MESYUARAT PENGURUS NEGERI 1/2006
BSC/KPI NEGERI
DISEDIAKAN OLEH:
ABD RAHAMAN RASID
PENGURUS KANAN
JABATAN PERANCANGAN
KORPORAT/PENGURUS PROJEK EIS
1B FEBRUARI 2006
SCOPE & OBJECTIVE OF
PRESENTATION
 Introduction and Background
 To explain basic concept on Balanced Scored Card (BSC)
 To highlight BPM Destination Statement
 To elaborate on BPM Corporate Scorecard
 To propose State Scorecard, Branch and Hub
 To get feedback from State Manager
BALANCED SCORE CARD
(BSC)
CONCEPT BSC
Formal Definition: A tool that translates an organization’s
mission and strategy into a comprehensive set of a
performance measures that provides the framework for a
strategic measurement and management system
MY DEFINITION: A SYSTEMATIC WAY FOR
MANAGEMENT TO PLAN AND EXCUTE STRATEGY
FOR THE WHOLE ORGANIZATION
WHY BSC?
 Traditional reliance on financial measures (e.g: ROA)
 The rise rise of intangible assets
 The importance of reputation ( part of intangible asses)
 Organizations face difficulty in executing strategy
Barriers to Strategy Execution
Only 10%
organizations execute
strategy
Barriers to Strategy Execution
Vision
Barrier
People
Barrier
Management
Barrier
Resource
Barrier
Only 5%
workforce
understands
the strategy
Only 25%
managers
have
incentives
linked to
strategy
85% executive
teams spend
less than 1
hour/month
discussing
strategy
60% of
organizations
don’t link
budgets to
strategy
Source: Robert S. Kaplan & David P. Norton
BSC: HAS FOUR PERSPECTIVES
 FINANCIAL
 CUSTOMER
 INTERNAL BUSINESS PROCESS
 LEARNING & GROWTH
BSC: FOUR PERSPECTIVES
FINANCIAL PERSPECTIVE
To succeed financially, how should we appear to
our shareholders?
CUSTOMER PERSPECTIVE
To achieve our vision, how should we appear to
our customers?
INTERNAL PERSPECTIVE
To satisfy our shareholders & customers, what
business processes must we excel at?
LEARNING & GROWTH PERSPECTIVE
To achieve our vision, how will we sustain our
ability to change and improve?
BALANCED SCORECARD: AN OVERVIEW
Financial
Perspective
Shareholder
Productivity
Strategy
Value
Product/Service Attributes
Customer
Perspective
Internal
Perspective
Learning &
Growth
Perspective
Price
Quality
Manage
Operations
Human
Capital
Time
Function
Growth
Strategy
Relationship
Image
Partnership
Brand
Manage
Customers
Manage
Innovation
Information
Capital
Organisation
Capital
FINANCIAL
PERSPECTIVE
FINANCIAL PERSPECTIVE
Shareholder
Value
Productivity Strategy
Improve
Cost
Structure
 Reduce expenses
 Improve yields
Increase
Asset
Utilization
 Manage capacity
from existing assets
Growth Strategy
Expand
Revenue
Opportunities
 New products
 New markets
 New partners
Enhance
Customer
Value
 Improve
profitability from
existing
customers
CUSTOMER
PERSPECTIVE
CUSTOMER PERSPECTIVE
Customer Perspective
FINANCIAL PERSPECTIVE
 Customer
Profitability
 Market Share
 Account Share
 Customer
Acquisition
Product/Service Attributes
Price
Quality
Selection
Availability
Functionality
 Customer
Retention
Relationship
 Customer
Satisfaction
Image
Service
Brand
Partnership
Customer Value Proposition
INTERNAL
PERSPECTIVE
INTERNAL BUSINESS PROCESS
FINANCIAL PERPECTIVE
CUSTOMER PERPECTIVE
 Acquire raw materials
 Convert raw materials
to finished products
 Distribution
Operation
Management
Process
Processes that
produce & deliver
products & services
Customer
Management
Process
Processes that
enhance
customer value
 Select targeted customers
 Acquire targeted customers
 Retain customers
 Grow business with customers
Processes that create
new
products &
services
 Identify new products &
services
 Manage research &
development
 Develop new products
Innovation
Management
Process
LEARNING AND
GROWTH
LEARNING AND GROWTH
FINANCIAL PERPECTIVE
CUSTOMER PERPECTIVE
INTERNAL PERPECTIVE
Human
Capital
Information
Capital
Organization
Capital
 Attitude
 Skill
 Knowledge
 System
 Database
 Network
 Leadership
 Culture
 Teamwork
BALANCED SCORECARD: OBJECTIVES, MEASURES, TARGETS & INITIATIVES
FINANCIAL
“To succeed
financially, how
should we appear to
our shareholders?”
CUSTOMER
Objectives
“To achieve our
vision, how should
we appear to our
customers?”
Objectives
Measures
LEARNING &
GROWTH
“To achieve our
vision, how will we
sustain our ability
to change &
improve?”
Targets
Initiatives
Objectives
Measures
Targets
Targets
“To satisfy our
shareholders &
customers, what
business processes
must we excel at?”
Initiatives
Objectives
Vision &
Strategy
Measures
INTERNAL
BUSINESS PROCESS
Initiatives
Measures
Targets
Initiatives
MEASUREMENT
MEASURING BUSINESS STRATEGY
PERSPECTIVES
Financial
GENERIC MEASURES
ROI, ROA, ROE
Customer
Satisfaction, retention, acquisition,
market share
Process
Response time, new products, cost,
product & service quality
Learning &
Growth
Employee satisfaction, information
system, competency, value system
MEASURES
Two Types of Strategic Objectives
Outcome (Lag) Measures
Purpose
• Focus on the performance
results at the end of a time
period or activity
Examples
• “year-end-budget expense”
• “client satisfaction”
• “cases per caseworker”
Strengths
• Usually objective and easily
captured
Issues
• Outcome measures reflect
success of past, not current,
activities and decisions
Driver (Lead) Measures
Purpose
• Measure intermediate
processes and activities
Examples
• “hours spent with clients”
• “$ spent on automation”.
Strengths
• More predictive in nature
• Allows organisations to adjust
behaviors for performance
Issues
• Based on hypotheses of
strategic “cause and effect”
• Often difficult to collect
supporting data
STRATEGY MAP
BSC TERMINOLOGY
Strategy Map: Diagram of the
cause-and-effect relationships
between strategic objectives
Strategic Theme:
Operating Efficiency
Financial
Increase
Shareholder
Value
Defend
Current
Business
More
customer
KEY PERFORMANCE INDICATOR (KPI)
Statement of
what strategy
must achieve
and what’s
critical to its
success
How success
The level of
Key action
in achieving
the strategy performance or programmes
rate of
required to
will be
achieve
measured and improvement
needed
objectives
tracked
Customer
Exceptional
Value Services
Internal
One Stop
Solution
Strategic Objectives Measurement
Create
Product &
Services Offerings
/ Bundles
Learning
Improve
Strategic Skills &
Competencies
Create
Product &
Services Offerings
/ Bundles
• # of cross sell
business
bundles
Target
• 8 new
business
bundle
Initiative
• Develop
cross-sell
business
bundles
FROM STRATEGY TO ACTION PLAN: LOAN BUSINESS
STRATEGY MAP
Strategy
ROA
Objective
BALANCED SCORECARD
Measurement
 Profitability
Target
ACTION PLAN
Initiative
 Identify new
customers
 Offer new limit
 RM 2 million to existing
customers
 Increase loan
 Loan approval
Customers
 Attract new
customer
 No. customer
 700
Fast Service
 Fast loan
approval
 Days taken to
approve loan
 One week
Decision making
 Review New
authority limit
 Day taken to
approve loan
 One week
 Proposal to
Management
Knowledge
 Enhance
Knowledge on
corporate loan
Number of
training/year
2 times
 Find suitable
courses
Grow Revenue
Budget
 Corporate
advertisement
RM10,000
RM4,000
INITIATIVE
INITIATIVES
Initiatives Are Defined to Help Close the Performance Gap
OBJECTIVE
Increase Customer
Satisfaction
Objectives articulate the components
of our strategy
MEASURE / TARGET
90%
Measure
Customer
Satisfaction
Survey Rating
gap
45%
$M
INITIATIVE
Target
90% favorable
overall
Target
Actual
Measures track our progress toward achieving and
communicating the intent of the objective
Implement automated case
management system and
train Every Rep in 99
Initiatives help close the gap between
our current and desired performance
CASCADING
CASCADING
What does cascading the BSC means?
• The process of developing BSC at each division and
business unit levels
• The scorecards must align with organization highest level
scorecard by identifying the strategic objectives and
measures
• Lower level scorecard will also include additional
measures and initiatives that reflecting the specific
opportunities and challenges faced at that level
BALANCED SCORECARD: THE CASCADING PROCESS
Mission, Vision & Value
BRANCH
STATE
DEPARTMENT
CORPORATE
Strategy
Financial
O
M
T
Customer
I
O
Financial
O
M
T
M
T
I
O
M
T
I
O
M
T
I
O
M
T
I
O
O
M
T
T
I
O
M
I
O
M
T
I
O
O
M
T
I
O: Objectives
I
T
M
T
I
O
M
T
I
T
I
L&G
I
Team & Personal BSC
Note:
T
L&G
Internal
I
M
L&G
Internal
Customer
I
M
L&G
Internal
Customer
Financial
O
T
Customer
Financial
O
M
Internal
M: Measures T: Targets I: Initiatives
O
M
Three Ways to Cascade
Cascading is accomplished using one of three approaches
Corporate
Shared
Identical Objectives
Contributory
Translated Objectives
Hybrid
Identical, Translated
and Unit Specific
Objectives
Business Unit
GLOSSARY
Balanced Scorecard: A tool that translates an organization’s mission and strategy
into a comprehensive set of a performance measures that provides the framework
for a strategic measurement and management system
Cause and Effect Relationship: A cause and effect relationship identifies the
initiatives, responsibilities or activities (causes) necessary to achieve an objective
or target (effect)
Customer Value Proposition: Defines who the customer is and what they want
Initiative: Key action programs to achieve objectives or close gap between
measures performance and targets. Initiatives are often known as projects, actions
or activities.
Lag Indicator: Measures to determine the outcome of an objective that indicate
company performance at the end of a period. These are results-oriented and do
not reflect a process. Lag indicators often appear in BSC’s outcome-oriented
Financial and Customer perspectives.
GLOSSARY
Lead Indicator: Measures that indicate progress againts a process or behavior.
These measures are helpful in predicting the future outcome of an objective. Lead
indicators tend often appear in the Internal and Learning & Growth perspectives.
Measures: Statement of how success in achieving an objective will be measured
and tracked. Measures are written statements of WHAT we will track and trend
over time, NOT the actual targets such as direction and speed. A measure should
include a statement of the unit to be measured (RM, %, rating).
Objective: Concise statement articulating a specific component of what the strategy
must achieve/what is critical to its success. Each perspective usually contains 3-6
primary objectives that state a key aspect of the strategy to be achieved over the
next 3-5 years. Objectives are best stated as action phrases and may include the
means and/or desired results as well as the action. E.g: “ Increase market share
through current customers”
Strategy Map: A visual representation of an organization’s strategy and the
processes and systems necessary to implement that strategy. A strategy map will
show employees how their jobs are linked to the organization’s overall objectives