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Paramjit Sharma

building a balanced scorecard

Paramjit Sharma
Imagine an excellent scorecard built by a staff
executive or middle management without actively
involving the senior management team in the process
Paramjit Sharma

Paramjit Sharma
The scorecard may be accepted as accurate
representation of the organisation, but may not
become an integral part of the organizational
management process
Paramjit Sharma

Paramjit Sharma
Therefore, building BSC may require actual
involvement of senior management
Paramjit Sharma

Paramjit Sharma
Establish objectives for BSC Programme

The first Step for building a successful BSC


is to gain consensus and support among
senior Management on why the scorecard
is being developed
Paramjit Sharma

Paramjit Sharma
Establish objectives for BSC Programme

The objectives would help to…

Guide the preparation of BSC


Gain Commitment
Clarify the framework for implementation
Paramjit Sharma

Paramjit Sharma
building the BSC- the process

Task 1. Select the appropriate Organizational Unit


Task 2. Identify SBU/Corporate Linkages
Task 3. Conduct First Round of Interviews
Task 4. Synthesis Session
Task 5. Executive Workshop
Task 6. Sub Groups Meetings
Task 7. Executive Workshop: ii nd Round
Task8. Develop Implementation Plan
Task 9. Executive Workshop: iii rd Round
Paramjit Sharma

Paramjit Sharma
Task10.Finalize the Implementation Plan
building the BSC- the process

Task 1. Select the appropriate Organizational Unit

Corporate Level I

Div A Div B Div C Level II


Paramjit Sharma

Paramjit Sharma
SBU1 SBU2 SBU3 SBU4 SBU5 SBU6 SBU7 SBU8 SBU9 Level III
building the BSC- the process

Task 2. Identify SBU/Corporate


Linkages

Financial Objectives for SBU Overriding Corporate themes


Linkages to other SBUs
Growth
Profitability
Cash flow Environment
Harvest Safety Common customers
Employees policies Core competencies
Community relations Suppliers
Innovation Customer Relationship
price Integrated approach to
customers
Paramjit Sharma

Paramjit Sharma
Linkage necessary because
One SBU may not
Develop at cost of other
building the BSC- the process

Task 3. Conduct First Round of


Interviews

The architect will prepare

Background Materials on BSC


Internal Documents of Organization
Vision, mission and strategy
Submitted to Senior Management
Paramjit Sharma

Paramjit Sharma
Acquire information about industry
Trends like growth, competitors,
customers, technology
building the BSC- the process

Task 3. Conduct First Round of


Interviews

After review of materials, architect(1-3)


Conduct interviews for at least 90 mts
with senior management

Obtain inputs on 4 perspectives


Introduce the concept
Paramjit Sharma

Paramjit Sharma
Identifying potential conflicts
Consolidate views and understanding
of BSC
building the BSC- the process

Task 4. Synthesis Session

After interview the architect & design


Team discuss

Responses in the interview


Major issues
Likely resistance to BSC
Expected changes in Processes
Develop tentative list of objectives
Paramjit Sharma

Paramjit Sharma
and measures
Basis for first meeting of Top Management
Objectives for 4 perspectives identified
Cause and effect relationship of objectives
building the BSC- the process
Task 5. Executive Workshop:1st Round

Architect schedule meeting with top Mgt.

Begin process of consensus on BSC


Group debate on Mission, Vision, Strategy…
Addressing each perspective……..
Show proposed objectives
Videotapes of interviews
Brainstorm on objectives ,top ones selected
Dividing executive team into 4 sub-groups
Paramjit Sharma

Paramjit Sharma
Select 3-4 strategic obj to each perspective
along with the measures
Post workshop document is distributed
building the BSC- the process

Task 6. Sub Group Meetings

Architect schedule meeting with Sub groups


for several meetings. The subgroup attempts to
accomplish 4 principal objectives

1 Refine the wording of the strategic Objectives

3 For each objective, identify the measure that best


capture and communicate the intentions of objectives

6 For each measure, identify the source of information


Paramjit Sharma

Paramjit Sharma
and actions necessary to access information

9 For each perspective, identify the key linkage among


measures within and between the perspectives
Selecting & Designing Measures

Core Financial Measures Core Customer Measures

ROI/EVA Market Share


Customer Acquisition
Profitability
Customer Retention
Revenue Growth Customer Profitability
Cost Reduction/ productivity Customer satisfaction

Core Learning &


Internal Processes
Growth Measures
Paramjit Sharma

Paramjit Sharma
Innovation Processes
Employee Satisfaction
Operation Processes
Employee Retention
Post Sales Processes
Employee Productivity
building the BSC- the process

Task 7: Executive Workshop-IInd Round

Involve senior management & their subordinates

Debate on organizational, vision, strategy statement

and tentative objectives & measures

Output of workshop be presented to subgroups

Participants offer their comments


Paramjit Sharma

Paramjit Sharma
Prepare draft brochure for communication

Formulate stretch targets for each measure


building the BSC- the process

Task 8. Develop the implementation Plan

New team consisting of leader of each sub group

Formalize the targets

Develop implementation plan

Linking measures with data base


Paramjit Sharma

Paramjit Sharma
Communicating the Balance Scorecard

Information Metric to be developed


building the BSC- the process

Task 9. Executive Workshop 3rd Round

Senior Team Meets for the third time

Final consensus of Vision, mission, strategy….

Validate the stretch targets fixed by implementation


team

Identifies action programmes to achieve targets


Paramjit Sharma

Paramjit Sharma
Aligning various initiatives to objectives, measures

Communicate implementation to employees


building the BSC- the process

Task 10. Finalize the Implementation Plan

To be integrated into management system

Management information system

Management start using BSC


Paramjit Sharma

Paramjit Sharma
Phase in plan at Place
Frame for implementation

Week 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Activities
I Measurement Program
Architecture Project Plan

1Select Organizational Unit


2 Identify SBU/Corporate Linkage

Interviews
II Define Strategic Objectives

3 First Round Interviews Workshop 1


4 Synthesis Session
5 Executive Workshop-1st round

III Select Strategic Measures subgroups

6 Subgroup Meeting
Workshop 2
Paramjit Sharma

Paramjit Sharma
7 Executive Workshop: 2nd Round

IV Build Implementation Roll out Plan


Plan

8 Develop Implementation Plan Workshop 3


9 Executive Workshop:3rd Round
10 Finalize Implementation Plan
Building a Balance Scorecard…..

Systematic process to build consensus & clarity


Build management team
Communicate the strategy
Link reward to achieving strategic objectives
Set strategic targets
Align strategic targets and initiatives
An architect for framing, collect and construct
Active support of senior management
Clear objective about development of BSC
Sustain investment in intellectual and intangible
Assets
Provide foundation for strategic learning
Paramjit Sharma

Paramjit Sharma
Paramjit Sharma

questions

Paramjit Sharma