Building a Balanced Scorecard in Banca 121. Alessandra Turi Head of Planning and Control

Transcription

1 Building a Balanced Scorecard in Banca 121 Alessandra Turi Head of Planning and Control

2 Agenda Initial considerations Banca 121 and its integrated multi-channel strategy Limits of traditional performance measurement systems The Balanced Scorecard approach The experience of Banca 121

3 Initial considerations According to Fortune less than 10% of strategies effectively formulated are effectively executed Strategies, business models, organisational structures are interpreted by people who have different personal motivations which don t necessary match the goals of the company The complexity of today business can distract management attention from the factors which are really important and create value

4 Agenda Initial considerations Banca 121 and its integrated multi-channel strategy Limits of traditional performance measurement systems The Balanced Scorecard approach The experience of Banca 121

5 Banca 121 strategy in the retail banking business Focus on personal financial services Low fixed-cost expansion Independent sales agents Financial Shops Virtual Banking (Phone( and Internet Banking) Integrated multi-channel distribution High personalisation of the service (emphasised by the brand name one to one ) Constant innovation of product and distribution ROE % Customers: Users Virtual Banking:

6 Banca 121 integrated multi-channel network Traditional Branches, Financial Shops, Independent Sales Agents and Virtual Banking leveraging on each other, thus strengthening Banca 121 competitive position

7 Agenda Initial considerations Banca 121 and its integrated multi-channel strategy Limits of traditional performance measurement systems The Balanced Scorecard approach The experience of Banca 121

8 Limits of traditional performance measurement systems Short term approach (lack of strategic vision) Focus on past performance (looking backward) Emphasis on quantitative and physical assets (no valuation of intangible assets as real performance drivers) Internal orientation (versus market orientation)

9 Agenda Initial considerations Banca 121 and its integrated multi-channel strategy Limits of traditional performance measurement systems The Balanced Scorecard approach The experience of Banca 121

10 The Balanced Scorecard Approach The Balanced Scorecard (BSC( BSC) ) complements financial measures of past performance with measures of the drivers of future performance. BSC incorporates the valuation of a company s intangible and intellectual assets (high quality products and services, motivated and skilled employees, responsive and robust internal processes, and satisfied and loyal customers). FINANCIAL PERSPECTIVE CUSTOMER PERSPECTIVE INTERNAL PROCESS PERSPECTIVE LEARNING & GROWTH PERSPECTIVE - satisfaction, retention, market and account share - quality, response time, cost and new product introductions, time to market - employee satisfaction, retention, training and skills

11 The Balanced Scorecard Approach: the management process STRATEGY Strategy formulation requires 5% of management time, the implementation the remaining 95% BSC STRATEGIC GAP ACTIONS KPIs Monitoring Identification of the existing gap between the actual and the expected market position Projects Initiatives Budgeting process Reward system

12 The Balanced Scorecard Approach: what s new BSC links strategic goals to targets and annual budgets, filling the gap between strategic planning and operational plans BSC focuses on factors creating long-term value and overtakes the financial accounting perspective to measure intangible and qualitative assets BSC translates the strategy into terms easily understandable and put in practise by the whole organisation

13 Agenda Initial considerations Banca 121 and its integrated multi-channel strategy Limits of traditional performance measurement systems The Balanced Scorecard approach The experience of Banca 121

14 The experience of Banca 121 The project focuses on PFS business and has been divided in 3 macro phases: 1 DEFINITION OF THE LOGICAL MODEL 2 IMPLEMENTATION OF THE ELECTRONIC BSC SUPPORTED BY SAS INSTITUTE 3 START UP AND MANAGEMENT

15 The experience of Banca 121 Macro phase 1: DEFINITION OF THE LOGICAL MODEL Strategic guidelines acquisition Development of BSC Compilation of the Indicators Book Business breakdown according to the Value Chain: - PRODUCT DEVELOPMENT - DISTRIBUTION (3 CHANNELS) -SUPPORT Definition of strategic goals Distribution of the goals throughout the Value Chain segments Identification of the KPIs Gathering of available elementary data and related sources Definition of calculation functions On what axis should I invest to maximise the value of the business ss? What segments create value for the clients?

16 The experience of Banca 121 Macro phase 2: IMPLEMENTATION OF THE ELECTRONIC BSC SUPPORTED BY SAS INSTITUTE The electronic BSC has been developed according to a gradual approach: 1) DEVELOPMENT OF A PROTOTYPE RELATED TO DISTRIBUTION 2) EXPANSION OF THE PROTOTYPE TO THE OTHER SEGMENTS OF THE VALUE CHAIN 3 STEPS: 1) Checklist of indicators 2) Creation of a dedicated data warehouse 3) Definition of visualisation criteria

17 THE CHECKLIST OF INDICATORS aimed at describing and formalising the technical and functional characteristics of each indicator based on the INDICATOR CARD defined with SAS Institute all the information collected during the checklist phase is used to create the application generating the BSC the completion of the indicator card involved the P&C as well as the IT Dept., as it required a wide knowledge of the internal operational databases

18 CREATION OF THE DEDICATED DATAWAREHOUSE EXCEL ACCESS OTHER db2 OPERATIONAL DATA STORE ACCESS SAS SYSTEM DATA WAREHOUSE DELIVERY ON INTRANET Existing company databases Normalized ODS DATA WAREHOUSE BALANCED SCORECARD

19 DEFINITION OF VISUALISATION CRITERIA Strong creativity, high personalisation, critical factor of success, vehicle to drop the strategy down into day-by-day THE PRINCIPAL CHOICES: DEFINITION OF THE RESULT THRESHOLD RANGES when does the red, yellow or green light appear? DEFINITION OF THE SYNTETHIC VALUATION CRITERIA what happens when a goal shows contradicting indicators?

20 DEFINITION OF THE VISUALISATION CRITERIA DEFINITION OF THE RESULT THRESHOLD RANGES THRESHOLDS CRITICAL Less than 80 Normalised KPIs vs target 86 Threshold result UNDER OBSERVATION GOOD EXCELLENT more than 110

21 DEFINITION OF VISUALISATION CRITERIA DEFINITION OF THE SYNTHETIC VALUATION CRITERIA PERSPECTIVE GOALS INDICATORS WORST CASE TAKES OVER

22 The experience of Banca 121 Macro phase 3: START UP AND MANAGEMENT Assignment of BSCs to Divisional Heads (reward system) Target definition (budgeting process) Operational plans definition (projects, initiatives, activities) START UP MANAGEMENT - monitoring (KPIs calculation, gap analysis, reporting) - identifying corrective actions to close the possible gaps - BSC tuning (with reference to goals, indicators or links) and target review

23 THE SCORECARDS FOR DISTRIBUTION Head of DISTRIBUTION Head of PHYSICAL CHANNELS Head of INTERNET BANKING Head of CONTACT CENTER Regional Dept. A Regional Dept. B Regional Dept. C Regional Dept. D Branches Regional Manager Area Manager INDIPENDENT SALES AGENTS Financial Shops