating the Vision into operational goals. 2. Communicating the vision and link it to individual performance. 3. Business planning; index setting. 4. Feedback and learning, and adjusting the strategy accordingly.

The Four Perspective

1. Financial: encourages the identification of a few relevant high-level financial measures that helps to get an answer to the question "How do we look to shareholders?" 2. Customer: encourages the identification of measures that answer the question "How do customers see us? 3. Internal Business Process: encourages the identification of measures that answer the question "What must we excel at? 4. Learning and Growth: encourages the identification of measures that answer the question "How can we continue to improve and create value?".

How Does It Work?

Objectives: The company specifies major objectives to be achieved under each perspective. Measures: These are the indicators that measure progress towards reaching the objectives. Targets: These are the values for the measures. Initiatives: Initiatives are the actions needed to be performed to achieve objectives and targets.

How to Build a BSC? (Example of a the Bank of Baroda)

Deposits: Rs. 2,41,261.92 Crore Advances: Rs. 1,75,035.29 Crore Net Worth: Rs. 19,750.63 Crore Fee-based Income: 6.97% Ratings: No. 4 or 5 among its Indian counterparts on different financial dimensions.

Bank of Baroda Overview (Contd.)

Track record of continuous profits. Substantial international presence. Committed staff. Has launched many innovative products. Perceived as a bank for the common man.

Strategic Analysis of BoB (SWOT Analysis)

Strengths: A large branch network with adequate presence in the semi-urban and rural areas. High network in the economically more developed Western India. Largest international presence amongst the Indian banks. Profitable since inception.

 Sound financial condition and healthy operations free from any scam. a forward-looking leadership.
Weaknesses: Lack of marketing focus. Ageing workforce, particularly the managerial staff. Low digital literacy. Customer loyalty under stress. Slow in decision-making due to multi-tier sanction process

Add high value customers, specially focusing on young customers and retaining high value existing customers

Financial

Convert low value customers to high value customers

Attract new customers

Essentials Customer
Quick service Safety Pleasure Cost effectiveness Reliability

Customer Delight

Distinctions Multiple products Quality service Distinct features Ease of use Multiple delivery channels

Maximize service/ product quality, delivery, and reliability Develop IT-driven superior service capability

Manage erosion of customer base

Internal Processes
Aggressive marketing; build product-wise brands; cross-sell products

Maintain leadership in existing products; add new features Strengthen treasury products

Introduce new products preferred by customers

Attract and retain key people Develop technical skills and IT orientation

Recruit skilled staff and do succession planning

Learning and Growth

Improve general competency and build KM Empower employees

Develop culture of innovation and customer orientation

De-emphasize control and vigilance

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PERSPECTIVE Financial

OBJECTIVE Growth Revenue

MEASURE Revenue by product /service: existing and new No. and percentage of active, value customer Number of incremental customers categorized by age, income, balance, etc. Profit per customer Customer satisfaction ratio (conduct survey) Erosion rate among young customers Service time (survey) Customer complaints Response time Cost of acquiring customer Product-wise new and total customers Benchmark with the best competitor Number of new products/services Number of products with new features Market share in each product

Customer

Attract and retain high value customer (customer value and delight) Manage erosion of customer base Maximize service quality and reliability Develop cost effective marketing and create brands Continue leadership in existing products and build leadership in other products by improving features Develop IT-driven superior service capability Train people at all levels to build special skills and general competencies Educate and encourage staff in the usage of IT Empower people

Internal Processes

Learning and Growth

No. and percentage of internet products No. of internet customersnew and migrated Cost per internet customer Internet customer satisfaction (survey) Training programmes/per employee Usage of IT by each employee No. of managerial decisions made by a manager

Philips Electronics BSC

FINANCIAL PROCESSES CUSTOMERS COMPETENCE

Economic profit realized. Income from operations. Working capital. Operational cash flows. Inventory turns.

Percentage reduction in process cycle time. Number of engineering changes. Capacity utilization. Process capability.

Rank in customer survey. Repeat order rate. Complaint. Brand index.

Leadership competence. Percentage of patent protected turnover. Training days per employee. Quality improvement teams participation.

Implementing a BSC that Succeeds

Top mgmt. commitment and support. Determine the critical success factors (CSFs). Translate CSFs into measurable objectives (matrices).

Link performance measure to rewards.

Install a simple tracking system.

Implementing a BSC that Succeeds (Contd.)

Create and link the BSCs at all levels of the
organisation.

Communication.
Link Strategic Planning, BSC and Budget

Process.

Why Focus on BSC?

Increase in customer focus.

Focus on creating intangible and intellectual capital.

Business excellence and growth.

Align strategy to operations at all the levels of the

organization.

Real time review.