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1. The Balanced ScorecardThe Balanced Scorecard
Presented To
Adnan AlshihaAdnan Alshiha
Presented By
Alaoula Board MemberAlaoula Board Member

2. WorkshopWorkshop
OutlineOutlineIntroduction to the Balanced ScorecardIntroduction to the Balanced Scorecard
What is it?What is it?
Why do it?Why do it?
1-31-3
Brayer BreakBrayer Break
Balanced Scorecard FundamentalsBalanced Scorecard Fundamentals
The Four PerspectivesThe Four Perspectives
Measures, Targets and InitiativesMeasures, Targets and Initiatives
Roles and ResponsibilitiesRoles and Responsibilities
Business StrategyBusiness Strategy

3. The Balanced ScorecardThe Balanced Scorecard
What is it?What is it?
Definition:Definition:
The Balanced Scorecard is aThe Balanced Scorecard is a
management tool that providesmanagement tool that provides
stakeholders with astakeholders with a
comprehensive measure of howcomprehensive measure of how
the organization is progressingthe organization is progressing
towards the achievement of itstowards the achievement of its
strategic goals.strategic goals.

4. 1992 1996 2000
Balanced ScorecardBalanced Scorecard
HistoryHistory
Measureme
nt and
Reporting
Alignment and
Communicatio
n
Enterprise-wide
Strategic
Management
Articles in Harvard Business
Review:
 “The Balanced Scorecard —
Measures that Drive Performance”
January - February 1992
 “Putting the Balanced Scorecard to
Work” September - October 1993
 “Using the Balanced Scorecard as
a Strategic Management System”
January - February 1996 1996 2000
Acceptance and
Acclaim:
 “The Balanced
Scorecard” is translated
into 18 languages
 Selected by Harvard
Business Review as
one of the “most
important management
practices of the past 75
years.“

5. • The Balanced Scorecard is the mainThe Balanced Scorecard is the main
management tool that has been used bymanagement tool that has been used by
successful organizations in various fieldssuccessful organizations in various fields
• Private and Public SectorPrivate and Public Sector
• For- Profit and Not For- ProfitFor- Profit and Not For- Profit
• Different industriesDifferent industries
• These successful organizations placed theirThese successful organizations placed their
strategies at the centre of their operations.strategies at the centre of their operations.
Their strategies, guided Their day- to- dayTheir strategies, guided Their day- to- day
activitiesactivities
• In this workshop, we will learn more aboutIn this workshop, we will learn more about
strategy- focused organizations, and how tostrategy- focused organizations, and how to
develop Balanced Scorecardsdevelop Balanced Scorecards
The Strategy-Focused-The Strategy-Focused-
OrganizationOrganization

6. Organizations Often Have AOrganizations Often Have A
Gap Between Strategy andGap Between Strategy and
ActionAction
Strategy Is a Step In a Continuum
MISSION
Why we exist
VALUES
What’s important to us
VISION
What we want to be
STRATEGY
Our game plan
STRATEGIC OUTCOMES
Satisfied
SHAREHOLDERS
Delighted
CUSTOMERS
Efficient and Effective
PROCESSES
Motivated & Prepared
WORKFORCE

7. The Balanced Scorecard IsThe Balanced Scorecard Is
A Bridge To Close That GapA Bridge To Close That Gap
Strategy Is a Step In a Continuum
MISSION
Why we exist
VALUES
What’s important to us
VISION
What we want to be
STRATEGY
Our game plan
BALANCED SCORECARD
Implementation & Focus
STRATEGIC INITIATIVES
What we need to do
STRATEGIC OUTCOMES
Satisfied
SHAREHOLDERS
Delighted
CUSTOMERS
Efficient and Effective
PROCESSES
Motivated & Prepared
WORKFORCE
PERSONAL OBJECTIVES
What I need to do

8. The Balanced ScorecardThe Balanced Scorecard
What is it?What is it?
The Balanced Scorecard:The Balanced Scorecard:
• Balances financial and non-financial measuresBalances financial and non-financial measures
• Balances short and long-term measuresBalances short and long-term measures
• Balances performance drivers (leading indicators) with outcomeBalances performance drivers (leading indicators) with outcome
measures (lagging indicators)measures (lagging indicators)
• Should contain just enough data to give a complete picture ofShould contain just enough data to give a complete picture of
organizational performance… and no more!organizational performance… and no more!
• Leads to strategic focus and organizational alignment.Leads to strategic focus and organizational alignment.

9. Measurement isMeasurement is
the language thatthe language that
gives clarity togives clarity to
vague conceptsvague concepts
Measurement isMeasurement is
used toused to
communicate, notcommunicate, not
simply to controlsimply to control
Financial Perspective
•Profitability
•Growth
•Shareholder
Value
The VisionThe Vision
Customer Perspective
•Price
•Service
•Quality
Internal Perspective
Learning and Growth
•New Skills
•Continuous
Improvement
•Intellectual
Assets
“If we succeed,
how will we look
to our
shareholders?”
“To achieve our
vision, what
customer needs
must we serve?”
“To satisfy our
customers and
shareholders, at
which business
processes must we
excel?”
“To excel in our
processes, what
must our
organization
learn?”
•Cycle Time
•Productivity
•Cost
The Balanced Scorecard Provides a FourThe Balanced Scorecard Provides a Four
Perspective Framework to Translate StrategyPerspective Framework to Translate Strategy
Into Operational TermsInto Operational Terms

10. The Revenue Growth Strategy
“Improve stability by broadening the sources
of revenue from current customers”
The Productivity Strategy
“Improve operating efficiency by shifting customers to
more cost-effective channels of distribution”
Improve
Returns
Improve
Operating
Efficiency
Broaden
Revenue
Mix
Increase
Customer
Confidence in
Our Financial
Advice
Increase
Customer
Satisfaction
Through Superior
Execution
Increase
Employee
Productivity
Access to
Strategic
Information
Develop
Strategic
Skills
Align
Personal
Goals
Financial
Perspective
Customer
Perspective
Internal
Perspective
Learning
Perspective
Cross-Sell
the Product
Line
Shift to
Appropriate
Channel
Provide
Rapid
Response
Develop
New
Products
Minimize
Problems
Understand
Customer
Segments
A Good Balanced Scorecard StrategyA Good Balanced Scorecard Strategy
Map Tells the Story of Your StrategyMap Tells the Story of Your Strategy

11. A Good Balanced Scorecard Tells the StoryA Good Balanced Scorecard Tells the Story
of Your Strategy Through A Set of Linkedof Your Strategy Through A Set of Linked
Cause and Effect HypothesesCause and Effect Hypotheses
F1 - Improve Returns
F2 - Broaden Revenue Mix
F3 - Reduce Cost Structure
C1 - Increase Customer
Satisfaction With Our
Products & People
C2 - Increase Satisfaction “After
the Sale”
I1 - Understand Our Customers
I2 - Create Innovative Products
I3 - Cross-Sell Products
I4 - Shift Customers to Cost-
Effective Channels
I5 - Minimize Operational
Problems
I6 - Responsive Service
L1 - Develop Strategic Skills
L2 - Provide Strategic Info
L3 - Align Personal Goals
Return on Investment
Revenue Growth
Deposit Service Cost Change
Share of Segment
Customer Retention
New Product Revenue
Cross-Sell Ratio
Channel Mix Change
Service Error Rate
Request Fulfillment Time
Employee Satisfaction
Revenue per Employee
Strategic
Objectives
Strategic Measurements
(Lag Indicators) (Lead Indicators)
Revenue Mix
Depth of Relation
Satisfaction Survey
Product Development Cycle
Hours with Customers
Strategic Job Coverage Ratio
Strategic Info Availability Ratio
Personal Goals Alignment (%)
FinancialCustomerInternalLearning

12. Objectives
• Fast ground
turnaround
Statement
of what
strategy
must
achieve and
what’s
critical to its
success
Target
• 30 Minutes
• 90%
The level of
performance
or rate of
improvement
needed
• Cycle time
optimization
Key action
programs
required to
achieve
objectives
InitiativeMeasurement
• On Ground Time
• On-Time
Departure
How success
in achieving
the strategy
will be
measured
and tracked
Strategic Theme:
Operating Efficiency
Profitability
Financial
Learning
Increase
Revenue
Ground crew
alignment
Lowest
prices
Lower Costs
Custome
r
Interna
l
Fast ground
turnaround
Strategy Map: Diagram of the
cause-and-effect relationships
between strategic objectives
Flight
is on time
Theme Example from SouthwestTheme Example from Southwest
Airlines’ Balanced ScorecardAirlines’ Balanced Scorecard

13. The Balanced Scorecard Supports a CompleteThe Balanced Scorecard Supports a Complete
Strategic Management System by Linking Long TermStrategic Management System by Linking Long Term
Strategy and Measures to More Tactical Planning &Strategy and Measures to More Tactical Planning &
BudgetingBudgeting
Objectives Milestones
• Promote
ABC Culture
Model
• Employee
Satisfaction
Survey
• Evaluate
survey
response
InternalLearningCustomer
Accountable
• HR
Committee
• $ xxxx
Resource
Alloc.
Targets InitiativesMeasuresThemes/
Goals
VisionMission
• Meet access
expectations
• 3rd
available
appointment
(% met)
• ‘02 xx%
• ‘03 xx%
• ‘04 xx%
• Access
project
• Meet monthly
target
• Deadline
met
• Mkg.
Team
• $ xxxx
ABCHospitalSystemwillprovideexcellent
careinourselectedspecialtyareaswhile
maintainingmarginandgrowingshare
Servetheneedsofpatientsexcellently
1.Strengtheninnovation
2.Improvecustomersatisfaction
3.Assureconsistenthighquality
4.Provideoperationalexcellence
Longer Term (3-5 year) View Shorter Term (Annual) View
Strategic Tactical
• % patient mix • ’02 = 39%
• ’03 = 40%
• ’04 = 41%
• Mix Margins
Project
• Dept. Chairs• Complete by
2003
• $ xxxx• Assure
optimum
patient mix
• ‘02 xx%
• ‘03 xx%
• ‘04 xx%
Financial
• Grow
revenue
from patient
care
• % patient
care revenue
growth
• ‘02 xx%
• ‘03 xx%
• ‘04 xx%

14. The Balanced ScorecardThe Balanced Scorecard
Why do it?Why do it?
 To achieve strategic objectives.
 To provide quality with fewer resources.
 To eliminate non-value added efforts.
 To align customer priorities and
expectations with the customer.
 To track progress.
 To evaluate process changes.
 To continually improve.
 To increase accountability.

15. The BalancedThe Balanced
ScorecardScorecard
Why do it?Why do it?
It works!It works!
In just 90 days, Sandia Labs was able to redirect $190,000 in savings byIn just 90 days, Sandia Labs was able to redirect $190,000 in savings by
dropping initiatives that didn’t fit their overall strategy.dropping initiatives that didn’t fit their overall strategy.
““The BSC has forced our management team to focus beyond financialThe BSC has forced our management team to focus beyond financial
measures… too often in the past we would get sucked into short-termmeasures… too often in the past we would get sucked into short-term
thinking.”thinking.”
““The BSC dramatically improved our data analysis… we don’t overreactThe BSC dramatically improved our data analysis… we don’t overreact
nearly as much as we used to.”nearly as much as we used to.”

16. Execution of Strategy HasExecution of Strategy Has
Become the CorporateBecome the Corporate
Challenge of Our Times!Challenge of Our Times!
• ““Strategy has never been more important”Strategy has never been more important”
Business WeekBusiness Week
• ““Less than 10% of strategies effectively formulated are effectivelyLess than 10% of strategies effectively formulated are effectively
executed”executed”
Fortune MagazineFortune Magazine
• ““The problem is that our age’s fascination with strategy and visionThe problem is that our age’s fascination with strategy and vision
feeds the mistaken belief that developing the right strategy willfeeds the mistaken belief that developing the right strategy will
enable a company to rocket past competitors. In reality, strategy isenable a company to rocket past competitors. In reality, strategy is
less than half the battle. .. In the majority of cases – we estimateless than half the battle. .. In the majority of cases – we estimate
70% – the real problem isn’t [bad strategy]…. It’s bad execution.”70% – the real problem isn’t [bad strategy]…. It’s bad execution.”
Why CEO’s FailWhy CEO’s Fail
Ram Charan and GeoffreyRam Charan and Geoffrey
ColvinColvin
Fortune (6/21/99)Fortune (6/21/99)

17. The Results are WidespreadThe Results are Widespread
1993 – $275 loss
1998 – Top Quartile
– $3b spin-off
Brown & Root Engineering (Rockwater)
Saint Mary’s/ Duluth Clinic Health System
Duke Children’s Hospital
Southern Citrus
CIGNA Property & Casualty Chemical Bank
ATT Canada
1993 – Losing money
1996 – # 1 in Niche (growth & profits)
1995 1998
Profits
1993 – X
1998 – 20X
1995 – $300M loss
1998 – Customer base doubles
1999 – $7b spin-off
• Shipments on Spec
• On Time Delivery
• Rework
• Absenteeism
• Employee Turnover
• Cost per Pound (¢)
70%
89%
6%
10%
100
28.8
97%
98%
2%
1%
31
18.9
Mobil US Marketing & Refining
Competitive Rank (out of
7,profit)
1993
1995
1996
1997
1998
#6
#1
#1
#1
#16363ReadmissionReadmission
RateRate
2525Length ofLength of
StayStay
1111FamilyFamily
SatisfactionSatisfaction
2525OperatingOperating
MarginMargin
% Improvement% ImprovementMeasureMeasure
15%15%OverallOverall
HospitalHospital
PointPoint
SatisfactionSatisfaction
Decrease 16 daysDecrease 16 daysDays in ARDays in AR
$18M since BSC$18M since BSC
implementationimplementation
OperatingOperating
MarginMargin
ImprovementImprovementMeasureMeasure

18. Mission: What we doMission: What we do
Vision: What we aspire to beVision: What we aspire to be
Strategies: How we accomplish our goalsStrategies: How we accomplish our goals
Measures: Indicators of our progressMeasures: Indicators of our progress
The Strategy FocusedThe Strategy Focused
OrganizationOrganization

19. ..the question..?..the question..?
What is our strategy?What is our strategy?

20. Environmental ScanEnvironmental Scan
Strengths WeaknessesStrengths Weaknesses
Opportunities ThreatsOpportunities Threats
ValuesValues
Mission &Mission &
VisionVision
Strategic IssuesStrategic Issues
Strategic PrioritiesStrategic Priorities
Objectives, Initiatives, and EvaluationObjectives, Initiatives, and Evaluation
A ModelA Model
forfor
StrategiStrategi
cc
PlanninPlannin
gg

21. Business StrategyBusiness Strategy

22. Business StrategyBusiness Strategy

23. Corporate CultureCorporate Culture

24. Corporate CultureCorporate Culture
• The beliefs and values shared by peopleThe beliefs and values shared by people
who work in an organisationwho work in an organisation
 How people behave with each otherHow people behave with each other
 How people behave with customers/clientsHow people behave with customers/clients
 How people view their relationship withHow people view their relationship with
stakeholdersstakeholders
 People’s responses to energy use, communityPeople’s responses to energy use, community
involvement, absence, work ethic, etc.involvement, absence, work ethic, etc.
 How the organisation behaves to itsHow the organisation behaves to its
employees – training, professionalemployees – training, professional
development, etc.development, etc.

25. Corporate CultureCorporate Culture
• May be driven by:May be driven by:
• VisionVision – where the organisation– where the organisation
wants to go in the futurewants to go in the future
• Mission StatementMission Statement – summary– summary
of the beliefs of the organisation andof the beliefs of the organisation and
where it is nowwhere it is now

26. Corporate CultureCorporate Culture
• May be reflected in:May be reflected in:
– Attitude and behaviour of the leadershipAttitude and behaviour of the leadership
– Attitude to the role of individuals in theAttitude to the role of individuals in the
workplace – open plan offices, team basedworkplace – open plan offices, team based
working, etc.working, etc.
– Logo of the organisationLogo of the organisation
– The image it presents to the outside worldThe image it presents to the outside world
– Its attitude to changeIts attitude to change

27. Corporate CultureCorporate Culture
What corporateWhat corporate
culture do you thinkculture do you think
the followingthe following
businesses havebusinesses have
managed to develop?managed to develop?
Virgin Group
Copyright: Joshua2150,
http://www.sxc.hu
The Body Shop
Copyright: fadaquiqa,
http://www.sxc.hu
McDonalds
Copyright: alexallied
http://www.sxc.hu
Nike
Copyright: alexbol
http://www/sxc.hu

28. Strategic PlanningStrategic Planning

29. Strategic PlanningStrategic Planning
• First Stage of StrategicFirst Stage of Strategic
Planning may involve:Planning may involve:
• Futures ThinkingFutures Thinking
– Thinking about what theThinking about what the
business might need tobusiness might need to
do 10–20 years aheaddo 10–20 years ahead
• Strategic IntentsStrategic Intents
– Thinking about keyThinking about key
strategic themesstrategic themes
that will informthat will inform
decision makingdecision making
• ““The thicker the planningThe thicker the planning
document, the more uselessdocument, the more useless
it will be”it will be”
– (Brent Davies: 1999)(Brent Davies: 1999)
Taking time to think and reflect
may be more important than many
businesses allow time for!
Copyright: Intuitives, http://www.sxc.hu

30. Strategic PlanningStrategic Planning
• The VisionThe Vision
– Communicating to all staff where theCommunicating to all staff where the
organisation is going and whereorganisation is going and where
it intends to be in the futureit intends to be in the future
– Allows the firm to set goalsAllows the firm to set goals
• Aims and Objectives:Aims and Objectives:
– AimsAims – long term target– long term target
– ObjectivesObjectives – the way in which you are going– the way in which you are going
to achieve the aimto achieve the aim

31. Strategic PlanningStrategic Planning
• Once the direction is identified:Once the direction is identified:
Analyse positionAnalyse position
Develop and introduce strategyDevelop and introduce strategy
Evaluate:Evaluate:
– Evaluation is constant and the results ofEvaluation is constant and the results of
the evaluation feed backthe evaluation feed back
into the visioninto the vision

32. AnalysisAnalysis

33. SWOTSWOT
 StrengthsStrengths – identifying existing– identifying existing
organisational strengthsorganisational strengths
 WeaknessesWeaknesses – identifying existing– identifying existing
organisational weaknessesorganisational weaknesses
 OpportunitiesOpportunities – what market opportunities– what market opportunities
might there bemight there be
for the organisation to exploit?for the organisation to exploit?
 ThreatsThreats – where might the threats– where might the threats
to the future success come from?to the future success come from?

34. PESTPEST
 Political:Political: local, national and internationallocal, national and international
political developments – how will they affect thepolitical developments – how will they affect the
organisation and in what way/s?organisation and in what way/s?
 Economic:Economic: what are the main economic issues –what are the main economic issues –
both nationally and internationally – that mightboth nationally and internationally – that might
affect the organisation?affect the organisation?
 Social:Social: what are the developing social trendswhat are the developing social trends
that may impact on how the organisationthat may impact on how the organisation
operates and what will they mean for futureoperates and what will they mean for future
planning?planning?
 Technological:Technological: changing technology can impactchanging technology can impact
on competitive advantage very quickly!on competitive advantage very quickly!

35. PESTPEST
• Examples:Examples:
 Growth of China and India as manufacturing centresGrowth of China and India as manufacturing centres
 Concern over treatment of workers and theConcern over treatment of workers and the
environment in less developed countries who may beenvironment in less developed countries who may be
supplierssuppliers
 The future direction of the interest rate, consumerThe future direction of the interest rate, consumer
spending, etc.spending, etc.
 The changing age structure of the populationThe changing age structure of the population
 The popularity of ‘fads’ like the Atkins DietThe popularity of ‘fads’ like the Atkins Diet
 The move towards greater political regulation ofThe move towards greater political regulation of
businessbusiness
 The effect of more bureaucracy in the labour marketThe effect of more bureaucracy in the labour market

36. Five-ForcesFive-Forces
• Developed by Michael Porter: forces that shape and influenceDeveloped by Michael Porter: forces that shape and influence
the industry or market the organisation operates in.the industry or market the organisation operates in.
 Strength of Barriers to EntryStrength of Barriers to Entry - how easy is it- how easy is it
for new rivals to enter the industry?for new rivals to enter the industry?
 Extent of rivalry between firmsExtent of rivalry between firms – how competitive– how competitive
is the existing market?is the existing market?
 Supplier powerSupplier power – the greater the power, the less– the greater the power, the less
control the organisation has on the supply of itscontrol the organisation has on the supply of its
inputs.inputs.
 Buyer powerBuyer power – how much power do customers– how much power do customers
in the industry have?in the industry have?
 Threat from substitutesThreat from substitutes – what alternative products– what alternative products
and services are there and what is the extentand services are there and what is the extent
of the threat they pose?of the threat they pose?

37. Required InputsRequired Inputs
• Changing strategy will impact on the resourcesChanging strategy will impact on the resources
needed to carry out the strategy:needed to carry out the strategy:
• Specifically the impact on:Specifically the impact on:
 Land – opportunities for acquiring land forLand – opportunities for acquiring land for
development – green belt, brownfield sites,development – green belt, brownfield sites,
planning regulations, etc.planning regulations, etc.
 Labour – ease of obtaining the skilled andLabour – ease of obtaining the skilled and
unskilled labour requiredunskilled labour required
 Capital – the type of capital and the cost of theCapital – the type of capital and the cost of the
capital needed to fulfil the strategycapital needed to fulfil the strategy

38. EvaluationEvaluation

39. EvaluationEvaluation
• Data from sales,Data from sales,
profit, etc. used toprofit, etc. used to
evaluate theevaluate the
progress andprogress and
success of thesuccess of the
strategy and tostrategy and to
inform of changesinform of changes
to the strategy into the strategy in
the light of that datathe light of that data Information from a wide variety of sources
can help to measure and inform the impact
and direction of the strategy.
Copyright: Mad7986, http://www.sxc.hu

40. Types of StrategyTypes of Strategy

41. Types of StrategyTypes of Strategy
• Competitive AdvantageCompetitive Advantage – something– something
which gives the organisationwhich gives the organisation
some advantage over its rivalssome advantage over its rivals
• Cost advantageCost advantage – A strategy to– A strategy to
seek out and secure a costseek out and secure a cost
advantageadvantage
of some kind - lower averageof some kind - lower average
costs, lower labour costs, etc.costs, lower labour costs, etc.

42. Types of StrategyTypes of Strategy
• Market Dominance:Market Dominance:
• Achieved through:Achieved through:
– Internal growthInternal growth
– Acquisitions – mergers and takeoversAcquisitions – mergers and takeovers
• New product development:New product development:
to keep ahead of rivals and set theto keep ahead of rivals and set the
pacepace
• Contraction/ExpansionContraction/Expansion ––
focus on what you are good at (corefocus on what you are good at (core
competencies) or seek to expandcompetencies) or seek to expand
into a range of markets?into a range of markets?

43. Types of StrategyTypes of Strategy
• Price LeadershipPrice Leadership – through– through
dominating the industry – othersdominating the industry – others
follow your price leadfollow your price lead
• GlobalGlobal – seeking to expand– seeking to expand
global operationsglobal operations
• ReengineeringReengineering – thinking outside– thinking outside
the box – looking at news ways ofthe box – looking at news ways of
doing things to leverage thedoing things to leverage the
organisation’s performanceorganisation’s performance

44. Types of StrategyTypes of Strategy
– Internal business level strategies –Internal business level strategies –
 DownsizingDownsizing – selling off unwanted parts of– selling off unwanted parts of
the business – similarthe business – similar
to contractionto contraction
 DelayeringDelayering – flattening the management– flattening the management
structure, removing bureaucracy, speed upstructure, removing bureaucracy, speed up
decision makingdecision making
 RestructuringRestructuring – complete re-think– complete re-think
of the way the business is organisedof the way the business is organised

45. The Five Principles
1. Translate the strategy to
operational terms.
2. Align the organization to the
strategy.
The Strategy FocusedThe Strategy Focused
OrganizationOrganization
Source: The Strategy Focused Organization, Norton & Kaplan

46. The Five Principles (cont.)
3. Make strategy everyone’s job.
4. Make strategy a continual process.
5. Mobilize change through executive
leadership
The Strategy FocusedThe Strategy Focused
OrganizationOrganization
Source: The Strategy Focused Organization, Norton & Kaplan

47. The BalancedThe Balanced
Scorecard and The BigScorecard and The Big
PicturePicture
•Activity Based Costing
•Economic Value Added
•Forecasting
•Benchmarking
•Market Research
•Best Practices
•Six Sigma
•Statistical Process Control
•Reengineering
•ISO 9000
•Total Quality Management
•Empowerment
•Learning Organization
•Self-Directed Work Teams
•Change Management
Mission
and
Vision
Balanced
Scorecard
Strategic
Planning

48. Strategic Direction
Create Environment
For Change
StrategicStrategic
PerformancPerformanc
ee
ManagementManagement
SystemSystem
Linking it all together….
Communicate Strategies
Define Objectives
Implement BSC
Balanced Scorecard
Measure Performance
Improve Processes
Evaluate and Adjust
Continuous Improvement
Redefine Initiatives

49. FINANCIAL/REGULATORY
To satisfy our constituents,
what financial & regulatory
objectives must
we accomplish?
CUSTOMER
To achieve our vision,
what customer needs must
we serve?
INTERNAL
To satisfy our customers and
stakeholders, in which business
processes must we excel?
LEARNING & GROWTH
To achieve our goals, how
must we learn, communicate
and grow?
THE BALANCED SCORECARDHE BALANCED SCORECARD

50. Customer PerspectiveCustomer Perspective
o Customer Satisfaction (Average)
o Satisfaction Gap Analysis (Satisfaction vs.
Level of Importance)
o Satisfaction Distribution (% of each area scored)
Possible Performance MeasuresPossible Performance Measures
To achieve our vision, what customer needs
must we serve?

51. Financial / RegulatoryFinancial / Regulatory
PerspectivePerspective
o Cost / Unit
o Unfunded Requirements or Projects
o Cost of Service
o Budget Projections and Targets
Possible Performance MeasuresPossible Performance Measures
To satisfy our constituents, what financial and
regulatory objectives must we accomplish?

52. nternal Perspectiventernal Perspective
o Cycle Time
o Completion Rate
o Workload and Employee Utilization
o Transactions per employee
o Errors or Rework
Possible Performance MeasuresPossible Performance Measures
To satisfy our customers, in which business
processes must we excel?

53. Learning and GrowthLearning and Growth
To achieve our goals and accomplish core activities,
how must we learn, communicate and work together?
Possible Performance MeasuresPossible Performance Measures
o Employee Satisfaction
o Retention and Turnover
o Training Hours and Resources
o Technology Investment

54. Why Measure?Why Measure?
• To determine how effectively andTo determine how effectively and
efficiently the process or serviceefficiently the process or service
satisfies the customer.satisfies the customer.
• To identify improvement opportunities.To identify improvement opportunities.
• To make decisions based on FACT andTo make decisions based on FACT and
DATADATA

55. Measurements Should:Measurements Should:
• Translate customer expectations into goals.Translate customer expectations into goals.
• Evaluate the quality of processes.Evaluate the quality of processes.
• Track our improvement.Track our improvement.
• Focus our efforts on our customers.Focus our efforts on our customers.
• Support our strategies.Support our strategies.

56. TargetsTargets
““If you don’t know where you’re going,If you don’t know where you’re going,
you’re probably not gonna getyou’re probably not gonna get
there.”there.”
Forrest GumpForrest Gump

57. TargetsTargets
• Targets need to be set for allTargets need to be set for all
measuresmeasures
• Should have a “solid basis”Should have a “solid basis”
• Give personnel something for whichGive personnel something for which
to aimto aim
• If achieved will transform theIf achieved will transform the
organizationorganization

58. TargetsTargets
• Careful not to developCareful not to develop
measures/targets inmeasures/targets in
a fragmented approach:a fragmented approach:
i.e. Asking people to increasei.e. Asking people to increase
customer satisfaction has tocustomer satisfaction has to
be backed up with thebe backed up with the
knowledge, tools, and meansknowledge, tools, and means
to achieve that target.to achieve that target.

59. InitiativesInitiatives
Once measures and targets areOnce measures and targets are
established, it is the responsibility ofestablished, it is the responsibility of
management to determinemanagement to determine HOWHOW thethe
organization will achieve its goals.organization will achieve its goals.
Measures are used to determine theMeasures are used to determine the
effectiveness of strategic initiatives.effectiveness of strategic initiatives.

60. The Leadership TeamThe Leadership Team
• Develops the division’s vision,Develops the division’s vision,
strategy and goalsstrategy and goals
• Develops organizational objectivesDevelops organizational objectives
and targetsand targets
• Provides leadership, endorsementProvides leadership, endorsement
and vision for the projectand vision for the project
• Clears barriers to scorecardClears barriers to scorecard
progressprogress

61. The Core TeamThe Core Team
• Drafts the strategy map andDrafts the strategy map and
scorecardscorecard
• Works with employees to developWorks with employees to develop
measures supporting strategicmeasures supporting strategic
objectivesobjectives
• Works with the Leadership Team toWorks with the Leadership Team to
plan and implement the Balancedplan and implement the Balanced
Scorecard in the FAS DivisionScorecard in the FAS Division

62. Y1999Y1999 CORPORATE LEVEL BALANCED SCORECARCORPORATE LEVEL BALANCED SCORECAR
Financial Customer Operational People Technical
Indica-
tor
Tar-
get
FY99
Final
Indica-
tor
Target Stat
-us
Indica-
tor
Target Stat
-us
Indica-
tor
Target Stat
-us
Indica-
tor
Target Stat-
us
Adjusted
Discharges
23,890 23,592 Patient
Satis-
faction
Choose key
focus areas
for
improve-
ment
C Arranging
Care
Determine outpatient
phone model,
conduct pilots
C Cultural
Develop-
ment
Complete
communi-
cations
strategy
C Quality
Improve-
ment
Implement
system-wide
governance
structure
C
Encounters 912,188 892,243 Employer
Satis-
faction
Complete
survey
develop-
ment in CY
1999
CY Determine outpatient
model for
registration &
scheduling
C Complete
physician
survey
C Complete
external quality
report in CY
1999
CY
Cost per
Adjusted
Discharge
6,964 7,535 HEDIS
Indicators
Select
indicators
for
develop-
ment plan
M Providing
Care
Determine model for
patient delivery
system for clinical
divisions
C Complete
employee
survey
C Meet or exceed
standards for
SMDC
accreditation
C
Cost per
Encounter
215 252 Com-
munity
Service
Complete
reporting
process and
inventory
C Complete system
strategy for
ambulatory surgery
C Complete
plan to
maintain
Catholic-
ity
C Informa-
tion
Technol-
ogy
Complete IT
strategic plan
in CY 1999
CY
Operating
Margin
2.0 1.3 Commun-
ity Aware-
ness
Complete
survey in
CY 1999
CY Docu-
menting
and
Tracking
Care
Complete plan for
decentralized coding
and charge entry
C Employee
Relations
Strategy
Accom-
plish “pay
equity”
C Complete Y2K
compliance by
12/99
CY
Excess
Margin
3.8 3.3 Market
Share
Complete
baseline
C Innova-
tion and
Program
Develop-
ment
Complete feasibility
study for a women’s
health center
C Synchro-
nize
employee
benefits
C Medical
Education
& Research
Complete
report of
funded grants
and
publications
C
Days Cash
on Hand
103.6 108.6 Complete plan for a
geriatrics program
C Facilities
Planning
Complete
Perkins & Will
plan
M
Days in
Accounts
Receivable
77.7 82.8
Return on
Investment
3.4 2.9
“C” = task completed; “CY” = Calendar Year 1999 task; “M” = task modified
Finance section: Target met; Target not met

63. Strategy MapStrategy Map
Finance andFinance and
Administrative ServicesAdministrative Services

66. FINANCIAL CUSTOMER INTERNAL
PROCESS
LEARNING &
GROWTH
Hum. Rscrs. Univ. Police Facilities
Police Parking
Link itLink it
together….together….
Measure: Satisfaction Index
Current: 3.0 Target: 4.0
DIVISIONDEPT.FUNCTION

67. The Strategy Map: CauseThe Strategy Map: Cause
and Effect Relationshipsand Effect Relationships
• What will drive margins?What will drive margins?
– Managed growth in high marginManaged growth in high margin
programs/service linesprograms/service lines
• How?How?
– Attract targeted patientAttract targeted patient
population through targetedpopulation through targeted
referring physicians who valuereferring physicians who value
leading edge technology &leading edge technology &
expertiseexpertise
• What will the internal focus be?What will the internal focus be?
– Ensure clinical excellenceEnsure clinical excellence
through leading edge programsthrough leading edge programs
and techniques in focusedand techniques in focused
specialty areasspecialty areas
– Align research priorities toAlign research priorities to
support leading programs andsupport leading programs and
stay out front in treatmentstay out front in treatment
methodsmethods
• Will our people be prepared toWill our people be prepared to
do that?do that?
– Yes, with appropriateYes, with appropriate
technologytechnology
– Yes, by recruiting criticalYes, by recruiting critical
expertiseexpertise
Maximize High
Margin
Opportunities
Strong Financial
Base
FinancialFinancial
CustomerCustomer
Specialty Care Patients
Referring Providers
Leading Edge
Technology
Leading Edge
Expertise
InternalInternal
Continually
Develop
Clinical
Excellence
Develop
Leading
Edge
Programs/
Techniques
Learning & GrowthLearning & Growth
Develop Critical
Staffing
Resource Plans
Align Research
Priorities
Implement
Technology
to Support
Processes
and Programs
Implement
Managed
Growth

68. The BalancedThe Balanced
Scorecard as aScorecard as a
Management SystemManagement System
BSC reviewed regularly to enhanceBSC reviewed regularly to enhance
operational decision-makingoperational decision-making
• Success of initiatives assessedSuccess of initiatives assessed
based on DATA… not opinionsbased on DATA… not opinions
• Leading indicators evaluated toLeading indicators evaluated to
confirm accuracy of assumptionsconfirm accuracy of assumptions

69. The Balanced Scorecard asThe Balanced Scorecard as
a Management Systema Management System
The BSC is a “Living Document” thatThe BSC is a “Living Document” that
requires regular revision of objectives,requires regular revision of objectives,
measures and initiatives:measures and initiatives:
• How are we doing?How are we doing?
• Are we measuring the right things?Are we measuring the right things?
• What initiatives do we need to get usWhat initiatives do we need to get us
where we want to go?where we want to go?
• Have our organizational goals changed?Have our organizational goals changed?

70. Rapid Deployment Case Study:Rapid Deployment Case Study:
Major Federal OrganizationMajor Federal Organization
Need
Approach
Benefits
•Definition of “Corporate” strategy
•Rapid roll-out and broad reach
•Develop internal capabilities to sustain momentum
•Develop Corporate Balanced Scorecard
•Define template for rolling out BSC
•Train subordinate units
•Streamline project management
•Quality checks
•Online education
•Clear guidance from Corporate
•Active involvement from client teams
•Rapid deployment with minimal resources
•Quality control

71. Advantages to thisAdvantages to this
ApproachApproach
• Simple to Use and UnderstandSimple to Use and Understand
• Based on Vision and StrategyBased on Vision and Strategy
• MultidimensionalMultidimensional
•Quantitative and Qualitative MeasuresQuantitative and Qualitative Measures
•Current and FutureCurrent and Future
• Provides Measurement of and Method forProvides Measurement of and Method for
Improving our ServicesImproving our Services
• Ties QI initiatives togetherTies QI initiatives together
• Serves as a Communication ToolServes as a Communication Tool

72. Thank YouThank You