Topic. Balanced Scorecard. Performance measurement. William Meaney MBA BSc. ACMA 1

Transcription

1 Topic Balanced Scorecard Performance measurement William Meaney MBA BSc. ACMA 1

2 The Balanced Scorecard Performance measurement William Meaney MBA BSc. ACMA 2

3 Strategic Implementation People and Systems Organisational Culture and Values Change management Organisation structure Organisation structure Strategy v Structure Mintzbergs Organisational fit Resource planning Budgeting Resource allocation Project management Balanced Scorecard Performance monitoring William Meaney MBA BSc. ACMA

4 Strategy implementation Human Resources Leadership Resource allocation Motivation Organisation structure and design Project management Strategic Marketing Culture and values Balanced scorecard Strategic IT Change management Final thoughts William Meaney MBA BSc. ACMA 4

5 Balanced Scorecard Kaplan and Norton A new approach to strategic management was developed in the early 1990's by Drs. Robert Kaplan (Harvard Business School) and David Norton. The balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial and other perspectives William Meaney MBA BSc. ACMA 5

6 Financial results is not the only measure of performance The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation. William Meaney MBA BSc. ACMA 6

7 William Meaney MBA BSc. ACMA 7

8 Relationships in the Balanced Scorecard William Meaney MBA BSc. ACMA 8

9 Performance measures Financial External Performance drivers Quantitative Non -financial indicators Internal measures Outcomes Qualitative factors William Meaney MBA BSc. ACMA 9

10 Financial Non financial Non financial Non financial William Meaney MBA BSc. ACMA 10

11 External I n t e r n a l William Meaney MBA BSc. ACMA 11

12 Past Future Future William Meaney MBA BSc. ACMA 12

13 The Complete Balanced Scorecard Strategy Map Financial Perspective: the drivers of shareholder value Improve Cost Structure Productivity Strategy Increase Asset Utilization Improve Shareholder Value Shareholder Value ROCE Enhance Customer Value Cost per Unit Asset Turnover Customer Profitability Revenue Growth Strategy Create Value from New Products & Services New Revenue Sources Customer Perspective: the differentiating value proposition Market and Account Share Price Product/Service Attributes Quality Customer Acquisition Customer Retention Customer Value Proposition Relationship Low Total Cost Customer Satisfaction Product Leader Customer Solutions Image Time Function Service Relations Brand Internal Perspective: how value is created and sustained Operations Theme (Processes that Produce and Deliver Products & Services) Customer Management Theme (Processes that Enhance Customer Value) Innovation Theme (Processes that Create New Products and Services) Regulatory and Society Theme (Processes that Improve the Environment and Communities) Learning & Growth Perspective: role for intangible assets people, systems, climate and culture Strategic Competencies Human, Information, and Organizational Capital Strategic Technologies Climate for Action William Meaney MBA BSc. ACMA 13

14 The Balanced Scorecard Links Vision and Strategy to Employees Everyday Actions MISSION Why we exist VALUES What s important to us VISION What we want to be STRATEGY Our game plan BALANCED SCORECARD Translate, Focus and Align STRATEGIC INITIATIVES What are the priorities TOTAL QUALITY MANAGEMENT What we must improve EMPOWERMENT / PERSONAL OBJECTIVES What I need to do STRATEGIC OUTCOMES Satisfied SHAREHOLDERS Delighted CUSTOMERS Efficient and Effective PROCESSES Motivated & Prepared WORKFORCE William Meaney MBA BSc. ACMA 14

15 Principles of the Strategy Focused Organization: TRANSLATE THE STRATEGY TO OPERATIONAL TERMS The Strategy Measurement is the language that gives clarity to vague concepts. Measurement is used to communicate, not to control. Building the scorecard develops consensus and teamwork throughout the organization Financial Perspective "If we succeed, how will we look to our shareholders? Customer Perspective "To achieve my vision, how must I look to my customers? Internal Perspective "To satisfy my customer, at which processes must I excel? Organization Learning "To achieve my vision, how must my organization learn and improve? William Meaney MBA BSc. ACMA 15

16 Balanced Scorecard Hall of Fame Implemented Strategies and Achieved Breakthrough Results 3 years Saatchi & Saatchi + $2b Mobil Last to first Cash flow +$1.2b ROI 6% --> 16% 2-5 years ATT Canada + $7b 3 years Cigna Brown & Root 2-5 years 3 years #1 in growth & + $3b profitability City of Charlotte Duke Children s 3 years 3 years Customer Satisfaction = 70% Customer Satisfaction #1 Public Official Award Cost/Case 33% Southern Garden Chemical Bank Hilton Hotels UPS Wells Fargo 3-5 years 3 years # Customers 450% Least Cost Producer Best Online Bank 2 years 3 years 2 years 99% Merged Target Revenues 9% Asset Retention Customer Satisfaction Net Income 33% Market Revenue Index William Meaney MBA BSc. ACMA 16

17 How will this be helpful in your exam? Gives you an insight into the outcomes of the strategy implementation process As future accountants it give you an appreciation for long term goals and how to achieve them Integrates your knowledge of integrated reporting Potential solution to management of firms performance William Meaney MBA BSc. ACMA 17