A Balanced Scorecard Hall of Fame™ Profile

Mellon Europe

HARVARD BUSINESS
SCHOOL PUBLISHING
What is the Balanced Scorecard Hall of Fame?
The Balanced Scorecard Hall of Fame for Executing Strategy™, administered by Balanced
Scorecard Collaborative, recognizes organizations that have achieved breakthrough
performance largely as a result of applying one or more of the five principles of the
Strategy-Focused Organization. These principles, formulated by Balanced Scorecard
creators Robert S. Kaplan and David P. Norton, are described in detail in their book
The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the
New Business Environment (Harvard Business School Press, 2001). BSC Hall of Fame
members are personally selected by Drs. Kaplan and Norton.
To learn more about Hall of Fame selection criteria and Hall of Fame members,
visit bscol.com.

The Five Principles of the Strategy-Focused Organization

Each of the five principles of the Strategy-Focused Organization include specific
management best practices that contribute to the achievement of breakthrough
results. These best practices—validated through ongoing research with Hall of Fame
organizations and hundreds of other users of the Balanced Scorecard around the world—
must be embedded in any organization that wants to make strategy execution a core
competency.

Principle #1. Mobilize Change Through Executive Leadership

Executive leadership, driven by a need for change, supports the drive to
establish a new way of managing based on a performance-oriented culture.

Principle #2. Translate the Strategy into Operational Terms

The Balanced Scorecard is used to translate the strategy into a language
that everyone understands.

Principle #3. Align the Organization to the Strategy

The scorecard is used to cascade the strategy to all parts of the
organization and align resources needed to accomplish the strategy.

Principle #4. Motivate to Make Strategy Everyone’s Job

The reward and recognition system is used to align
individual behavior with performance objectives called for
by the strategy.

Principle #5. Govern to Make Strategy a Continual Process

Strategy execution is linked to the budget, and a reporting system
based on scorecard measures is used to provide feedback on
strategic performance.
Balanced Scorecard Hall of Fame Profile: Mellon Europe

Far-flung financial-services giant Mellon Europe set

Table of Contents out to present a unified front and sharpen Europeans’
awareness of the mighty Mellon brand. The key
Profile ..................................................................................1 weapon in its arsenal? Savvy execution of the BSC
Key Results, Takeaways ..............................................10 methodology.
SFO Spotlight (best practices) ................................11
To Learn More ................................................................14

“Though the European Union has done much to unite

ABOUT Mellon Europe the diverse countries of Europe, there are still many
languages, tax codes, and 42 different regulatory
Industry: Financial services
bodies that complicate the way business is conducted.
Established in 1968 through an association with
Mellon Europe’s challenge [is] to execute a global
the Bank of London and South America, Mellon strategy at a local level in a competitive market full
Europe is the London-based international arm of Mel- of opportunities for expansion—and ensure that
lon Financial Corporation (MFC). Headquartered the brand gets the right traction to win the right
in Pittsburgh, Pennsylvania, MFC is the fifth-largest business.” 1 With these words, Mellon Europe chairman
global custodian bank and the 11th-largest asset Jack Klinck articulated the overarching challenge
manager in the world. A diversified financial services facing his organization, a major division of Mellon
firm that originated as a bank in 1869, its asset Financial Corporation (MFC).
management businesses include a raft of familiar
names, among them: The Dreyfus Corp., Newton The chairman was also keenly aware of additional
Investment Management, The Boston Company hurdles his company would have to surmount.
Asset Management, Franklin Portfolio Associates, When he took office in early 2001, Mellon Europe
and Mellon Capital Management. MFC’s total assets had just defined an aggressive goal of contributing a
under management, administration, or custody as set percentage to the corporate revenues of its parent
of Q1 2005 exceeded $4 trillion, with Mellon Europe’s company, and to nearly doubling that percentage
share comprising more than 20% of that total. MFC by 2007. The organization was also grappling with
counts among its competitors State Street Corp., Cred-
challenges stemming from a series of major acquisitions
it Suisse Group, Fidelity Investments, and Citigroup.
and restructurings it had initiated in the 1990s as
Mellon Europe’s businesses, like its parent company’s, part of its growth strategy. Not the least of these
include asset management, asset servicing,* mutual challenges was overcoming the lack of alignment
funds, treasury services, and private wealth manage- among the company’s various business lines. Some
ment. The company has 12 business lines, most of executives focused on their own “silos,” which made
them London-based. They include Mellon Global it difficult for line leaders to formulate clear strategies
Investments, Mellon European Fund Services, ABN and implement strategic initiatives efficiently for the
AMRO Mellon Global Securities Services, and Newton overall benefit of Mellon. Furthermore, few managers
Investment Management. felt a personal sense of ownership of key corporate
initiatives.
The company has offices throughout the United King-
dom, Ireland, Spain, Germany, the Netherlands, Italy, Klinck cites an example: “Some lines of business
and Switzerland, and manages additional and shared-service departments were undertaking the
businesses located in Australia, Japan, Hong Kong, annual budgeting process without consulting each
Dubai, Brazil, Chile, and Singapore. other. Not surprisingly, their budgets often did not
tally at the end of the exercise, and competing priorities
Headquarters: London
were difficult to reconcile.” The result? In 2001,
Employees: 2,500 (MFC: 20,000-plus worldwide) budgets weren’t adequately reflecting the priorities
of the businesses or meeting MFC’s consolidated
Inducted into the Balanced Scorecard expectations.
Hall of Fame: 2004 The turbulent markets and investor unease character-
* Asset services typically include custody, securities lending, izing the worldwide business landscape at the turn
investment accounting, foreign exchange, recordkeeping,
and other services needed by institutional clients. of the millennium further underscored the need for a
new strategy that would unleash the value locked in

1 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe

Mellon Europe’s many businesses. Moreover, In the same interview, the chairman warned against
Europe’s financial services scene had begun to thinking of Europe as “a single, large homogeneous
shift in response to new forces. For instance, at the region.” He explained: “Delivering top-class service
same time as aging populations are putting growing levels and wonderful products is not a guarantee to
pressure on European governments to fulfill pension success. It sure helps, but our challenge is to under-
obligations (Europe’s pension system is largely state- stand the nuances of the disparate peoples and build
sponsored), they are also creating a big demand for long-term relationships. You often hear the phrase
investment savings and pensions products and services. ‘Think global, act local.’ It’s a motto Mellon must
Along with the opportunity such trends presented, take to heart.”
Mellon Europe faced marketplace challenges. Mellon Klinck concluded the interview with a call for
was unusual as a specialist in asset servicing and strengthening the Mellon brand. As he explained,
Mellon Europe was “bringing a new mindset to the
market,” and that had generated interest. Europeans
This last goal—dominating overseas were taking notice of the deals Mellon Europe was
markets—would be particularly concluding. “That’s good,” Klinck said, “because…
not enough people in Europe know about Mellon
demanding, given the fragmentation Financial Corporation.” According to the chairman,
characterizing the financial services Mellon Europe’s more aggressive approach to
industry. In Europe, financial products communications, its leveraging of its marketing
dollars, and the clarity of its branding strategy were
customers will always prefer to buy already starting to pay dividends. Mellon Europe
from a local institution. set out to capitalize on this momentum.
Operation “One Mellon”
After using the BSC to help define his personal
asset management in a playing field of mostly gener- performance objectives soon after arriving in London,
alists, which posed added competitive challenges. Klinck realized the BSC methodology could help
To leverage new opportunities as well as meet its Mellon Europe articulate and execute its strategy and
pressing challenges head-on, Mellon Europe’s strategy strengthen its alignment to MFC’s competitive strategy.
would need to accomplish five overriding objectives: He quickly received approval and a budget from
Martin McGuinn, MFC’s chairman and CEO, to launch
1. Emphasize alignment
a scorecard program. Fittingly, the initiative became
2. Strengthen awareness of the Mellon brand known as “One Mellon,” its main purpose being to
3. Refocus executives’ attention on key markets align all the Mellon entities throughout Europe and
enhance the unified organization’s performance.
4. Motivate business line leaders to boost
performance of their lines Later that year, Klinck and his executive team (the
heads of Mellon Europe’s then 14 business lines and
5. Help MFC strengthen its dominance of its 10 shared services units) began developing an initial
overseas markets strategy map and scorecard to reflect the company’s
This last goal—dominating overseas markets—would One Mellon initiative. The map reflected the company’s
be particularly demanding, given the fragmentation support of MFC’s strategy, financial objectives, and
characterizing the financial services industry. “On corporate vision. Here’s a sampling of the themes
a country-by-country level, you find exceptionally and objectives featured in the first version of the
strong local institutions,” Klinck acknowledged in strategy map:
an interview published in a January 2002 issue Financial perspective: “Organic growth,” “Growth
of Mellon News, an internal MFC publication. “In through acquisition,” and “Cost efficiency and
Europe, financial products customers will always productivity.”
prefer to buy from a local institution.” Moreover,
“the markets for our combination of services remain Client perspective: “Shared services to provide
highly fragmented in Europe.” superior knowledge, value, and service to their
customers at a reasonable cost,” “Consistently deliver

2 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe

on the ‘Mellon Promise,’” “Broaden and deepen “Cross-sell non-MEFS products,” which supported
relationships with our customers,” and “External the corporate-level theme of leveraging synergies
recognition and internal understanding of image across the organization. And the HR department’s
and brand.” map featured the overarching theme “HR will
Internal perspective: “Nimble, robust decision- ensure Mellon is recognized internally and externally
making process” and “Leverage synergies to make for its performance-driven culture,” which reflected
One Mellon greater than the sum of its parts, the company’s new focus on measuring strategic
through an integrated, stable, scalable model.” performance.

Learning and growth perspective: “Instill As 2003 unfolded, additional business lines (such as
management accountability and ownership,” “Attract, Mellon Global Investments and Mellon European
develop, and retain superior talent consistent with Fund Services) and shared services units (including
our vision and values,” and “Clear, consistent, and corporate sourcing, audit, and risk management)
relevant messages that are communicated inclusively, developed strategy maps and scorecards. Participants
and that celebrate our successes.” in this round of cascading—which included every
line-of-business and shared services head—operated
Rolling Out “One Mellon” under the guidance of a reconfigured core team led
The One Mellon BSC became operational during by then-BSC program manager Wale Buraimoh, along
the second quarter of January 2002. That quarter, the with several “BSC Champions” trained in the method-
newly formed Mellon Europe Strategic Performance ology. (The BSC Champions group, one of several
Forum (made up of business line and support service new organizational structures Mellon Europe created
representatives who oversee strategy execution) to support its scorecard initiative, is described in
began using a traffic light system to signal performance more detail on p. 8.)
on the scorecard measures that had been defined. Early in 2004, the company began using lessons
Though some objectives on the One Mellon scorecard and feedback from the business lines’ scorecard-
still lacked defined measures, the working version development experiences to refine the One Mellon
of the strategy map was enough to get executives strategy map and scorecard. Scorecard reporting
talking more than ever about strategy. also improved, and some objectives were changed
Chairman Klinck also continued to stress the to reflect a change in emphasis or in broader market
importance of One Mellon. In a memo from issues. Objectives that had been accomplished were
December 2002, he noted: phased out.
One Mellon represents a stepping stone in those The revised strategy map puts greater emphasis on
growth aspirations and will, at the same time, be the strategic priorities that span the European entities.
a unifying force for good, helping us work better Three clear themes run through the perspectives—
together, with the clear aim of making Mellon themes that represent the key strategic messages
Europe…greater than the sum of its parts. from corporate to Europe:
One Mellon is all about [achieving] supercharged 1. Revenue Growth
performance for our businesses and [getting]
shared services working with the business lines to 2. Execute! Execute! Execute! (MFC Chairman and
achieve this. We each have an important part to CEO Martin McGuinn’s mantra)
play in ensuring our initiatives achieve success
3. Cost Efficiency and Productivity
and sustain momentum.
There are clear tensions among the themes—
During 2002, a core BSC team—consisting of the
opportunities for revenue growth can, at times,
firm’s chief administrative officer, the Balanced
compete with expense management—hence, the
Scorecard Collaborative consultant who first worked
new internal perspective objective “Balance short-
with Klinck on his personal objectives, and members
term financial targets with long-term investment in
of the company’s internal consulting team—facilitated
growth.” Another key internal-perspective objective
the cascading of the corporate-level scorecard to
that emphasizes Mellon Europe’s cross-business focus
several key business lines and shared services units,
is “Work together to drive cross-selling opportunities
including Newton and Mellon Europe Fund Services,
that provide multi-product solutions.” Within the
and HR and IT. For example, Mellon Europe Fund
“Execute! Execute! Execute!” theme are two important
Services’ strategy map contained the objective

3 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe

new internal-perspective objectives: “Shared ments of operational inefficiencies. The message

services and lines of business work in partnership to became especially powerful when delivered by CEO
contribute to business objectives” and “Successfully McGuinn and Steve Elliott, senior vice chairman of
integrate acquisitions to realize expected value.” MFC, at the Leadership Team Road Show.2 At this
By late 2004, the company had dropped the event, senior managers appeared at the two main
term “One Mellon” as the name of the scorecard company locations (London and Edinburgh) to lay
implementation, because the notion of unity was out their vision of a newly efficient organization.
now embedded in the organizational culture. (Employees from other locations were invited to
the London event.) The current organization, they
explained, had never “married” the entities it had
acquired. Each had their own functional areas—
The current organization had never public relations, human resources, and so forth.
They operated in parallel and independently—thus
“married” the entities it had acquired. there was no unified message about strategic priorities
Each had their own functional areas— radiating from these functions out to the businesses.
public relations, human resources, and To address this situation, Mellon Europe had central-
so forth. They operated in parallel and ized some functional areas (such as communications
teams and HR functions) within the company. These
independently—thus there was no groups were now known as shared services areas.
unified message about strategic priorities Next came efforts to ramp up these newly reconfig-
radiating from these functions out to ured departments’ skill levels. The main goal? To
build these departments’ capabilities not just for the
the businesses. present but also for the future. The company had
upgraded its managerial job descriptions and brought
in more senior-level personnel to get shared services
into shape. Over time, executives reasoned, the up-front
Today’s completely revised strategy map emphasizes costs of this approach would decrease in magnitude
the company’s European strategy. The BSC cascade compared with the size of the businesses and the
continues, as several Mellon Europe entities build increased efficiencies gained through centralization.
their strategy maps and scorecards for the first time, By laying out the changes Mellon Europe had initiated,
while other units’ implementations are in more as well as the rationale behind them, the Leadership
advanced stages. Team Road Show presenters made it crystal clear that
Mobilizing the Troops the company was fully committed to improving its
strategic performance—and that every business line
Mellon Europe used potent tactics to ensure a
leader would need to make the same commitment to
successful BSC rollout. For one thing, chairman
carrying out the new strategy.
Klinck had a strong voice as the effort’s sponsor,
which helped to emphasize the methodology’s Not surprisingly, communicating the BSC to the
credibility. The company also stressed Mellon thousands of Mellon Europe executives, managers,
Europe’s connection with MFC’s corporate vision: and employees operating across many different
becoming the world’s best-performing financial countries and in many different cultures wasn’t easy.
services company. And it hammered home the To overcome this obstacle, the company worked
importance of the European businesses’ support to translate information about the BSC into the
of the parent company’s corporate strategy, which most accessible languages possible, and to embed
hinged on building an attractive mix of fee-based messages about the methodology broadly throughout
businesses and aggressively managing capital for its wide-ranging communication efforts.
high returns. The company’s comprehensive communications
Implementation leaders also presented the organization program also clarifies how individual and business-
with a compelling case for change—complete line performance affects Mellon Europe’s ability
with detailed analyses of Mellon Europe’s financial to achieve its objectives. The program conveys the
position, results from employee surveys, and assess- message in a variety of ways, such as: “Our shared

4 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe

values are the glue that underpins all we do in all Mellon doesn’t rely strictly on formal communications.
our diverse business lines,” “Everyone can contribute As Jan Altink, Mellon Europe’s director of corporate
to and have a part to play in Mellon’s success,” and affairs, observes, a particularly effective way to
“We must each understand how Mellon Europe’s communicate strategy to the troops is for managers
business lines work together and where they come to sit down with their people and discuss it face-
into contact with one another.” to-face. “This has always been the best way, and it
The communications program has also included always will be.” Much of this informal approach
Klinck’s quarterly “Dear Colleague” letter, distributed occurs through the cascading process, but it is also
to all European employees. In this letter, Klinck reinforced at review time, when the BSC serves as a
describes in forthright prose Mellon Europe’s current foundation and agenda for discussion.
successes and challenges in carrying out strategy. An important element in Mellon Europe’s communi-
He also explains new initiatives and the reasoning cation program is the company’s intranet. Defined
behind them, and expresses his appreciation for in 2001 as a strategic initiative, the site went “live”
Mellon Europe’s workforce. Some excerpts from in the summer of 2002, and is accessible by every
these letters include: employee. It features a BSC section where people
• “These are tough times for the investment industry— can learn about the BSC and get answers to common
markets are turbulent and investors uneasy. But BSC questions. (The site’s BSC section does not
we have cause to look forward with real confidence, show scorecard results. Instead, BSC performance
albeit tempered by realism. The economic conditions results are monitored by senior managers through
are stretching, and we must keep focused on the company’s Strategic Performance Forum.) In
the execution of our strategy. Now is the time to addition to the BSC section, the intranet site provides
remember the mantra we need to score that success: employee announcements, press releases (including
Execute, execute, execute.” the company’s induction into the Balanced Scorecard
Hall of Fame for Executing Strategy), and daily press
• “The Mellon name is becoming more widely clippings, along with information about Mellon
recognized in our European markets—everything Europe’s various business lines and shared services.
from our new advertisements and branded As Altink points out, the intranet “has changed the
green umbrellas around the city to the network of way we communicate internally and has made each
clients we’re building up, reinforces the overall one of us better informed and better equipped to
Mellon brand.” deliver on the Mellon Promise: to meet or exceed
• “Executing on our plans and objectives to the our customers’ expectations.”
highest standards is all that my senior management Creating New Organizational Structures
colleagues in Europe and I ask of you. While
we are constantly evaluating improvements in To help fuel the cascading process and revolutionize
operating efficiency, it will be the cumulative effect its performance management, Mellon Europe created
of your individual performances that determine several new permanent organizational structures,
Mellon’s long-term success.” all of which rely on the BSC as their guidepost and
meeting discussion agenda. The Mellon Europe
Additional communication vehicles include “learning Strategic Performance Forum (MESPF), launched
lunches,” at which business line managers educate in 2002, is perhaps the most important example.
employees about the connections between corporate- Created to oversee strategy execution, the MESPF
and unit-level objectives, providing employees a meets each quarter to discuss one theme from the
clear picture of their role in the overall corporate Mellon Europe strategy map and scorecard. At each
strategy. Managers also discuss business and progress meeting, two members of the company’s executive
against the strategy. During staff briefings at the team lead the discussion on the selected theme—
largest business units, senior managers make keynote raising two or three critical strategy-related concerns,
presentations on strategy, Mellon Europe’s core analyzing the implications of identified problems,
values, and business line performance. And at “a day and facilitating discussion of potential solutions.
in the life” presentations, employees describe ways Action steps are assigned, and accountability
in which they collaborate with colleagues across the affirmed. Each meeting also features a “hot topic”—
business during a typical workday. a strategy-related issue that has some immediate
relevance or urgency and that often has come to

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Balanced Scorecard Hall of Fame Profile: Mellon Europe

light in scorecard performance reports. Finally, unit and shared services leaders to decide how
participants identify and prioritize the major initiatives messages and strategic objectives could best be
needed to drive successful implementation of the communicated in their parts of the organization. By
company’s strategy. selecting bright, high-performing individuals as BSC
Each MESPF meeting generates a “commitment Champions, the company sent the message that the
log” containing action items such as “Explore BSC initiative was vitally important.3
opportunities (print or oral) to publicize One Mellon Mellon Europe also created new structures focused
and Forum progress in the U.S.—possible Mellon on improving organizational performance management.
News article” (an early-stage action item) and Previously, performance management had been
“Discussions to take place regarding possible ways limited to employee goal setting and measurement
to track cross-sell revenues.” At every MESPF meeting, via annual staff appraisals. To establish an organiza-
review of the commitment log—and progress toward tional performance review process, the company
the items on it—is the first item on the agenda. formed an operating committee composed of the
The MESPF’s quarterly meetings have sharpened heads of all support services, and an executive
business leaders’ focus on strategic issues. Thanks committee consisting of all line-of-business leaders.
to this new organizational structure, there is also The operating and executive committees meet
enhanced transparency of units’ strategic performance monthly to review operations, clarify priorities, and
and challenges, more cross-unit collaboration and refine strategy and its execution, using the BSC as
problem solving, and a strengthened commitment to agenda and guideline.
strategy execution. The new and existing governing bodies work together
to share information and insights. For instance, the
BSC Champions convey their decisions and insights
to the MESPF. And representatives from Mellon’s
The BSC has facilitated alignment and Organizational Effectiveness and Corporate Affairs
“pressure-testing” between individual teams—which facilitate strategic learning and
and organizational objectives. “It’s disseminate corporate communications, respectively—
also participate in BSC Champions meetings.
become much easier for senior managers
“This model has worked well for us,” says Klinck,
and their team members to plan annual “because it distinguishes strategy formulation from
stretch goals and measure performance execution. Executives manage strategy formulation,
in the context of strategic objectives while implementation of the BSC at local levels is
supported by the BSC Champions. This enables us
for the year, clearly visible [through] to focus implementation at the right levels and clarify
strategy maps and associated scorecard the contribution expected from each level.”
objectives and results,” according to Aligning Employees
Sheena Wilson, head of HR. Before adopting the BSC, Mellon Europe had
introduced an employee performance management
program (PMP) organization-wide. The program
Inspired by the success of the MESPF, the company consists of annual performance planning between
assembled the BSC Champions group—consisting manager and employee; midyear reviews that include
of representatives from each business line and assessments of the individual’s adherence to Mellon’s
shared service department who had received training shared values as well as self-assessments; and a
in the BSC approach—in 2003. Its members, acting comprehensive year-end performance review.
as internal core team members, began facilitating According to Sheena Wilson, head of HR, the BSC
scorecard development in their parts of the organiza- has facilitated alignment and “pressure-testing”
tion. Champions reported to the BSC manager, a between individual and organizational objectives.
newly appointed, full-time position then occupied “It’s become much easier for senior managers and
by Wale Buraimoh. Respected in their businesses their team members to plan annual stretch goals
and perceived as “up and comers,” BSC Champions and measure performance in the context of strategic
explained the methodology and worked with business objectives for the year, clearly visible [through]

6 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe

strategy maps and associated scorecard objectives custody, securities lending, foreign exchange, and
and results.” performance analytics remain cornerstones of the
Mellon Europe has steadily accelerated alignment by business, the company also set out to leverage
linking personal goals with high-level aims. Appraisals significant opportunities for expansion in these areas
for all employees are linked to corporate and business through new products, new clients, and new markets.
line (or support unit) scorecard objectives. The The near-term focus remains on the United States,
corporate-level scorecard even contains the measure Canada, the United Kingdom, and Europe. But the
“Percentage of performance appraisals completed and company has also pursued opportunities that have
filed on time”—and sets a target of 100% for this metric. the potential to spur growth in Asia and the Pacific
Rim over the long term.
The BSC has not only enhanced employee alignment
to the strategy, but has also brought “greater rigor To these ends, the company restructured this large,
and integrity” to the rewards process, notes Wilson. complex business sector to provide additional senior
Because company goals are transparent to employees, leadership resources. For example, newly appointed
it is easier to identify and reward high performers. leaders of components of the asset servicing business
As the PMP and BSC become better synchronized, (such as Custody and Investment Manager Solutions)
the process of differentiating exceptional performance collaborated to identify ways to leverage natural
has become easier. synergies across their businesses. One outcome of
this effort was a sharing of several functions, such
To further align personal objectives with overall as sales and client service administration.
strategy, Mellon Europe’s BSC program manager is
working with HR to develop a training program that Numerous examples demonstrate how support
will enable middle and junior managers to align their groups now view themselves as partners of Mellon
staffs’ goals with departmental objectives. Because Europe’s revenue-generating businesses, prioritizing
of the company’s PMP, compensation will also be their projects with high-level strategy in mind. When
smoothly aligned once goals line up behind strategic the Newton Investment Management unit discovered
objectives. that the company’s standard level of desktop IT
support was insufficient for its activities, IT and
Employee alignment has improved at the highest Newton worked together for the first time to find a
levels of the organization. As Klinck explains, solution. Another example: while working with
When we started using the BSC, the focus was Mellon Europe Fund Services, the IT group realized
solely on developing, aligning, and measuring it would achieve better alignment if project resources
objectives at the corporate level. However, were moved from the business line to IT. That way,
the BSC has helped us do this so clearly that I direction from the business would be embedded in
was also able to draw my 2002, 2003, and 2004 the IT team.
personal goals directly from the respective
corporate scorecards. This has helped improve How does Mellon Europe evaluate business line
communication of my personal objectives to and support unit alignment? Besides the traditional
stakeholders, and performance is now visibly vertical appraisal of each line of business and shared
more closely linked to corporate performance. services unit by its U.S. head, there is an annual
This offers the benefit of integrating my role evaluation of shared services by the business lines,
completely and objectively into the corporate which look across the business to assess how well
strategy development-implementation-refinement
the shared services support business line objectives.
loop, which, in my view, [reflects] the true
The chairman also gauges their alignment based
purpose of the BSC.
on the number of shared clients. In addition, he
Organizational Alignment informally assesses their alignment through the goal-
The restructuring of Mellon Europe’s asset servicing setting process at the beginning of the year and
business in 2004 well illustrates how synergy and through periodic reviews during the year.
alignment have become ingrained in the corporate New Headquarters: Unity Made Visible
culture. The company has affirmed its commitment
In June 2004, Mellon Europe completed a major
to provide a full range of asset services, one of its
initiative: it opened the doors to its new European
core competencies, to the global institutional market-
headquarters, Mellon Financial Centre, in London.
place, believing it will continue to grow. While
The Centre brought together 1,500 employees formerly

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Balanced Scorecard Hall of Fame Profile: Mellon Europe

scattered throughout ten locations—and gave Fortune 500 companies, and 290 of the Fortune
Mellon Europe a distinctive visual presence. Global 500. More than 25% of the top 25 European
The Centre had been a key initiative in the pension funds are clients of Mellon Europe.
internal processes perspective of the company’s Several Mellon Europe business lines have also
strategy map in 2001, in support of the objective boasted 100% retention of their highest performing
“Working together better, getting more from people employees. In addition, some lines have outperformed
through synergies.” Remarkable in an age when their peers since the company adopted the BSC. For
large construction projects routinely suffer long example, in 2004, Newton Investment Management
delays and cost overruns, the new headquarters was was named number one in the Best Major Balanced
completed on time, within budget, and with Fund Manager category over one-, three-, and five-
no disruption to Mellon Europe’s business. It now year periods by Professional Pensions, a leading
stands as a powerful visual symbol of the unity U.K. industry publication. Newton also finished in
that has constituted such a strong theme in the the top three for U.K. and overseas equities in the
company’s BSC implementation, and it affirms Best Defined Contribution Fund Manager category.
MFC’s long-term commitment to Europe. Mellon Global Investments was named the Best
Specialist group in Europe over a one-year period
in S&P’s Fund Awards 2004, as well as Best Equity
group in Germany in the 2004 Lipper Awards. And
Today, budgets are no longer developed Mellon European Fund Services and Global Securities
Services were named number one versus their peers
in a vacuum. Support departments meet and number two in service in the 2004 R&M
with each business line manager early in Consultants4 fund administration and global custody
surveys. (The two garnered top ranking in 2003 in
the budget planning process to agree on
the global custody survey.)
direction and strategic priorities and to
Moreover, thanks in part to Mellon Europe’s efforts
estimate schedules and costs. Meeting to support its parent company’s strategic direction, in
participants identify potential conflicts March 2005 MFC was named the number-one “most
admired” superregional bank by Fortune magazine.
and resolve them promptly and with (This followed “most admired” awards from Fortune
complete transparency. in 2002 and 2003.) In selecting admired companies,
the editors of Fortune consider eight specific areas
of leadership: candidates’ innovativeness, people
management, financial soundness, quality of manage-
The Proof Is in the Performance ment, use of corporate assets, social responsibility,
long-term investment, and quality of products
By deploying the BSC, Mellon Europe has clearly
and services. In 2004, MFC was named top global
addressed the conflicting priorities problem that it
custodian in three industry surveys.
faced just a few years ago. Today, budgets are no
longer developed in a vacuum. Support departments Successful use of the BSC has led to personal
meet with each business line manager early in the achievement as well as organizational success.
budget planning process to agree on direction and In 2004, five Mellon Europe employees won the
strategic priorities and to estimate schedules and coveted Mellon Stars Award—MFC’s most prestigious
costs. Meeting participants identify potential conflicts employee honor—out of a total of 33 awarded
and resolve them promptly and with complete worldwide. And Jack Klinck, the ultimate BSC
transparency. champion at Mellon Europe, was promoted to the
position of vice chairman of Mellon Financial
Other results are equally striking. To illustrate, since
Corporation in September 2004. In his new role,
the inception of the company’s scorecard initiative,
he oversees a new portfolio of businesses spanning
Mellon Europe has achieved yearly revenue growth
Europe and the United States. The chairman sums
in excess of 20% (in 2004, nearly 30%), while keeping
up his impressions of the Balanced Scorecard’s
its shared services costs flat. The company’s customer
power in these words:
roster includes 87 Fortune 100 companies, 388

8 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe

The BSC has introduced a structure to our

strategy execution such that there is now increased
ownership and accountability of initiatives across
the business. We are also…less emotional about
agreeing on strategic priorities, because we can see
the organizational cause-effect model more clearly.
This is incredibly motivating for senior managers
who, in turn, are motivating their staff by ensuring
[that] the link between personal goals [and] strategic
objectives is clear….The end result can only be
a strong performing, more integrated and highly
motivated organization to lead us into the next
major phase of our development.
What are Mellon Europe’s goals regarding future use
of the BSC? As two new co-chairmen prepare to take
over Jack Klinck’s role in the summer of 2005, they
inherit an organization already transformed by the
BSC. But Klinck isn’t satisfied with leaving this legacy
at Mellon Europe; in his new role as vice chairman
of MFC and president of the corporation’s Investment
Manager Solutions division, he will be further spreading
the scorecard’s reach, cascading the scorecard into
IMS—with the enthusiastic support of MFC’s Martin
McGuinn and Steve Elliott.
1
Interview published in the Fall 2002 NewsLink, a Mellon
publication.
2
The Leadership Team Road Show is an annual event at which
the CEO and senior vice chairman discuss year-end results,
progress toward strategy, weaknesses, and priorities for the next
year.
3
With the BSC now embedded as a business process and the
remaining cascades proceeding apace, the Champions’ role is
no longer as active.
4
R&M Consultants provides market research to financial
institutions, and conducts numerous annual surveys.

9 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe

KEY RESULTS

• Mellon Europe’s annual revenues grew 21% from 2002 to 2003, and nearly 30% in 2004.
Its shared services costs remain flat since inception of the BSC.
• In both 2003 and 2004, Mellon Europe exceeded its target contribution to the parent
company’s total revenues.
• Also in 2003, Mellon Financial Corporation scored second place overall as “most admired”
company among U.S. financial institutions for the second consecutive year and first in
the “employee talent” and “social responsibility” categories by Fortune magazine. MFC was
named number-one superregional bank in Fortune’s “most admired” companies of 2005.
• The company’s shared services groups now see themselves as partners of the
revenue-generating businesses, prioritizing projects according to strategic importance.
• In June 2004, Mellon Europe achieved a major goal that represented the single biggest step,
both physically and symbolically, in unifying its scattered U.K. and European operations:
opening the doors to its new European headquarters, Mellon Financial Centre, in London.
• Several Mellon Europe business lines have outperformed their peers since the company
adopted the BSC.

TAKEAWAYS

• Active, engaged executive leadership can have a huge impact in buy in and in the
speed of implementation. It’s particularly important in organizations made up of disparate
cultures, such as those resulting from mergers or acquisitions.
• Accept that building and using the BSC is an iterative process. As initiatives and goals
are accomplished, the strategy map and scorecard must be revised.
• A working version of a strategy map is sufficient to get the strategic conversation going—
and a strategic transformation under way.
• Frequent communications from and events featuring top executives signal the importance
of the BSC implementation and strategic effort. They generate do-or-die acceptance and
often excitement.
• Establish new governance structures to support the new way of managing and allow
the BSC to serve as the agenda for key meetings.
• Cross-functional teams can help “spread the word” and cross-pollinate ideas. Their role
gives them visibility within the organization, which confers status and further serves to
promote their effort and the broader strategic effort.

10 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe

SFO SPOTLIGHT

All Balanced Scorecard Hall of Fame organizations exemplify the five principles of the Strategy-
Focused Organization. Mellon Europe is especially noteworthy as an exemplar of the following
SFO best practices:

• Top leadership sponsorship: The chairman, Jack Klinck, has driven Mellon Europe’s
BSC effort from the beginning and remains its primary driver. [Principle #1: Mobilize Change
Through Executive Leadership]

• Case for change clearly articulated: Mellon Europe’s case for change was developed
in 2000, after a major acquisition and amid a changing business landscape. The company
recognized that its businesses suffered from a lack of ownership of Europe-wide initiatives,
inadequate strategy development and execution, a lack of alignment among business units,
inefficient resource management and use, and conflicting corporate priorities. The chairman
led the charge by conducting detailed assessments of business financials, employee surveys,
and operational reviews. [Mobilize principle]

• Program manager identified: A full-time staff member managed the BSC development and
implementation process, supported by the BSC-trained “Champions,” who represent each line
of business and support service area. Their aim is to drive through and manage BSC imple-
mentations in their respective areas. The program manager continues to oversee and coordi-
nate the BSC effort organization-wide under the chairman’s direction. [Mobilize principle]

• Initiatives identified and rationalized: During BSC implementation, executives reviewed

existing initiatives and eliminated those that weren’t strategically relevant. To avoid duplicating
efforts and wasting resources, corporate initiatives were aligned and rationalized against
business-unit initiatives. Key corporate initiatives are shown on the corporate strategy map,
and, where relevant, are aligned to business unit initiatives on the appropriate business unit
strategy map and scorecard. When a business unit initiative can add value to another business
unit, it is also reflected on the corporate BSC and assigned to the executive of the originating
business unit. Initiatives are systematically revised, prioritized, and if need be, eliminated,
when the strategy map is refreshed. Proposed major strategic initiatives (those costing more
than $1 million) are analyzed, and, if approved, managed independently of operational
expenses, so the corporation can more easily evaluate their business benefits. [Principle #2:
Translate the Strategy into Operational Terms]

• Accountability assigned: Every member of the executive team must either own or manage
an initiative on the corporate strategy map. For example, in relation to the objective “Drive
value through leveraging core competencies,” the head of HR is responsible for the associated
measure “consolidated competency rating trend” and the initiative “personal performance
management planning audit.” [Translate principle]

11 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe

SFO SPOTLIGHT

• Corporate role defined: Besides being ultimately responsible for the delivery of support
services to all the organization’s business lines, corporate facilitates funding for all strategic
initiatives. It is also responsible for all corporate initiatives involving business lines and
support services, and facilitates synergies across business lines, such as cross-selling. As
such, corporate is overseer and facilitator of organization-wide strategy execution without
compromising the individual business units’ responsibility for strategy execution. Separating
funding responsibility from execution allows local executives to focus almost exclusively
on strategy execution. [Principle #3: Align the Organization to the Strategy]

• SBUs–Support units aligned: Support service units have their own strategy maps, which
are aligned with business line strategy maps, and support service strategies are developed with
direct input from business line executives. Alignment exercises between business lines and
support services have become a regular activity and help maintain alignment through any
internal or external changes. Business line and support services alignment is stressed in all
budget discussions and reinforced by the intrabank charge-back mechanism that allocates
support service costs to business lines by their usage. Support services are thus committed to
delivering business line and enterprise strategic objectives. These processes recognize and
emphasize the interdependencies among the enterprise, business line, and support service
strategies, and the need for ongoing coordination and communication in strategy execution.
[Align principle]

• Strategic awareness created: Through town hall meetings, the company’s intranet,
and the chairman’s quarterly “Dear Colleague” letter and regular e-mails, employees and
managers receive ongoing messages about strategy. Other vehicles for educating employees
about strategy include staff briefings, learning lunches, and “day-in-the-life” presentations.
[Principle #4: Motivate to Make Strategy Everyone’s Job]

• Strategic review meetings conducted: All business line and support services heads meet
quarterly to review corporate strategy and their alignment to it. The company created new
governing structures, such as the Mellon Europe Strategic Performance Forum, that meet
regularly to address strategic issues and needs. An operating committee (consisting of
support services heads) and an executive committee (made up of all business line heads)
each meet monthly to review operations and strategic issues, using the BSC as an agenda.
[Principle #5: Govern to Make Strategy a Continual Process]

• Planning, budgeting, and strategy integrated: Support services heads attend each
business line’s business-planning briefings to verify and validate their budget forecasts and
make necessary adjustments to agree on strategic direction and priorities. [Govern principle]

12 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe

SFO SPOTLIGHT

• Knowledge sharing linked to strategy: Trained BSC Champions, representing each major
business line and support service, meet regularly with the corporate BSC program manager
to share information and lessons learned. (BSC Champions coordinate BSC implementation
in their part of the organization.) Their findings are forwarded upward to the Mellon Europe
Strategic Performance Forum, which consists of all business line and support service heads.
Among the Champions’ team members are representatives of the Organizational Effectiveness
and Corporate Affairs departments, whose day-to-day roles are to facilitate strategic learning
and corporate communications through various channels. [Govern principle]

• Strategy management office established: Responsibility for strategy formulation,

performance reporting, and strategy execution rests in the chairman’s office, but each
function is delegated and managed at the business line and support services level. A member
of the chairman’s team is dedicated full-time to coordinating strategy management across
the organization. The chairman’s office focuses on ensuring a standardized approach and
consistency in the application of these functions organization-wide. [Govern principle]

13 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe

TO LEARN MORE
Editorial Advisers
To learn more about Mellon Europe and its Robert S. Kaplan
Professor, Harvard Business School
Balanced Scorecard program, see:
David P. Norton
• The Balanced Scorecard Report article President, Balanced Scorecard Collaborative
“Mellon Europe: Mobilizing Change Through Edward D. Crowley
Executive Leadership,” by Lauren Keller Johnson, Executive Director–HBR Specialty Publications
Contributing Writer, BSR January–February 2005 Publisher
(Reprint #B0501F). Robert L. Howie Jr.
SVP, Balanced Scorecard Collaborative
• Balanced Scorecard Hall of Fame Report 2005,
which features a brief profile on Mellon Europe Director of Research
and the 17 other Hall of Fame inductees from 2004 Randall H. Russell
Balanced Scorecard Collaborative
(Product #9157).
Editor
• The BSC library: BSC portal members with access Janice Koch
to the library can search the keyword “Mellon Balanced Scorecard Collaborative
Europe” for a complete list of resources, including Writer
conference presentations and executive video Lauren Keller Johnson
interviews. (For information on becoming a BSC
Portal member, go to www.bscol.com.). Design
Robert B. Levers

ADDITIONAL RESOURCES About Balanced Scorecard Collaborative

• For more information on the Strategy- Balanced Scorecard Collaborative (BSCol), a Palladium
Focused Organization (SFO) principles, company, is a global family of professional service firms
visit BSC Online. Membership is free. Go that helps clients use the Balanced Scorecard to successfully
execute strategy. BSCol offers a wide range of services,
to www.bscol.com/bsc_online. including education (conferences, publications, research),
• For additional guidance on the SFO principles, training (public seminars, in-house, online), consulting
(strategy, performance, change), and technology (“BSC
and to learn about best practices in use at other Portal™,” “BSC First Report™,” toolkits). To learn more,
organizations that have successfully executed visit www.bscol.com, or call 781.259.3737.
strategy, go to www.bscol.com/toolkits. Here
About Harvard Business School Publishing
you’ll find many resources available for purchase,
Harvard Business School Publishing is a not-for-profit, wholly
including Strategy Execution Toolkits. owned subsidiary of Harvard University. The mission of
• For access to the largest compilation of Harvard Business School Publishing is to improve the
practice of management and its impact on a changing
published materials on the Balanced Scorecard world. We collaborate to create products and services in
and the Strategy-Focused Organization, visit the media that best serve our customers—individuals and
www.sfo.harvardbusinessonline.org. organizations that believe in the power of ideas.

Ordering Information
To order additional copies of this profile (in print or by
download), call HBSP at 1-800-668-6705 (617-783-7474
outside the U.S.) and request product #1363 or visit
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number into the search field, or type in “Hall of Fame.”
Here you’ll find a list of all available Hall of Fame profiles
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© 2005 by Harvard Business School Publishing and Balanced Scorecard

Collaborative, a Palladium company. Quotation is not permitted. Material
may not be reproduced in whole or in part in any form whatsoever
without permission from the publisher. Balanced Scorecard Hall of Fame
for Executing Strategy™ and Balanced Scorecard Hall of Fame Profiles™
are trademarks of Balanced Scorecard Collaborative. The trademarks
referenced in this publication are the property of their respective owners.

14
 TRANSLATE STRATEGY
INTO ACTION WITH THE
BALANCED SCORECARD REPORT

The ability to execute strategy is the most important

capability an organization needs to quickly adapt and
thrive in today’s global economy. But implementing
strategy may be the single most difficult task you face.
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Now you too can benefit from an invaluable tool that’s helping companies
around the world get the most from their Balanced Scorecards—the
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latest thinking of BSC founders Robert Kaplan and David Norton and
their five principles of the Strategy-Focused Organization—principles
that can help you translate ideas into action—

MOBILIZE change through executive leadership

TRANSLATE the strategy into operational terms

ALIGN the organization to the strategy

MOTIVATE to make strategy everyone’s job

GOVERN to make strategy a continual process

Each bimonthly issue of
Balanced Scorecard Report The Balanced Scorecard Report
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The Balanced Scorecard Hall of Fame™ Profile Series
Learn how each of these Balanced Scorecard Hall of Fame organizations
became strategy-focused. Each individual profile provides a source of
information on how to “do it right”, including a profile narrative, Strategy-
Focused Organization spotlight best practices, key results and takeaways.

Chrysler Group

City of Charlotte

Crown Castle International

Economic Development Administration

(U.S. Department of Commerce)

E-Land

Hilton Hotels

Media General

Mobistar

Motorola’s Government and Enterprise Mobility Solutions

Royal Canadian Mounted Police

Tennessee Valley Authority

Unibanco

U.S. Army

To learn more visit: www.sfo.harvardbusinessonline.org

or call 1-800-668-6705 (617-783-7474 outside U.S.)

Product Number 1363