Scorecard Balancedbalanced-scorecard.de/docs/BSC_KPMG.pdf · a Balanced Scorecard Bürgenstock,...
Transcript of Scorecard Balancedbalanced-scorecard.de/docs/BSC_KPMG.pdf · a Balanced Scorecard Bürgenstock,...
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Balanced ScorecardBürgenstock, 28.5.97
SPS-IN / JAR
BalancedScorecardLinking Strategy to Actions
KPMG Swiss PracticeBenchmarking Congress, BürgenstockMay 28th, 1997, Roger Jaquet
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Contents
� Objectives 1
� What’s the historical background of the BSC? 2 - 4
� BSC - What is it? 5 - 12
� Case Study trading company XYZ 13 - 19
� Benefits and roll out 20 - 21
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Objectives
1. Explain the BSC-approach
2. Show a case study of a BSC implementation
3. Why should the BSC interest KPMG?
4. Benefits of the BSC
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BSC History (origins)
� In the sixties development of the so called “Tableau de bord”in France
� 1990: Nolan Norton Institute (research arm of KPMG)sponsored a one-year multicompany study “MeasuringPerformance in the Organization of the Future”
� 1992: David P. Norton (CEO of Nolan Norton) and Robert S.Kaplan (Academic Consultant) summarized the findings ofthe study in an article “The Balanced Scorecard - MeasuresThat Drive Performance” (Harvard Business Review - HBR)
� 1993: Second HBR article “Putting the Balanced Scorecardto Work”
� 1996: New developments in a third HBR article “Using theBalanced Scorecard as a Strategic Management System”
� 1996: Norton and Kaplan published the book “The BalancedScorecard-Translating Strategy into Action”
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Phase 4Phase 3Phase 2Phase 1
Historical Backround in Switzerland
• 1992 ZfU-Meeting withR.Kaplan andKPMG
• first articles ofKaplan/Norton
• ABM in practice• little BSC
actions
• improve financialmeasurement
• market: more andmore finance driven
• Mergers &Acquisitions
• trend towardsIntegrated SoftwarePackages
• MIS/EIS
• Use of conven-tional accountingmethods
• plus new methods- ABC- JIT- BPR- TQM- Team
empowerment
• Presentation ABBCH
• Competitors C&LHorvath &Partners (seminar)
• KPMG Pilot FritzNauer AG
• 3-4 interestedclients
• roll out KPMG CH
BSC:integrated
performancesystem
process and HR orientation
traditionalcontrolling
(packages)
theoreticalback ground
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The BSC Approach
VisionVision
StrategyStrategy
ObjectivesObjectives
MeasurementMeasurement
FinancialFinancial
Learningand
Growth
Learningand
Growth
InternalBusinessInternal
BusinessCustomerCustomer
What do wewant to achieve?
What actions dowe need?
How do wemeasure strategyimplementation
Where arewe going?
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The Questions
Financial Perspective“To suceed financially,
how should we appear toour shareholders?”
Internal Business Process“To satisfy our share holders
and customers, whatbusness processes must we
excel at?”
Learning and Growth“To achieve our vision,how will we sustain ourability to change and
improve?”
Customer Perspective“To achieve our vision,
how should we appear toour customers?”
Visionand
Strategy
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What is a Balanced Scorecard?The 4 perspectives
Financial• operating income• return on capital employed• economic value added
Customer• customer satisfaction• new customer acquisition• customer profitability• market and account share
in targeted segments
Internal BusinessProcess• product development cycle• service error rate• new Product revenue
Learningand Growth
• employee satisfaction• employee climate survey• training rating• skill rating
Vision andStrategy
Vision andStrategy
future focus whit the critical success factors of the companytraditional focus data based and historical oriented
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Linking the measures
Financial Perspective
Customer Perspective
Learning and Growthemployees
morale
improve
ROCE
customer satisfaction
employeessuggestions
operatingexpense
accountsreceivable
Internal Business Process
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What is special about the BSC?
Vision/Strategy
Financial
Learningand Growth
InternalBusinessProcess
Customer
Operational Level
Balanced Scorecard
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3
4
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What is special about BSC?
Linking key measurements to the operational level
Ongoing learn process for employees
Regular feedback regarding direction and progressof strategy
overall system for business assessment and measurement
operational feedback wether the BSC is balanced andpractical
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How do we Implement BSC?
FinancialPerspective
CustomerPerspective
InternalBusinessProcess
Key Performance DriversLearning
and Growth
How do we measure ourprogress?
Critical Success FactorsWhat do we need to “do well”?
StrategyHow do we get there?
VisionWhere is the Organisation going?
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The Benefits
� The Balanced Scorecard is “balanced” in different ways- past and future performance- soft and hard factors- internal and external indicators- etc.
� It puts the company’s strategy into practice
� It helps to communicate and align the strategy throughoutthe organisation
� Ongoing learning process
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Case Study Trading Company XYZ
1. company figures / environment
2. company problems/challenges
3. strategical success factors
4. measures
5. link between the different aspects
6. conclusions
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Business Environment
� medium sized family owned company� annual turnover: 130 million CHF� staff: 750 employees� retailer� products: - furniture
- clothing- others
� 62 stores� previous yearly growth: on average 30%
Vision: to become market leader and fulfillthe consumers requirements
Vision: to become market leader and fulfillthe consumers requirements
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The company’s problems
� Communication between different functionsacross the organization
� Information is not distributed systematically
� success depends on a few key employees
� driven only by financial key figures
� etc.
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Strategical success factors
Price Quality SponsoringCompany Slogan
closeness to customeravailability of goods
Process qualityProductivity
Quality ofPurchasing
Image-Management
Information flowof main processes
Employee skilldevelopment
improve ITinfrastructure
cultivate an opencompany culture
Client-Perspectives
Process-Perspectives
Employee-Perspectives
Strategic measurements� employee-motivation� qualification index
� percentage of on-linecompany data
� system downtime
� number of employeesuggestions put into practice
� percentage of employeeslinked to the new controllingsystem
example: linking the customer dimension (to employeean process development)
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Connection of the Strategical Objectives
sales growth
Price Leader
Company Logo
Sponsoring
availability of goodscloseness to
customer
Profitability
Return to Equity
(quality of)shopping
experience
employee skilldevelopment
Image-Management
Information flowMain processes
quality ofprocesses,productivity
"open company"
EDP Performance
Financial-Perspectives
Prozess-Perspectives
Employee-Perspectives
Client-Perspectives
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Store manager cockpit
0%
50%
100%Customer
satisfaction
0%
50%
100%Employee
morale“company health”
index
0%
50%
100%
1
2
3
merchandiseturnover
% of articlesnot available
% write-offs
% contribution from sales
employee costsin % of sales
other.........sales
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Systematic order of Performance-Measurements
StrategyStrategy
BudgetingBudgeting
Performance-Performance-measurementmeasurement
Performance-Performance-managementmanagement
ImpleImple--mentationmentation
EmployeeEmployeesalariessalaries
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What is the benefit for KPMG?
Audit
ManagementConsulting
BalancedScorecard
MeasurementMeasurement
BusinessBusinessControl Control
BusinessBusinessImprovementImprovement
• Establishing of currentposition and quantitativetargets, with timing
• Measurement / evaluation of“lag indicators” and reporting(=results)
• Advice on “lead indicators”(=activities)
• Measurement / evaluation of“lead indicators”
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1997
Involvementwith BSC
PartnerAnnouncement
Distribution toall Partners
Road Show forLead Partners
Extend WCForganization
TargetingWeek
Core TeamSet up
BSCDesk
Training BSCPilot
Audit 200Pilot
Responseteam/Projectwork
WCF Practice
BSC Team
Invest.Planning
WCF Roll Out Switzerland 1997
1996
BSC Pilotproject