balanced scorecard strategies for hr ss workshop may 10 2010 chicago, il
DESCRIPTION
Balanced Scorecard Workshop presented at the IQPC HR Shared Services Summit in Chicago May 10, 2010TRANSCRIPT
Presented byRick Buchman and Chuck Hannabarger
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
04/09/23 Workshop Leaders: Rick Buchman and Charles Hannabarger 1
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger
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
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 3
Balanced Scorecard Strategies for HR Shared Services
- The Four ‘Legs’ of a Balanced Scorecard
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger
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
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
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 5
Balanced Scorecard Strategies for HR Shared Services
- 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. _____________________
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 6
Balanced Scorecard Strategies for HR Shared Services
- 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.
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger
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, …]
Feed ‘Back’ Loops[Quality, Issues, Timing, Performance, …]
Feed ‘Back’ Loops[Quality, Issues, Timing, Performance, …]
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Balanced Scorecard Strategies for HR Shared Services
Step 1 – Mapping your Strategy
Balanced Scorecard Strategies for HR Shared Services
- 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
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 9
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 10
Balanced Scorecard Strategies for HR Shared Services
- 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
Balanced Scorecard Strategies for HR Shared Services
- An Example of a Strategy Map
04/09/23 Workshop Leaders: Rick Buchman and Charles Hannabarger
‘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
Financial Performance
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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Balanced Scorecard Strategies for HR Shared Services
- 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…
04/09/23 Workshop Leaders: Rick Buchman and Charles Hannabarger 12
Balanced Scorecard Strategies for HR Shared Services
- Leveraging the Balanced Scorecard for HR SSHow do the ‘Legs’ of the Balanced Scorecard relate to HR Shared Services?
04/09/23 Workshop Leaders: Rick Buchman and Charles Hannabarger
Financial Performance
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
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04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 14
Balanced Scorecard Strategies for HR Shared Services
- Strategy MappingSmall Group
DiscussionSmall group discussion:Get into groups of 5-6, sorted by Strategic, Operational
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]
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 individual exercise.
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 15
Balanced Scorecard Strategies for HR Shared Services
- 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)_____
2. _____________________ Key Metric________________ Target (2010)_____(3 yr)_____
3. _____________________ 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)
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 16
Balanced Scorecard Strategies for HR Shared Services
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
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 18
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
Balanced Scorecard Strategies for HR Shared Services
- 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]
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 21
Balanced Scorecard Strategies for HR Shared Services
- Developing your Balanced ScorecardSmall Group
DiscussionSmall group discussion:Get into groups of 5-6, sorted by Strategic, Operational
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]
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 individual exercise.
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 22
Balanced Scorecard Strategies for HR Shared Services
- 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)
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 23
Financial Performance
Customer Focus Business Process Performance
Employee Skills & Capabilities
Strategy #1___________________________________________________
________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
________________________________________________________________________________
Strategy #2___________________________________________________
________________________________________________________________________________
________________________________________________________________________________
____________________________________________________________________________________
________________________________________________________________________________
Strategy #3___________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Strategy #4___________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Balanced Scorecard Strategies for HR Shared Services
- 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.
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 24
Balanced Scorecard Strategies for HR Shared Services
Step 3 – Develop your Dashboards– Executive/Organization Department / Division Section / Workgroup
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 25
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
04/09/23 Workshop Leaders: Rick Buchman and Charles Hannabarger 26
Balanced Scorecard Strategies for HR Shared Services
- 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
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger
A Real State Department of Human Services Finance set-up
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04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger
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
Balanced Scorecard Strategies for HR Shared Services
- Example of a Dashboard for an Airline
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger
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04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 30
Balanced Scorecard Strategies for HR Shared Services
- 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]
Be prepared to talk briefly about what your group talked about, and any key insights discovered during the discussion. [General group review and summary – 10 minutes]
Update your notes for the final individual exercise.
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 31
Balanced Scorecard Strategies for HR Shared Services
- 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
___Company / Executive (Strategic)
___Department / Division (Operational)
___Section / Workgroup (Tactical)
Customer Focus and Satisfaction Financial Performance
Business Process Performance Employee Knowledge, Skills, Competencies
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 32
Balanced Scorecard Strategies for HR Shared Services
- Developing your Dashboard – Select Level: Layout your Dashboard:
___Company / Executive (Strategic)
___Department / Division (Operational)
___Section / Workgroup (Tactical)
04/09/23Workshop Leaders: Rick Buchman and Charles Hannabarger 33
Balanced Scorecard Strategies for HR Shared Services
- 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…
04/09/23 Workshop Leaders: Rick Buchman and Charles Hannabarger 34
Balanced Scorecard Strategies for HR Shared Services
- Your Presenters…Mr. Rick Buchman has over 2 ½ decades hands-on international experience that spans 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. Rick has also taught extensively at the graduate level for major institutions such as MSU, Towson and George Mason, in strategy planning, problem solving, business management, coaching and team leadership. His clients include AT&T, Raytheon Corp., Hughes, Texas Instruments, Allied-Signal, ITT, Husky Oil, Slumberger, Remy, and US State and Federal Government agencies.
Mr. Charles Hannabarger is the Founder and President of Process Solutions International. He is a hands-on practitioner, with experience and results from the board-room to the shop floor, who for the last 25 years has taught and consulted on the concepts and applications of Six Sigma, Lean Manufacturing / Toyota Production Systems, Strategic Analysis and Goal Setting, Project Management, and Team Facilitation and Leadership. Mr. Hannabarger is a recognized expert in the areas of team building, problem solving, metrics and Balanced Scorecard and dashboard development, and the implementation of process improvement strategies and tactics. His clients include the US Army, Owens Corning, PacBell, Switching Translations Group, Raytheon Learning Institute, Ricoh USA, Samsung Electro Mechanical (South Korea), Sargent Fletcher, Inc., Stanley Aviation and EarthTech, a subsidiary of Tyco International.
Both Rick and Charles co-authored the Amazon Productivity Best-seller, Balanced Scorecard Strategy for Dummies, published by Wiley and Sons, Inc. in September 2007 (English Language), and again in March 2008 (Dutch Language) and September 2008 (German Language).