Balance Scorecard was introduced in 2007

1. Finance
2. Customer
3. Process
4. Employee Performance

Due to financial crisis, their sales were affected, new production was in the plant itself. The scorecard
started turning yellow and red.

Schmall was cautions on restoring finance flow – General rule that came from HQ “Drive as fast as you
can see”.

Brazil Landscape

 5th largest land and highly populated

 85% live in urban areas
 Rich and fertile land
 Good Per-capita income (South had twice as northern region)
 World’s 9th largest economy

Competition in Brazil

 19% of GDP is from automotive sector and employees around 1.5 million ppl
 1995, Brazilian govt made a mandate – Multinational companies either abandon Brazilian
market or producing 90-95% local content within 5 years.
 By 2008, Brazil was 6th largest producer of passenger vehicle and 5 th largest consumer
market.

2008 – 3rd largest automotive company in the world – 10.3% market share

10- year vision – By 2018, they wanted to sell 6.6 mn vehicles per year – 21% ROI, top employer,
Customer satisfaction and quality

VWB’s strategy was to produce reliable and inexpensive cars – earned 61% market shared

1986 – Overcapacity and macroeconomic situation led to 20% decline and from then the market was
volatile.

There was a slump in vehicle sale and market position

 The new management team

Schmall was appointed as CEO in 2007

He set up the administrative and production offices under single roof

He shifted the focus to “Build a high performance team that would drive VWB to become South
American’s automotive industry leader in quality, innovation, sales and profitability on a sustainable
basis”

Rebrand VWB – highly motivated employees to produce innovatively designed cars and light
vehicles.

Senn introduced BSC within the function - HR funcation

The employee satisfaction was low as per 2005 Gallup survey

By 2007, they wanted to instill new culture for employees – solve problems as they arose, eliminate
defects and reduce health and safety incidents though it comes with a cost and decreased short run
production output.

Isensee – CFO

11-member committee was formed to lead transformational journey.

1. The bureaucratic and slow moving culture to be changed

2. Schmall wanted Senn and Isenee to work together to implement BSC
3. BSC committee developed a strategy map covering 4 challenging dimension
a. Finance
b. Customer – Satisfy customer expectation, Improve company image
c. Internal Process – Service-oriented culture among dealers, reduce cost, improve quality
d. Potential and Growth – high performance culture,

BSC purpose ?

 Strategy is described in a consistent and clear manner.

 Cause and effect relations are clearly defined.
 Breaks down the strategy into different parameters, so that everyone can understand.
 Conversion of intangible assets (employees) to tangible financial assets

Each executive was assigned to each of the objectives to reach metrics

Came with a transformation program “Act to Win”.

Communicating the new strategy

- Communication should be clear -it is the backbone to any change

- To announce the change and reinforce it lot of events, competitions, activities were held – one
such was to come up with a mascot - Giga.
- Board games, customized learning maps,

By 2008, all executives had their personal objectives linked to companies’ strategic priorities

Compensation and Recognition

Incentives, Fixed pay to shop floor ppl negotiated thru trade union, Awards

Engaging Suppliers (550) and dealers (600 independent dealers)

Dealer and supplier engagement program were set up – Awards, Supplier day.