BSC Designer – Balanced Scorecard Software

Event: two-day seminar on effective strategic performance management using 3rd generation Balanced Scorecard techniques. Learn more…

When: 16th – 17th September or 2nd – 3rd December

Price: 10% discount, mention AKS-Labs when book the seminar

Where: Cookham, Berkshire, Moor Hall; Moor Hall is located about 30 miles west of Central London

Who should attend: Senior Managers, BSC Professionals

admin Uncategorized balanced scorecard, BSC, performance management, seminar

A two-day seminar on performance management using Balanced Scorecard

Our partners 2GC Active Management will hold a two-day seminar on effective strategic performance management  using 3rd generation Balanced Scorecard techniques at Moor Hall, Cookham, Berkshire, UK.

• Learn more in the Seminar Brochure
• When book to the seminar mention “AKS-Labs” to have a special discount of 10% on the course fee

Seminar Details

• Seminar dates: 16th – 17th September or 2nd – 3rd December
• Location: Cookham, Berkshire, Moor Hall; Moor Hall is located about 30 miles west of Central London

Course Plan

• The evolution of Balanced Scorecard framework from the beginning to the 3rd generation Balanced Scorecard
• Building Balanced Scorecard that is focused on achieving specific goals. Developing Strategic Linkage model
• Choosing winning measures, targets, initiatives
• Plan to implement cascading scorecards
• Project management issues: meetings and workshops to design the Balanced Scorecard
• How to use Balanced Scorecard once it was implemented – the review of key usage issues

You will find the detailed course plan in the Seminar Brochure.

Pricing

• You will find pricing details and application form in the Seminar Brochure.
• Mention AKS-Labs on your application form to have a 10% discount

admin Training and Coaching Berkshire, brochure, BSC, Cookham, London, Moor Hall, seminar, uk

Successful implementation of Balanced Scorecard and introduction of strategy maps concept of the company very much depends on the right choice of key performance indicators (KPIs).  Unfortunately, it is impossible to develop a universal set of key performance indicators which will be effective for any company.  Every business is individual and that means that it requires individual approaches to performance evaluation and strategy development.  Much depends on the strategy itself and company strategic goals.  Every business has different key success factors and key performance indicators should reflect relations to the success factors.

At the same time, it is possible to compile a general list of key performance indicators which are divided into categories.  This list should not be viewed as a must have set of indicators.  In each case the number of key performance indicators and KPIs themselves will vary.  But the list of key performance indicators which will be compiled below is based on experienced of many companies and researches related to strategic maps.

One look at the list is enough to understand that this list of key performance indicators includes both final indicators and those KPIs that characterize key success factors.  You’ll find both leading and lagging indicators.  As known lagging indicators mostly concerned financial issues, while KPIs related to customer relations, internal business processes and learning and growth will tell much about what will happen to the company.  Some indicators, like number of received patents, may be viewed as a result for learning and growth perspective.  Most indicators, however, combine final indicators and indicators characterizing certain activity aspects.  For instance, such indicator as time for placing an order characterizes one of key activity aspects, while customer loyalty is a final result.  At the same time, customer loyalty stimulates sales volumes, which is a vivid example of how cause and effect ties work within the framework of strategy maps.

Financial perspective

•          Total assets holdings

•          Asset value per one employee

•          Capital productivity ratio

•          Sales volumes for new products/services

•          Working efficiency of personnel

•          Profitability of assets

•          Revenue from new products/services

•          Revenue per employee

•          Market price per share

•          Profitability of net assets

•          Added value per one employee

•          Efficiency of assets

•          Profitability of investment

•          Efficiency of sales volumes

•          Ratio of marginal revenue

•          Marginal revenue per employee

•          Cash flow

•          Ratio of equity capital to total assess holdings

•          Profitability of investment

•          Total expenses

Of course, this is only a short list of indicators, and other key performance indicators may and must be evaluated.  You can find the full list of all possible indicators in specialized literature.  But from the above list it is evident that some business experts and authors (like Kaplan and Norton) tend to use markets and customer oriented indicators to the financial category.  Although such indicators characterize past periods of company activity and can be obtained from financial and accounting reports, they have strong relations to customer perspective of the Balanced Scorecard.

Key performance indicators of the financial category make it possible to perform comparative analysis of different departments of the company.  It is recommended to contrast obtained results with the average indicators for the industry and results obtained for the past periods.  For example, Volvo company is effectively using graphs and time series to present its policy and strategy.  Financial perspective may include both static and dynamic indicators.  This makes it possible to evaluate current condition of the company and changes in performance and profitability.

Customer perspective

•          Number of customers

•          Market share (%)

•          Average annual sales volume per customer

•          Number of lost customers

•          Average time of taking an order

•          Number of customers per employee

•          Specific weight of concluded agreements in the total number of contacts with customers

•          Customer satisfaction

•          Customer loyalty

•          Expenses per customer

•          Number of visits/contacts with customers

•          Number of advertising campaigns

•          Trademark index

•          Marketing expenses

•          Average contact duration with a customer

•          Average amount of products shipped to one customer

•          Number of customer visits to the company

•          Average time between first contact with the customer and signing of agreement

•          Average annual expenses to serve one customer

Some of the above mentioned indicators characterize customer perception of the company, including customer satisfaction and different indicators on relations between customers and the company.  They may be decomposed to customer segments, sales channels etc.  Such indicators are simultaneously reflecting current situation in relations of customers with the company (certain segment of customers or customer group) and changes in customer relations over a certain period of time.  In other words, these indicators look like a balance of customer relations and report on revenue and losses.  Experience shows that in order to forecast sales volumes organization should monitor indirect indicators like recognition rate of the brand and the like.  Besides, there are even deeper indirect key performance indicators like company marketing efforts or number of contacts/visits to potential customers.  Such indicators are sometimes included to learning and growth perspective especially if they reflect expenses related to entering certain market segments or repositioning of the company.

Depending on the situation (strategy and key success factors) the company may require indicators reflecting product share in total purchase volumes of customers, number of contacts with customers, number of employees who regular ea contact customers etc.  You will find more information in specialized marketing literature and studies.

Internal business processes

•          Specific weight of administered if expenses in total revenue

•          Ratio of timely completed orders

•          Average product labor-output ratio

•          Average development time of a new product

•          Average time from placing the order to its completion

•          Supplier frequency

•          Average decision-making time

•          Turnover of material assets

•          Labor productivity growth

•          Efficiency of information systems

•          Increasing number of IT Systems &Computer Equipment

•          Specific weight of expenses on IT Systems in the total amount of administrative expenses

•          Emission of hazardous substances to the environment

•          Influence of company products to the external environment

•          Expenses related to correction of mistakes in managerial decisions

•          Number of properly executive orders

•          Administrative expenses per employee

It is often reasonable to evaluate not only efficiency of some production processes and operations at a given moment but also assess potential of these indicators, opportunities to improve them in order to increase production output and broaden production line.  Similar to customer perspective, indicators must evaluate current condition of the company and changes in internal processes over a certain period of time.  If the company decided not to single out a separate perspective of human resource capital, it is possible to include indicators reflecting efficiency of human resources and technologies to the internal processes perspective.  It is very important to include indicators on efficiency of IT Technologies use.  In the age of information any company is interested to evaluate indicators showing customer skills and efficiency of using IT systems, computer equipment Internet and web based services, corporate customer database etc.

Learning and growth perspective

•          Expenses for research and innovation

•          Specific weight of expenses on research and innovation in the total amount of expenses

•          Specific weight of expenses on improvements in total amount of expenses related to IT technologies

•          Length of research and innovation projects

•          Resources allocated on research and innovation

•          Investment in training of personnel dedicated to customer relations

•          Investments in innovation and research

•          Expenses related to preparations and study of new products

•          Investments in exploration of new markets

•          Frequency of direct contacts with customers

•          Number of registered patents

•          Average time company patents are in force

•          Number of rational and creative ideas per employee

•          Average training cost per employee

•          Employee satisfaction index

•          Marketing expenses per customer

•          Employee trust rate to the company

•          Specific weight of employees who have not reached a certain age in the total number of employees

•          Non production expenses per customer

•          Specific weight of new products in the total amount of products

Similar to previous category, the above mentioned indicators often reflect interaction of human resources and technologies.  Company management is often forced to use indicators that characterize uncompleted processes contrary to final KPIs.  As known, high professional and education level of strategic development department employees does not guarantee that the company will complete a great number of successful innovation projects, as well as huge investments in business do not guarantee success.  Selected indicators should enable users to make own conclusions as to efficiency of using certain resources or combination of resources.

Human resources perspective

•          Leadership index

•          Personnel motivation index

•          Number of employees

•          Personnel turnover rate

•          Average employment time in the company

•          Average employee age

•          Time spent for education and training of personnel

•          Ratio between temporary and permanent employees

•          Percentage of employees with college degree

•          Average employee absence time

•          Number of female managers

•          Number of job applications to the company

•          Personnel trust rate to the company

•          Ratio of employees under 40 y.o.

•          Annual expense for re-education of personnel

•          Number of fulltime employees who spend less than half of working time in office

•          Ratio of fulltime employees

•          Number of temporary fulltime employees

•          Number of part time employees

•          Number of employees with a per hour compensation system

Please note that in the company decides to create a separate human resources perspective then indicators should fully reflect strategically important characteristics of personnel.  One of such characteristics is personnel competence.  Of besides, many human resource managers group employees by age, sex, education, experience, nationality etc.  Employee turnover rate and career chances have an exceptional importance.  As a result, selected indicators should have strong cause and effect ties with indicators in other categories.

It should be repeated that the choice of key performance indicators solely depends on company strategy, its organization structure, strategic goals, mission and values.  A certain set of indicators which proves to be effective for one company may turn out to be a failure for another.  That’s why, most top managers and scholars claim that successful choice of key performance indicators predetermine successful implementation of Balanced Scorecard and strategy maps in the company.

bsc_ideas Articles, BSC implementation, Balanced Scorecard Theory BSC implementation, KPI choice, kpi evaluation

The latest version of BSC Designer has much more useful features. Following requests of our users we have added the specify value – Progress. What is the difference between Progress and Performance?

In the Balanced Scorecard project we have two columns - Performance and Progress. What is the difference?

The indicator “Turnover Rate” has the performance equal to 16% and progress just 3,33%.

The indicator "Turnover Rate" has the performance equal to 16% and progress just 3,33%.

Now we will check the current settings of indicator to understand the difference:

The baseline is 15 and the target value is 45. Current value is 16 that's why the progress is just 3%

• Current value is 15
• The min value is 0, the max value is 100
• The baseline is 15, target is equal to 45

The difference between Performance and Progress

Performance shows how the indicator is performing. Performance doesn’t incorporate the historical values of indicators, it calculates the value using only min value, max value and current value. That is why the performance is 16%

In contrast to performance Progress focuses on baseline and target interval, e.g. progress shows us how good is our project performing according to the starting point that we assigned and end point that is our target. In this case the baseline is 15 and the current value is just 16, so we’ve improved the current value only by 1 point, which is 3% on the interval [baseline; target]

admin Features difference, performance, progress

The concept of strategy maps is based on the assumption that financial indicators do not always give a full picture of the company activity.  That’s why this model better suits companies and commercial organizations that have the primary goal of making profits.  It also concerns government sector.  This article focuses on approaches to implementation of strategy maps in government and nonprofit organizations, and changes which need to be introduced to the strategy maps concept as compared to their commercial counterparts.

Use of strategy maps in public organizations

Strategy maps complement financial information on the performed actions.  Consequently, companies that have the primary goal of making short-term profits have no urgent need in implementation of strategy maps.  But it would be interesting to know what information the company needs and what systems of gathering information are used in such companies.  Strategic maps are mostly helpful for description of those operations the result which will be visible in future, and advantages (such as profits increase) will not be immediate.  Such operations are performed by support and development departments, although their final goal is to increase profits for the company.

This is especially true for central and local government bodies.  As a service supplier, the government sector has almost the same requirements to administrative management as commercial organizations.  Since the early 1950s the U.S. and other countries have been arguing on success criteria which determine efficiency of government bodies and methods of analysis performed when choosing economic policy.

Currently, strategic maps are being tested in some departments and bodies of central and local governments.  Unfortunately, there are no real cases of a full implementation of strategy maps and Balanced Scorecard.

Strategy maps and local government

Regional and municipal government of Sweden has been using different performance evaluation tools with a set of key performance indicators.  Recently a “customer – supplier” model has been gaining popularity. Local government purchases or orders necessary services and pays for them with the taxpayers’ money.  In order to review the volume of supplied services and even change the supplier, local government is freed from any responsibility as a service supplier.  This responsibility goes to municipal departments that render services.  For example, healthcare department may be divided into several sub-departments, one of which renders services.  The customer goal is to get the best services for taxpayers’ money.  It is very important to introduce indicators related to customer satisfaction.  Thus, introduction of non-financial indicators is very helpful.  If customers are not satisfied, the results cannot be viewed as positive.  Strategic maps can be used both by different service administrators (local government, school councils, hospital management) and service suppliers that are directly responsible to taxpayers and local governments for rendering high quality services.

In fact, a number of municipal bodies in Sweden are using different modifications of strategy maps.  Some local governments have been using key performance indicators which can be easily represented in the form of strategy maps.  It is believed that the key advantage of using strategy maps is related to comparative analysis or benchmarking which is easy to be introduced in municipal bodies, as compared to private companies.  Indicators used by Swedish authorities are related to resources, activity types and perception of government policy and actions by taxpayers.  Moreover, some indicators characterize public attitude towards actions/decisions of the local government.  Some municipal departments even go further by introduction of strategy maps in schools and hospitals.  The local authorities want to know answers to such questions: are students satisfied with curriculum, do patients like their stay in the hospital etc?

Of course, the bulk of indicators are related to financial issues.  Thus, indicators describe the number of real estate objects, equipment units, expenses for maintenance of real estate and production facilities, total length of roads and highways, traffic lights units, of street lights etc.  Through measurement of maintenance expenses it is possible to optimize them (average maintenance costs per one light post, meter of track etc.) The choice of such indicators depends on the way they will be used in decision making.