Saturday, May 09, 2015

BSC (Balanced Scorecard) Simplified....


First Time in History, BSC (Balanced Scorecard) Simplified....But still hard to implement....

irst thing first,  BSC means aligning every employee towards organizational goals and it starts with vision, mission and strategy of the organization. This is not short term initiative but should be focused long term and beyond the vision. 

Elements of strategy,
  • Ambition of the organization,
  • Arena of operations,
  • Products,
  • How are you going to differentiate your products?
  • How you will operate : alliance , JV  or on your own.

Once the strategy is aligned how are you going to make the strategic map...
You need to make the strategic map of the organization and then deploy the policy...with fixed accountabilities. Be aware that if you do not have the clear vision and strategy and subsequent strategic map BSC has no sense.

Now what is balanced in BSC?

Once the strategic map is ready,  it is converting functional strategic map and then targets....
If you have a five year horizon...what you want to achieve?
Translate it into short term goals...

Based on four perspective
  • Customer
  • Operational
  • Financial
  • And people...

So what is balanced in Balance Scorecard?

  • Short term VS long term,
  • Strategic map vs tactical planning and implementation,
  • Four perspective takes care of whole organizational context.

Based on this once you converted all this in matrix called organizational scorecard and then functional scorecard....which can be assigned to individual employees as KRA and KPI.

Please remember to establish the monitoring system.

BSC fails because when there are some business turmoil. Owners gets panic instead of making changes in strategic plan.

Then it becomes just KRA sheet based on four perspective.

Today most of the organizations says that they have BSC but is just KRA sheet based on 4 perspective without long term strategy, map and key drivers. It is not at all BSC.

Implementation : Let's take step by step

  1. Study of the market, key driver for growth are find out and based on that it is decided where the organization would like to go by 5 years 10 years etc.
  2. What you would like be in the market and how?
  3. Make a strategic intents. This is utmost imp phase.
  4. Few questions should be asked like are we prepared for.
  5. Are we  Serious?
  6. Commitment of top in terms of strategic intents,
  7.  Prepare complex strategic map,
  8. Convert it into long term goals,
  9. Convert it in short term targets,
  10. Make organizational scorecard,
  11. Prepare Functional scorecards,
  12. Convert Scorecards into Individual targets,
  13. Establish monitoring system

What is complete strategy?

·         It is sustainable,
·         It addresses the cross boundaries of functions,
·         It is linked with external environment,

Example: If you have strategy focused to 2020 and targets thereon, how HR can have its own strategy linked to the same. The assessment of the organization is for example you need Intrapreneural skillsets and there is a gap..

Then your HR strategic map should have this element.

This can be linked to other functions as well.

And then with this all you need to work on change management and handle this accordingly.

Review strategy periodically;
Stick to the commitment.

About can have a dedicated business warehouse software...

However moreover from performance point of view...

You can have... proper review mechanism like

  • Business performance review,
  • Operation performance review etc....

The challenge is to extract the right data for discussion in these types of meeting.
It is better to automate high level data through SAP etc.

BSC is change management process.

Somebody senior Management Team member should take the responsibility of policy deployment leader...who also works as a change champion.  Sensitization is also required with right branding and communication associated with strong reward and consequence management policy.


Ramesh Walia said...

Very well said, Vinod. To achieve the long term vision, it is important that all the people in the organisation are aligned towards this vision and have long term as well as short term goals. It is important to split the long term goals in short term goals which are constantly monitored. Taking corrective actions on short term goals will ensure that the organisation remains on course to achieve the long term goals. Rightly pointed out by you that in case of setbacks ( which anyway will happen) , the panic button should not be pressed. Instead, the situation should be carefully reviewed and take necessary actions. Also, since all the functions will be working to achieve a common long term goal, the harmony & synergy will be much better. Rewards and recognition should be an integral part of the journey since motivated employees can wonders. On the whole it was a great article. Pl keep sharing.

NARE$H $HARMA said...

A good one though even with the Best of the Strategy, the Culture ocupies the paramont position! Still in Box-Cox type arrangement scenarios, I think, the chase to tools hadly delivers the sustainable intended results as the efforts remains on hard gains while overlooking the softer leading to these hard gains. As indicated in the article, alignment toward the common goal (and beyond the vision) helps in managing the change that sticks. Are we seeing BSC as the panecea for all things or we can use this in conjunction with ever needed, ever evolving new concepte?


Good one.., Strategy and BSC, Good that companies have longterm vision and employees need to align with it and HR along with all has to make it,


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