Sir M Visvesvaraya Institute Of

Management Studies

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 Balanced Score Card
Presented by –
Nimit Soni
Monil Visariya
Ajay Malavi
Radheshyam Jaiswal
Ravi Chaurasiya
Peran Sukheswala
2 Bakhtyar Panday
 TOPICS COVERED
 About Balanced Scorecard

o Corporate Performance Management

o Strategy Map

o Balanced Scorecard (BSC)

o KPI & KRAs

o BSC Model

 International Companies Adopting BSC

 Indian Companies Adopting BSC

 Conclusion

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 About Balanced Scorecard

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 Corporate Performance Management

 Effective performance management requires accurate

performance measurement.
 The value of measurement is that it identifies where action

should be taken.
 Corporate performance Management is one of the

important aspect for talent management in current

scenario.

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 Strategy Map
 Strategy maps are communication tools used to tell a

story of how value is created for the organization. 

 They show a logical, step-by-step connection between

strategic objectives (shown as ovals on the map) in the

form of a cause-and-effect chain. 

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 Strategy Map Framework
Long-term Shareholder
Value

Cost Efficiency Revenue Growth

Financial

Price Quality Service Availability Brand

Customer

Operations Customer Regulatory

Innovation
Management Management and Social
Processes
Processes Processes Processes
Internal Process
Learning & Growth

Human Capital Organization Capital Information Capital

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 Balanced Scorecard (BSC)

The Balanced Scorecard translates an organization's

mission & strategy into a comprehensive set of
performance measures that provides the framework for a
strategic measurement and management system.

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Source - The Balanced Scorecard – Kaplan & Norton
 Balanced Scorecard (BSC)
 BSC was implemented in late 1990s .

 It was developed by David Norton & Robert Kaplan in 1992.

 It is a framework that focuses on shareholders,

customers, internal processes, and innovation

requirements of a business in order to create a system of
linked objectives, measures, targets and initiatives
which collectively describe the strategy of an organization
and how that strategy can be achieved.

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 4 Perspectives in Balanced Scorecard

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 Financial Perspective Customer Perspective

•Market share & growth in it

•Sales growth
•Customer service
•Earnings growth
•On-time delivery
•Dividend growth
•Customer satisfaction
•Bond and credit ratings
•Brand recognition
•Cash flow
•Positions in favorable markets
•Increase in stock price

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 Internal Process Learning & Growth
Perspective Perspective

•High product quality •Competence and integrity of

•Manufacturing innovation managers

•High manufacturing •Morale and firm-wide culture

productivity •Education and training

•Cycle time •Innovation

•Yield, reduction in waste

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 Key Performance Indicators (KPI)

KPI = Measurement or indicator

that provides information on how
far we have succeeded in
achieving the strategic objectives

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 Key Result Areas (KRA)

“Key Result Areas” or KRAs refer to

general areas of outcomes or
outputs for which a role is
responsible.
A typical role targets three to five
KRAs.

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 KRAs helps individuals in:
 Clarify their roles

 Align their roles to the organization's business or strategic plan

 Focus on results rather than activities

 Communicate their role’s purposes to others

 Set goals and objectives

 Prioritize their activities, and therefore improve their

time/work management
 Make value-added decisions

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 Objectives for KPIs & KRAs

•S – Specific

•M – Measurable

•A – Achievable

•R – Results

•T – Timing

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 Results of Balanced Scorecard
 Increase focus on strategy and results.

 Improve organizational performance by measuring what

matters.
 Align organization strategy with the work people do on a day-

to-day basis.
 Focus on the drivers of future performance.

 Improve communication of the organization’s Vision and

Strategy.

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Incentive compensation based on BSC
Category Measure Weighting
Financial(60%) Margin vs. competition 18.0%
ROCE vs. competition 18.0%
Cost Reduction vs. Plan 18.0%
New Market Growth 3.0%
Existing Market Growth 3.0%
Customers(10%) Market Share 2.5%
Customer Satisfaction Survey 2.5%
Dealer Satisfaction Survey 2.5%
Dealer Profitability 2.5%
Internal(10%) Community/ Environmental
Index 10.0%
Learning and Employee Climate Survey 10.0%
Growth(20%) Strategic Skill Rating 7.0%
Strategic Information 3.0%
Availability
 International Companies
Adopting BSC

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 ABB
 ABB - developed a balanced scorecard in 1994 known as

EVITA.
 In this organisation, BSC is a system of financial and

management control.
 It chose five perspectives viz customer, process/supplier,

employee, innovation/development and financial .

 It also explored the feasibility of sixth perspective -

environmental factors but finally dropped the idea.

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 Halifix
 Halifix - UK-based company with business in retail operation,

customer credit, insurance etc. – utilized balanced scorecard as an

instrument of operational management system rather than a

strategic instrument.

 It replaced learning and development perspective with the staff

development and improvement perspective.

 Presently, it has 2-5 measures in each perspective resulting in 16

measures for its balanced scorecard.

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 Other major Organizations
 Few other organizations with BSC as a measurement tool:-

 Skandia

 Electrolux

 Compaq

 Development Dimensions International (DDI)

 Some international consultant firms like SAS, Cedar,

Renaissance Worldwide and Peoplesoft have developed

balanced scorecard for companies in India and abroad.

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 India Companies
Adopting BSC

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 PHILIPS India Ltd.
 Used the balanced scorecard to streamline its complex

process and structure.

 Making employees aware of its strategy and vision and

educating them about the outcome drivers of the business

success.
 The focus was on value creation by converting the

relationship between customer satisfaction and product sales

into CSFs.

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 PHILIPS India Ltd… (cont)
 Philips identified the following four critical success factors

(CSFs) :

1) Competence - knowledge, technology, leadership and

teamwork

2) Processes - drivers for performance

3) Customers - value proposition

4) Financial - value and growth.

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Balanced scorecard Sample (Phillips)
Financial Processes Customers Competence
Economic Profit- Percentage Rank in customer Leadership
Realized reduction in survey competence
process cycle
time
Income from Number of Repeat order rate Percentage of
operations engineering patent protected
changes turnover
Working capital Capacity Complaints Training days per
utilization employee
Operational cash Process capability Brand index Quality
flows improvement
team participation

Source : Gumbus Andra and Lyons Bridget (2002)

 Goodlass Nerolac
 BSC in this organisation is broadly based on 25 objectives

which the company wants to achieve.

 The very purpose of implementing the BSC in the Company

is its endeavour to grow its business profitability over the

next few years.
 Cedar Consulting (a global management consulting and

enterprise solutions Company) assisted the Goodlass

Nerolac in building and implementing the BSC framework.

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 Goodlass Nerolac… (cont)
Observations made by H.M. Bharuka, MD, Goodlass Nerolac are:
Company needs a performance management system which aligns

the entire organisation and allows to measure the delivery of company’s

strategy.
The BSC framework is communicated across the organization and will

become a business review and enterprise performance management

framework.
The scorecard framework will create a strategy deployment system

which will monitor month-on month achievement against defined

strategic objectives.
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 Other major Organizations
Few other organizations with BSC as a measurement tool:-

 Infosys  Bharti
 Reliance  Dr. Reddy Labs
 Godrej  Tata Group
 TCS  lCICl Bank Ltd.
 Castrollndia Ltd.  Taj Group
 RPG  India Hotels
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 Conclusion

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 Conclusion
 BSC provides feedback around both the internal business

process and external outcomes in order to continuously improve

strategic performance and results.
 It captures both the financial and non-financial aspects of a

company's strategy and discusses cause and effect relationship

that drives business success.
 The organisation can become aligned and focused by using

the BSC to implement the long-term strategy.

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 Thank You

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