Balanced Scorecard Strategies For Hr Ss Workshop May 10 2010a Chicago, Il

Presented byMr. Frederick S. ‘Rick’ Buchman

Practitioners and Experts on Balanced Scorecard and Dashboard Applications, and

Co-Authors, Balanced Scorecard Strategy for Dummies, Wiley & Sons, Inc. Sept 2007

March 10, 2010Chicago, IL

04/09/23IQPC HR SSO Summit, May 10, 2010 - Balanced Scorecard Strategies Workshop – Presenter: Frederick S. ‘Rick’ Buchman 1

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Objectives of the course: Understand the fundamentals of the Balanced Scorecard and

Dashboard approach Develop a framework for your Strategy Map Devise the elements for each ‘Leg’ of your Balanced Scorecard Design your Dashboard Concept

Conduct of the course: Some introductory lecture, mostly interactive, individual work Majority split into research time, collaborative, evaluative and

presentation materials Total time – about 140 min.

For this Workshop

2

Balanced Scorecard Strategies for HR Shared Services

- Overview and Definitions

What is meant by the term “Balanced Scorecard?” Traditional “Scorecards” are mostly Financial Based

Revenue, Margin, Profit, Cash Flow, Budget Compliance, …

While these are very important to a company, they do not tell the whole story…

“Balanced Scorecards” look at the multi-dimensions of an organization, based on: Customer Focus and Satisfaction Financial Performance Business Process Performance Employee Knowledge, Skills and Competencies

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- The Four ‘Legs’ of a Balanced Scorecard

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Business Process

Performance

Business Process

Performance

Employee Knowledge, Skill and

Competencies

Employee Knowledge, Skill and

Competencies

Customer Focus and

Satisfaction

Customer Focus and

Satisfaction

Financial Performance


Competitive Advantage

Competitive Advantage

On-TimeFirst Time Right

Exactly as OrderedExcellent Condition

Cost ManagementGood ‘Handoffs’

In-Process Checks & Great Quality

First Time RightCustomer FocusProduct UnderstandingProcess UnderstandingBusiness KnowhowTeamwork & FeedbackContinuous Improvement

Revenue ProfitableMargin Cost Management

On-Time Performs as DesiredDependable Great Price

Market Share Business Growth Shareholder Value

4

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- Overview and DefinitionsWrite down 4 general items related to each ‘Leg’.

Then, code each item as S, O, or T for Strategic, Operational or Tactical.Customer Focus and Satisfaction Financial Performance

1. _____________________2. _____________________3. _____________________4. _____________________

1. _____________________2. _____________________3. _____________________4. _____________________

Business Process Performance Employee Knowledge, Skills and Competencies

1. _____________________2. _____________________3. _____________________4. _____________________

1. _____________________2. _____________________3. _____________________4. _____________________

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- Overview and DefinitionsSmall Group

DiscussionSmall group discussion:Get into groups of 5-6, sorted by Strategic, Operational

or Tactical. Discuss each ‘Leg’ and the items you have written

down. Share your thoughts with the other members of your discussion group. [15 minutes]

Ask questions for clarification, understanding. No Judging.

Feel free to change, add, correct your notes, based on your discussion.

Be prepared to talk briefly about what your group talked about, and any key insights discovered during the discussion. [General group review and summary – 5 minutes]

Update your notes for the next step.

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1. Establish yourStrategy Map

2. Design the ‘Legs’ ofYour Balanced Scorecard

4. Continuously Improve

Feed ‘Forward’ Loops[Information, Orders,..]

Feed ‘Back’ Loops[Quality, Issues, Timing, Performance, …]



7

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Step 1 – Mapping your Strategy


- Strategy Mapping for a ‘Balanced Approach’

What is “Strategy Mapping?” Maps the key organizational strategies to the ‘Legs’ of your

scorecardHow is it done?

1. Identify the top 3-4 organizational strategies2. Set up a Matrix to align to the 4 ‘Legs’ (Customer,

Financial, Process, Competencies) 3. Identify Key Alignments, Actions, and Metrics4. Link to and Design Department Dashboards for Real-Time

Management and AdjustmentHow does it add value?

Ensures Actions, Focus are aligned to Strategic Direction Enables Real-Time Response and Adjustment to Changes

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- Strategy Mapping for a ‘Balanced Approach’

Key ConceptsThere is an important difference between an Objective or

Goal, and the Strategy to achieve it. Objective or Goal: This is the desired ‘End State’ to be achieved by

the organization. It can be a financial (Make $XX Million Net Profit), Market (Own XX% Market Share), or any other specific, measurable target.

Strategy: This is the method that the organization will employ, to achieve its objective or goal.

Example: Objective: Achieve 15% increase in Market Share in 3 yrs.

Strategy: Add new major clients, through: 1) Acquiring 3-5

smaller competitors, 2) Converting 20 potential

clients from competitor companies

• KISS – “Keep It Simple Strategically ” – Strategy should be clear and explainable to anyone within 60 seconds or less.

SM


- An Example of a Strategy Map

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‘Legs’ of the Balanced Scorecard

Growth & Market Share

Highly Regarded Expert in the Industry

Increased Shareholder Value

Customer Focus

Create desire for our products, at our price

Looked to for Expertise First

Profitability Leader for our Shareholders


Increasing Revenue, Price Competitive

Higher Margins, Cost competitive

Business Processes

Deliver when, where, and how much, flexible to demand changes

Demonstrated Best Practices, Leading-Edge Processes

Cost Reduction, Efficient Process, Minimize Waste

Knowledge, Skills and competence

Demonstrated Leaders and Experts in the Industry

Demonstrated Leaders and Experts in the Industry

A Company seeks to increase Market Share through Growth, providing addedValue to customers through knowhow and performance, and increasing shareholderValue through improved Profitability and increased Margin performance

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- HR Shared Services – Deployment Model Stages

HR Shared Services – Key Services:Initial Stages – ‘Harmonization’

Provide the lowest-cost services solution Collective, Standardized Transaction-based services

Advanced Stages – ‘Leverage and Delivery Rationalization’ ‘Bundled’, Either Functional (HR, IT, Financial) or Geographic (NA,

EMEA, Asia/Pacific) Shared Services Move to Customer, Employee, and Manager ‘Self Service’

High Performing Stages – ‘Integration and Convergence’ Complete, integrated ‘End-to-End’ Services Total Value Stream Integration (with Supply Chain, Customers, Trading

Partners, possibly cross-industry convergence…

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- Leveraging the Balanced Scorecard for HR SSHow do the ‘Legs’ of the Balanced Scorecard relate to HR Shared Services?

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Customer Focus Business Processes Employee Capabilities

Harmonization- Lowest Cost Solution- Collective, Standardized Transactions

- Chargeback process based on services- Cost Management - Standard Governance

-Efficient Service Delivery at lowest cost- Committed to Quality, Performance- Better, Faster, Cheaper

-Transaction Based- Process based metrics for performance

-Performance Based Compensation- Knowledge mgmt processes-- Internal Experts

Leverage & Delivery Rationalization- ‘Bundled’ Services- Self-Service Oriented

-Manage Shared Services under a ‘golden umbrella’ - Global SS ‘Hubs’ more effective than Regional Duplication centers

-Serviced provided effectively when, where needed- Customizable to each customer’s needs- Higher Customer, Supplier & Employee Satisfaction

-Capitalize on Scale, Scope: Move from Transaction Based to ‘Centers of Expertise’- Customers & Employees: Self Service-- Productivity increase to 80%

-Employees more in-tune with Customer Desires, needs- Shared competence, could work with outside firm

Integration & Convergence- End to End Services- Value Stream Integration w/ Suppliers, Customers, ..

-Managed Shared Services under a End-to-End integrated approach- Financial expectations compare to world class financials

- Provide complete Suite of services, integrating the different departments across the organization, to help customers achieve a strategic competitive advantage

-Entire services suites are integrated, deeply connected to all process components as well as customers and suppliers- Customers can take advantage of best-fit scenarios of HR services for their specific needs

- Highly cross-trained, competent workforce, capable of adjusting to market and customer changes quickly and effectively

13

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- Strategy MappingSmall Group


or Tactical. Discuss potential issues for HR Shared Services and

Outsourcing, relate to Strategy Mapping and the 4 ‘legs’ of the Balanced Scorecard. Discuss how they might be addressed. Share your thoughts with the other members of your discussion group. [15 minutes]




Update your notes for the next individual exercise.

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- Strategy Mapping –– Select Level:Write down your Objectives/Goals, and specific Strategies:

Top 3-4 Objectives/Goals: Top 3-4 specific Strategies:

1. _____________________ Key Metric________________ Target (2010)_____(3 yr)_____



4. _____________________ Key Metric________________ Target (2010)_____(3yr)_____

1. __________________________________________________________________2. ___________________________________________________________________3. ___________________________________________________________________4. ___________________________________________________________________

___ Company / Executive (Strategic)

___ Department / Division (Operational)

___ Section / Workgroup (Tactical)

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Step 2 – Designing your Balanced Scorecard – Defining and Aligning the 4 ‘Legs’

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What is a “Balanced Scorecard?” Business Multi-Discipline Tracking and Management Tool to

help achieve and sustain desired performance levels , based on 4 ‘Legs’:

Customer Focus Financial PerformanceBusiness Process PerformanceEmployee Knowledge, Skills &

Competence

How is it created?1. Determine the key focus areas and measures for each ‘Leg’,

tied back to the strategic direction, from the Strategy Map2. Decide the Strategic, Operational and Tactical Actions to be

tracked and measured for your group3. Design your Balanced Scorecard, get concurrence and

deployHow does it add value?

Ensures Actions, Focus are linked to key goals, and measured

Enables Real-Time Response and Adjustment to Changes

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STRATEGIC LEVEL• TIMEFRAME: 3 TO 5 YEARS• ASSESSMENT• SELECTION• DEPLOYMENT• REVIEW: AT LEAST MONTHLY

OPERATIONAL LEVEL• TIMEFRAME: 1 YEAR• ASSESSMENT• SELECTION• DEPLOYMENT• REVIEW: AT LEAST WEEKLY

TACTICAL LEVEL• TIMEFRAME: REAL TIME • ASSESSMENT• SELECTION• DEPLOYMENT• REVIEW: REAL TIME, DAILY, WEEKLY


- Tying Strategic, Operational and Tactical to the 4 ‘Legs’

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Process Objectives Process Measurement TargetStrategic - Align strategic direction with upcoming health care

legislation- Benchmark 'best practices' for business process performance, and establish achievement targets, strategies- Overall focus on Customer Satisfaction

- Anticipated compliance, and Risk levels

- Comparison to 'Best Practices' over time

- Customer Satisfaction Indices

- 100%

- Meet or Exceed

- >98% Monthly

Operational - Comply with existing and upcoming health care legislation- Effectively Plan and Operate at optimum cost efficiency - staffing levels, operational process costs, reduced waste, …

- Business Process Compliance to Legislation Requirements- Staffing levels/Indices, Operational Process Cost Indices, Waste reduction, Response, Customer Satisfaction operational indices, and overall Process Performance

- 100%

- Indices targes are 1.0- Waste Reduction: 25% year over year- Response: TBD- Overall Process Performance: >95%

Tactical - Comply with legislated requirements for daily operation- Manage business and operational processes to budget- Meet daily, weekly and Monthly operational goals- Ensure Customers needs are satisfied daily- Conduct Admin functions in a timely manner

- Compliance to legislated requirements

- Compliance to budget weekly, Monthly, with actions in place - Goal acheivement - on/off track- Customer Satisfaction Indices- Cycle time, First Pass Yield, Rework and process capability

- 100%

- 100% or better

- On track, or plans in place to recover- >98%- Improvement 25% year over year

Balanced Scorecard Worksheet - Strategic, Operational, Tactical - Example: Health Care Shared Services - Business Process 'Leg'

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Scorecard

Leg Indicator Measure Units Target

Knowledge and Growth

Employee feelings about work Employee feelings about qualifications Employee feelings about the future

Employee complaints Employee suggestions Employee turnover Training and Development Movement within Sears

Complaints Ideas suggested and implemented Turnover T&D numbers Growth Successions

0 10% more each year <5% 25% per year 15% per year

Internal Business Process

Service oriented Helpful to Customers Value Merchandise

Handling situations Movement of merchandise Ease of processes

First Pass Yield Inventory levels/Turnover Cycle Time

>95% >5 per year 10% better each year

Customer Focused

Customer ideas and recommendations Customer impressions Customer Retention New Customers

Number of ideas from customers suggested and implemented Customer surveys % Return customers % Increased customers

Number, type % Implemented $ Saved/Improved Percent, by demographics Percent, by demographics

>300 per year >10% >$5M each division >10% each year >10% each year

Financials Investment return Profit Sales Growth

ROA Operating Margin Gross Revenue Revenue Growth over last year

$$ Percent $$ Sales Percent

$XXXX YY% $$MMMM ZZ%

Draft Working Balanced Scorecard Example

[Retail sales Corporation - Worldwide]

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- Developing your Balanced ScorecardSmall Group


or Tactical. Discuss different aspects for HR Shared Services and

Outsourcing, relate to the 4 ‘legs’ of the Balanced Scorecard. Share your thoughts with the other members of your discussion group. [15 minutes]




Update your notes for the next individual exercise.

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- Developing your Scorecard – Select Level:Enter your Key Performance Metrics (KPM)

related to each ‘Leg’ of your Balanced Scorecard from

Step 2: Customer Focus and Satisfaction Financial Performance

KPM Units Target

1. _____________________2. _____________________3. _____________________4. _____________________

KPM Units Target

1. _____________________2. _____________________3. _____________________4. _____________________

Business Process Performance Employee Knowledge, Skills, Competencies

KPM Units Target

1. _____________________2. _____________________3. _____________________4. _____________________

KPM Units Target

1. _____________________2. _____________________3. _____________________4. _____________________

___Company / Executive (Strategic)

___Department / Division (Operational)

___Section / Workgroup (Tactical)

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Customer Focus Business Process Performance

Employee Skills & Capabilities

Strategy #1___________________________________________________

________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

________________________________________________________________________________

Strategy #2___________________________________________________

________________________________________________________________________________

________________________________________________________________________________

____________________________________________________________________________________

________________________________________________________________________________

Strategy #3___________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

Strategy #4___________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________


- Defining the 4 ‘Legs’ of the Balanced ScorecardEnter your Strategies down the left side. Then, in each box,

identify a specific initiative that will support achieving each strategy related to the specific ‘Leg’ of your scorecard.

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Step 3 – Develop your Dashboards– Executive/Organization Department / Division Section / Workgroup

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What is a “Dashboard?” Visual Management Tool that provides Real-Time critical

information on key business measures, to enable timely decisions, based on the 4 ‘legs of the Balanced Scorecard:

Customer Focus Financial PerformanceBusiness Process Performance Employee Knowledge, Skills & Competence

How is it created?1. Assess your business operation/process, and determine what you

would need to see on an on-going basis, in order to assess the ‘health’ of your operation/department, as related to each of the 4 ‘legs’

2. Design your Dashboard to provide Real-Time, up to date intelligence on these measurements

3. Install the Dashboard, test it, and improve on it, and make it part of your daily management system.

How does it add value? Ensures Actions, Focus are continually aligned to key performance

goals Enables Real-Time Response and Adjustment to Changes

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- Developing your Dashboard Consider various ways to portray,

arrange and display your visual and graphical indicators.

Important points: Must clearly indicate when

something requires attention Should be simple Easy to understand Flow naturally Use Color, different shades… Updated in real time Flexible to requirements changes

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A Real State Department of Human Services Finance set-up

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Key Points:-Lots of Color, Graphics, Charts, clearly labeled, and well understood by all.- Set up so that an executive or manager can look it over quickly, and should be able to spot something out of whack immediately.

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LEGEND: Home page Dept Web Pages

LEGEND: Home page Dept Web Pages


- Example of a Dashboard for an Airline

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29

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- Strategy MappingSmall Group Exercise

Small group Exercise:Get into groups of 5-6, sorted by Strategic, Operational

or Tactical. Imagine you are members of an HR Shared Services

organization. As a group, on a Flip-Chart, lay out a Dashboard, considering everything we have discussed. Be sure to include aspects related to all 4 ‘Legs’ of the Balanced Scorecard, but specifically to your ‘level’ and how you would measure your organizational performance. [15 minutes]


Update your notes for the final individual exercise.

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- Developing your Dashboard – Select Level: List various visual and graphical ways to show

current and updated status of your metrics, for each ‘Leg’, based on the metrics you chose for your Scorecard.

Suggestions: - Red, Yellow, Green Indicators - Gauges,

Meters - Bar, Pie, Line, Radar Charts - Combinations




Customer Focus and Satisfaction Financial Performance

Business Process Performance Employee Knowledge, Skills, Competencies

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- Developing your Dashboard – Select Level: Layout your Dashboard:




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- Wrap up What we covered today:

Understand the fundamentals of the Balanced Scorecard and Dashboard System for Management

Develop a Framework for Mapping your Strategy Devise the Elements for each ‘Leg’ of your Balanced

Scorecard Design and layout a Dashboard for your particular

level and management requirements Where you can go to get more information:

Web Books Industry Examples Other Resources

Remember…..o No ‘One’ answer for you, many different wayso Try something, and then adjust, but get it out there

soon, and don’t be afraid to make changes and adjustments

o Keep it Simple, Clear, Effective. Use the 20 second rule…

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- Your Presenter…Frederick S. ‘Rick’ BuchmanMr. Buchman has over 25 years hands-on international strategic, operational and organizational transformation experience, spanning multiple industries from missiles and electronics to medical devices. He has been directing business improvement initiatives involving Strategy Planning, Lean and Six Sigma, Balanced Scorecard and Dashboard deployment, Operations, and Organizational optimization for the past 16 years, as both an internal and contract consultant, supporting the automotive, electronics, semiconductor, oil & gas, electromechanical, medical device, commercial and components industries, and working extensively with Engineering, Operations, R&D, Finance, HR and Legal divisions. Rick has also taught extensively at the graduate level for major institutions such as MSU (the Eli Broad Graduate School of Management), Towson and George Mason Universities, in strategy planning, problem solving, business management, value stream mapping, balanced scorecard and dashboard strategies, coaching and team leadership. His clients have included AT&T, Raytheon Corp., Hughes, Texas Instruments, Ford Motor Company, Allied-Signal, ITT, Husky Oil, Slumberger, Gerdau, Remy, Dura GmbH, GKN, and several US State and Federal Government agencies. Mr. Buchman has a B.S. in Mathematics, MBA in Business, and a Ph.D (ABD) in Business, and has been featured in International Who’s Who in Business, 2006..

Rick recently co-authored the Amazon Productivity Best-seller Balanced Scorecard Strategy for Dummies, with Mr. Charles Hannabarger and Mr. Peter Economy, published by Wiley and Sons, Inc. in September 2007 (English Language), and again in March 2008 (Dutch Language) and September 2008 (German Language). This book was also just recently voted (May 5, 2010) by the Channelinsider community #5 out of the top 21 ‘Must-Read Books’ for Business Success.

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Balanced Scorecard Strategies For Hr Ss Workshop May 10 2010a Chicago, Il

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