Balanced Scorecard Designer

Futura, a custom aluminum extrusion company, realized that their employees were their greatest asset in a competitive marketplace, and the foundation of their success in customer service, operations and profitability.  They used the Balanced Scorecard approach to make employee retention and support a priority, implementing a suite of human resource tools and effecting a significant and measurable increase in employee loyalty and satisfaction rates.

Introduction

An international company based in Clearfield, Utah, Futuraspecializes in customized, start-to-finish aluminum extrusion services, including finishing, fabrication, machining and design.  With nearly 60 years in business, the company has built up a niche clientele in a wide range of industries, including home construction, electronics, transportation, retail and more.

The Challenge

Futura was a conscientious company that had already developed a set of financial and customer relationship metrics, and they had also achieved ISO accreditation (an internationally recognized quality designation offered by the International Organization for Standardization).  However, they knew that their most valuable assets were their employees, and that they needed to focus on their human resources infrastructure.  A competent, stable, committed workforce was the key to improved operations, better customer relationships and larger profits.

In fact, in 1995 Futura hired a new CEO, Susan. D. Johnson, because of her “employees first” philosophy. The company wanted to find a way to improve retention, satisfaction and advancement rates among workers, and ensure the loyalty and performance excellence of their workforce.

They needed to build a corporate culture that put employees first and ensured that the benefits of a supported, loyal workforce were measurable in all areas: as measurable improvements in employee retention and job satisfaction, financial growth, organizational efficiency and customer relationships.

The Solution

Starting in 1996, Futura used the Balanced Scorecard approach to create four aligned perspectives: the financial perspective, the customer perspective, the internal operations perspective and the learning, innovation and growth perspective. Goals were developed for each perspective, along with a series of measurements to help them determine how close they were to achieving each goal.

Because employee engagement was considered to be the basis upon which excellence in each perspective was built, the learning innovation and growth perspective was prioritized, with a host of new tools created to engage employees and measure improvements in the workforce.  These new measurement and engagement tools included:

• “Employee Friendly Initiatives at Futura” survey, a survey that listed more than 60 employee benefits and encouraged staff to identify benefits that were a priority.  Prioritized benefits, such as dependent and spouse scholarships, flex-time options and short-term loans, were then added to employees’ benefits packages.
• “Birthday Review,” an interview conducted with each staff member on their birthday to determine their employment satisfaction levels and identify gaps in their on-the-job support.
• “Leadership Survey,” an opportunity for employees to provide feedback on the levels of courtesy and support their superiors show them.
• “Certification and Training Matrix,” a certification program that encourages employees to improve their skills and cross-train, resulting in a more upwardly mobile and flexible workforce.  The matrix also helps clearly define the pathway to advancement for employees at all levels.
• “Annual Performance and Personal Development Review,” a thorough and holistic performance review process that evaluates past performance, sets future goals, explores how employees can enrich their personal and professional lives and allows them to provide input on how their superiors can better support them.

The Balanced Scorecard helped Futura to identify the right tools and determine meaningful ways of measuring their effectiveness.

The Result

Within three years of implementing a Balanced Scorecard approach,Futura has met—and in many cases exceeded—their human resource goals.

The Balanced Scorecard helped the company to put the focus on nurturing their human resources by implementing an engagement and retention strategy with a set of holistic tools, including surveys, performance reviews,attractive benefits that reflect the specific needs and priorities of Futura’s workforce, clear certification pathways and opportunities for employees to “manage up,” providing valuable feedback to their superiors and leaders.

This allowed the company to exceed their employee satisfaction goal of 3.2 out of a four on their annual Gallop employee survey.  Within three years, employees were returning average scores of 3.26.

Most importantly, Futura was able to increase staff retention significantly as a result of these efforts, resulting in a 33% reduction in turnover.  The company now boasts a retention rate that is far above the industry average.  Industry-wide, the turnover rate is approximately 50%; Futura’s is a fraction of that at 10.7%.

Trademarks mentioned in this article belongs to the respective owners.

admin Case Studies Aluminum, Case Studies, Manufacturer, scorecard

Southern Gardens Citrus (SGC), located in Clewiston, Florida, currently produces more than 50 percent of the private label, not-from-concentrate orange juice in America. A subsidiary of United States Sugar Corporation, it’s now the world’s largest supplier of 100 percent pure, not-from-concentrate orange juice to the private label industry and to major brands. The company owns more than 2.5 million orange trees, and processes their product in the state’s most modern facility.

Summary

In the mid-1990s, SGCwanted to break into the private-label market for not-from-concentrate orange juice.  To do so, they needed to tighten operations, reduce product costs and motivate employees to align their performance with the company’s core values.  The Balanced Scorecard approach allowed them to carefully monitor their operations, reduce product costs and deliver excellent customer service, resulting in a phenomenal leap from owning no market share to becoming the top supplier of private-label products.

The Challenge

In 1995, SGC was a small business of 150 employees.  With a new VP and General Manager taking the helm, it was the right time for the company to establish a strong corporate culture and move towards becoming a more dynamic and responsive organization.  The not-from-concentrate orange juice market was crowded with competitors, and SGC wanted to break into the market for private-label product and become a top-rated supplier.  To do so, the company needed to keep its product costs low and product quality high while providing service excellence.  They needed a framework that would allow them to carefully monitor organization-wide performance, motivate employees to support strategic goals, and uncoveroperational areas requiring improvement.

The Solution

SGC decided that the Balanced Scorecard approach would allow them to develop the best framework for motivating employeesto support the company’s core values by calibrating employee compensation to measurable achievement in these areas.  The Balanced Scorecard would also help them to set ambitious goals and carefully monitor their progress.

SGC developed a tandem Balanced Scorecard approach, with a corporate Scorecard for overall organizational alignment and strategic integrity, and a Bonus Scorecard, which linked employee bonuses to the support and fulfillment of the corporate strategy.  Five perspectives were captured in the Scorecards: financial, customer, internal, innovation and learning, and core values.  Each of these perspectives was aligned with the company’s strategic goals, each of which was set at a specific number or percentage increase or decrease:

• Increase sales of not-from-concentrate juice.
• Secure a greater portion of fruit supply on a long-term basis.
• Reduce the integrated cost of product
• Continuously improve processes and products, and lower costs.
• Continue to improve HR, technical, and operational skills as a competitive advantage.

SGC organized its employees into 10 operating teams tasked with taking ownership of the Balanced Scorecard elements relevant to their operational area.  Teams defined what should be measured in their area, and team managers connected with one another regularly to ensure that area efforts complemented and reinforced each other.

While clear strategic goals and a cross-functional team structure ensured organizational co-ordination and support, the Bonus Scorecard encouraged individual employees to align their efforts with the overall corporate goals by tying compensation into the achievement of those goals.  Employees in each organizational area were rewarded with one of three compensation levels according to how well they had met the goals for their area.  For instance, those in customer service were expected to measurably contribute to specific departmental targets for loading cycle times, customer satisfaction rates and the percentage of shipments that were shipped within specification.  Support for the company’s core values and the employee’s commitment to innovation and learning were also taken into account.

The Result

In the six years since implementing the Balanced Scorecard approach, SGC achieved outstanding results. Employees have risen to the challenge, with all major work units reporting the highest measurable levels of adherence to the company’s core values of safety, attitude, teamwork, productivity and quality.

Most impressively, the company has surged ahead as a competitive supplier.  Before the company implemented the Scorecard, they supplied none of the not-from-concentrate orange juice to the private label market, and ranked last among suppliers.  In the years following Scorecard implementation, SGC grew this area of their business, eventually supplying 60 percent of the private label market and becoming the acknowledged leader among bulk not-from-concentrate suppliers.  At the same time, the costs per pound for their juice product have declined steadily from the first year they implemented the Scorecard.  The company is now the lowest-cost supplier of not-from-concentrate orange juice in the industry.

Trademarks mentioned in this article belongs to the respective owners.

admin Case Studies Case Studies, food, Manufacturer

BSC Designer successfully comes along with implementation consulting services, provided by IRS Consulting, Lithuania based Management Consultancy, which implements effective Management Systems in the Baltics since 1991

Andrejus Kaleinikovas, Managing Partner of IRS Consulting, shared his opinion about BSC Designer usage with us:

We took the challenge of using BSC Designer at our Balanced Scorecard implementation project in Lithuania. As a tool relatively easy to operate and convenient for practical realization, it helped our customers to develop efficient scorecards and as a result improve their business performance. BSC Designer helped us to realize BSC implementation project for multi-site NGO in Lithuania.

BSC Designer gave us a solution reporting critical business indicators on local site level. BSC Designer is directly addressing the business needs and management challenges our customer is facing.

Furthermore, by integrating BSC Designer and ISO based management systems IRS Consulting will be able to link business performance indicators to processes. The main goal of our client is to reduce costs and commit local employees to come up with suggestions for improvement.

At our BSC implementation project small internal group developed a strategy map based on the data needed in order to make comparable reports and discuss managerial questions. For each success criteria some performance indicators were defined and the set up was launched. It became clear to us that the management information system needed to be much more flexible than a data warehouse and that is one of the reasons why we chose BSC Designer.

BSC Designer is a very flexible system which allows the top management to follow up on all the defined indicators continuously. It has web-based service and therefore easy to implement and deploy. In addition the balanced scorecard system makes it possible for the management to see all performances of the departments at a glance.

This BSC implementation process with BSC Designer had a very positive influence on the implementation gaining commitment from everyone and adding transparency to it. In order to make BSC project as successful to the regional managers as it is at a corporate level, our customer is currently considering also developing more strategic scorecards for central and local business development purposes, ensuring the alignment of all initiatives with the strategy of the organization.

We were surprised to find an effective Balanced Scorecard solution for this customer. The implementation was rather successful and BSC Designer looks to be a promising tool for the further Balanced Scorecard implementation projects.

Andrejus Kaleinikovas, Managing Partner of IRS Consulting

Expert_KPI Case Studies bsc designer, Case Studies, consulting

Summary

Bridgeport Hospital, a private, not-for-profit hospital in Connecticut, needed to improve its financial management.  The hospital had been operating at a loss despite being adequately funded, and also needed to find a way to make excellence in customer care and employee retention relevant to financial goals. The Balanced Scorecard approach helped Bridgeport to improve fiscal responsibility while improving in key service delivery areas.

Introduction

Bridgeport Hospital, located in Bridgeport, Connecticut, is part of the Yale New Haven Health System. This private, not-for-profit acute care hospital has 425 licensed beds, more than 2,600 employees and 550 active attending physicians representing more than 60 subspecialties.

Bridgeport Hospital provides nearly 250,000 patient care visits annually, including 20,000 admissions; nearly 230,000 total outpatient visits to the hospital (including more than 72,000 emergency department visits and 35,000 clinic visits); 7,200 same-day surgery visits, and 38,000 outpatient rehabilitation visits.

The Challenge

Financial pressures, including federal funding changes and an overall shift towards outpatient care has resulted in widespread downsizing and closures among hospitals in the U.S. Operating margins at U.S. hospitals were, on average, 20% lower in 2001 than they were four years earlier.  These challenges are forcing hospitals to attend more rigorously to the financial aspect of their business.  However, patient care is still at the core of what they do, and they must find ways of building patient care metrics into their management models.

Bridgeport Hospital, a member of the Yale New Haven Health System, needed to address the financial realities of a challenging funding and operational environment while maintaining an ongoing commitment to excellence in patient care.  Quality, patient satisfaction and staff retention were key areas that the hospital wanted to improve, and they needed to find a way to connect those pursuits to financial outcomes.

Additionally, Bridgeport knew that they had not been completely efficient in allocating funding towards their operations; despite being adequately funded, they were operating at a loss. They needed to find a way to use their capital more effectively and make it stretch further towards organizational excellence.

The Solution

The Balanced Scorecard gave Bridgeport a framework for connecting quality clinical outcomes, expert clinical care providers, satisfied patients, doctors and staff, volume and market share growth to financial measures.

The hospital began by bringing together management groups to map a course to financial health.  The leadership team, along with the board of directors and medical and administrative staff crafted three scenarios for future success.  Clinical priorities that fit these scenarios were further refined with the help of external community physicians, and ultimately the three scenarios were merged to create a single vision for the future.  The vision was supported by four perspectives: organizational health, quality and process improvement, volume and market share growth and financial health.

As part of the quality initiative, Bridgeport tasked Employee of the Month Award winners to craft an accountability system that translated excellent customer service into a series of simple, measurable activities known as the Service Contract. The contract was made up of seven daily commitments, such as, “I will introduce myself to patients 100% of the time,” “I will be sensitive and aware of cultural diversity,” and, “I will keep patients and families informed.” Adherence to the Service Contract was taken into consideration during employee evaluations, and accounted for 50% of the merit increase they could be given.  This gave employees a clear and performable set of behaviors that are directly linked to compensation.

The Balanced Scorecard was also instrumental in helping the hospital to collaboratively prioritize capital budget items.  In the first year, the leadership team used the Scorecard to set budget items, but in year two, they were able to tabulate specific scores for budget items listed under each of the four perspectives.  Items with weaker scores were given lower funding priority.

This process has allowed clinicians and senior management to increase their understanding of the clinical and other dimensions of care.  It has also transformed a fairly political process into one that is team-oriented and goal-driven, bringing physicians, clinicians and lay managers together in an open collaboration towards common goals.  What used to be determined behind closed doors by the finance department is on openly evaluated in a transparent and understandable process.

The Result

The Balanced Scorecard has given the organization a shared language, which is especially crucial for an organization made up of so many highly skilled, diverse and strong-willed professionals.  Clinicians are now able to think in terms of financial impacts, and non-clinicians are able to better understand the clinical measures required for excellence in patient care.

Annual strategic planning takes far less time since the implementation of the Balanced Scorecard, because only the metrics change.  The plan remains essentially unchanged from year to year.

After one year of Balanced Scorecard implementation, Bridgeport had achieved significant improvements in several key areas.  They were able to lower the turnover rates among registered nurses and overall staff to exceed the human resources target they had set. Bridgeport met their goals for providing a certain volume of care in all care areas, and exceeded their goal for cardiovascular surgery and diagnostic cardiac catheterization. And perhaps most importantly, patient satisfaction and customer preference increased.

While achieving improved performance in a number of areas, the hospital also met its financial goals.   They were able to increase the price of their managed care services, stay below the allocated staffing budget and achieve supply chain savings of $750,000 in excess of their goal.

Trademarks mentioned in this article belongs to the respective owners.

admin Case Studies balanced scorecard, Case Studies, health care, hospital

Summary

Facing a new competitive landscape, Rockwater, a deep-sea engineering and construction company, needed to find ways of building closer relationships with their customers and providing better service while maintaining profitability.  The Balanced Scorecard helped them establish customer feedback channels, boost service levels and identify ways to reduce the cost of doing business.

Introduction

In 1993, Rockwater was a global leader in underwater engineering and construction and a wholly-owned subsidiary of Brown & Root/Halliburton.  The company’s service offerings included commercial diving, scour and erosion, underwater coatings and installation of marine structures, and their customer base was the oil companies whose deep-sea oil rigs they serviced on a regular basis.

The Challenge

Having grown from a small and relatively low-tech deep-sea repair and construction diving company, Rockwater had weathered keen competition in the 1980s and emerged in a strong position.  However, they were now facing a changing competitive landscape, in which the offshore oil-drilling companies who made up their customer base were now seeing the benefits of establishing long-term partnerships with their suppliers, instead of choosing them based on competitive pricing alone.Rockwater had to align themselves with these new expectations with a renewed focus on customer service and building robust customer relationships.  The winning formula for customer loyalty needed to be articulated and translated into tangible goals and actions.

The Solution

Rockwell used the Balanced Scorecard to develop a new vision statement that made customer relationships the focus.  The CEO and senior management team developed the following vision: “As our customers’ preferred provider, we shall be the industry leader in providing the highest standards of safety and quality to our clients,” and created five strategy elements in support of that vision:

• Services that surpass customers’ expectations and needs
• High levels of customer satisfaction
• Continuous improvement of safety standards, costs and effectiveness
• High-quality employees
• Realization of share-holder expectations

These five strategy elements were then expressed in four different perspectives: financial, customer, internal and growth.  Each perspective was translated into a clear set of performance measures that could be supported through co-ordinated organizational activities at all levels.

To support the financial perspective, the senior management team developed three measurements geared towards long- and short-term shareholder value: return-on-capital-employed and cash flow monitored short-term returns, which forecast reliability showed the company’s commitment to predicting and managing longer-term performance.

To support the customer perspective, the team established a two-tiered system for customer management and recognition.  The two-tier approach addressed the realities of staying cost-competitive, while allowing the company to deliver more value to customers looking for a deeper, more stable relationship. Tier 1 represented customers who wanted to build long-term relationships with suppliers, and who placed the value of services rendered above cost.  To cater to these customers, they engaged an independent organization to conduct monthly and annual customer satisfaction surveys. Tier 2 was made up of customers who chose services solely on the basis of cost.Rockwater made sure they were still able to attract these customers by using an in-depth price index.

To ensure internal processes were optimal, the team tracked the life cycle of a project, from launch (recognizing the customer’s need) to completion (meeting that need successfully), and developed measures to evaluate five phases in each cycle: identify, win, prepare, perform, close out.  Linking internal processes along a life cycle continuum was a significant departure from the way Rockwell perceived their internal processes.  Formerly, they had established performance levels for each department separately, instead of integrating key business processes and establishing overall performance measurements.  This helped them to refine the metrics used for identification stage, and to highlight the importance of this time-intensive stage for project success.

The growth perspective included product and service innovation as well as improvement in financial, customer and internal process performance.  The effectiveness of product and service innovation was measured by the percentage increase in revenue from new services.  Financial, customer and internal processes were measured using an index of a range of improvements in safety and repeat business.  The Rockwater team recognized that success in both areas relied on empowered and motivated employees.  To support this, a staff survey was conducted to measure attitude, along with metrics that tracked the number of employee suggestions submitted. And to hook employee motivation back into a clear performance metric, the revenue generated per employee measured the outcomes of these employee commitment and training programs.

The Result

Implementing a Balanced Scorecard showed Rockwater that they needed to move from a department-based to a process-based view of operations and helped them recognize the need for customer feedback metrics.  It also helped them to become a high-value, service- and results-driven organization, focused on fostering close relationships with long-term customers, but also able to compete on a pure cost basis. The customer surveys, in particular, gave Rockwater a deeper more responsive relationship to their customer base. And by creating better feedback on the cost of doing business, Rockwater uncovered the significant, hidden, indirect costs of safety incidents, which they addressed with an integrated Scorecard safety index.  The Balanced Scorecard was acknowledged by the company CEO as an invaluable tool in helpingRockwaterbecome number one in their industry.

Trademarks mentioned in this article belongs to the respective owners.

admin Case Studies Case Studies, customer service

Verizon Communications Gets Human Resources On Track with a Balanced Scorecard Approach

Summary

Emerging from a recent merger and industry deregulation, and entering a time of increased competition, Verizon Communications needed to prepare for aggressive customer acquisition if it was to survive the telecomm wars.  The company decided to take a hard look at human resources, a department that was not historically linked to profitability in any way, and create profit-linked goals and accountability to guide their activities.

Introduction

In 1997, the merger between Bell Atlantic and GTE was named Verizon Communications.  The newly merged company was the largest local phone company in the U.S. and the largest wireless phone company, with about 260,000 staff in its employ. The company managed 63 million local-access lines and 27 million local and five million long-distance customers generating annual revenues of approximately $60 billion, with room for considerable growth in the long-distance market once they were approved for expansion in this area. Verizon Communications offered voice, data and wireless services as well as published print and electronic directories.

The Challenge

When the Telecommunications Act of 1996 created new and significant challenges for Verizon Communications, the company needed to cope with the new competitive landscape created by deregulation.  Suddenly, telephone, cable and Internet providers were vying for the same customers, and in an effort to achieve economies of scale, many began offering consolidated services, including local, long-distance, wireless, video and Internet.  Deregulation incurred a wave of consolidations, of which Verizon was just one, with more than $10 billion in worldwide telecommunications industry acquisitions and mergers.

Verizon needed to be ready to build its long-distance customer base as soon as it received regulatory clearance, and also needed to aggressively seek to increase its overall revenue base.

At the same time, they were dealing with high employee turnover rates of 20 to 25% per year. This problem compounded by record lows in unemployment rates. Customer service was suffering and smaller, newer telecommunication companies were using better service to lure customers away.  Deciding that improved, consistent customer service was integral to customer retention, Verizon chose to focus on their human resources department.

The human resources department had historically not operated under specific performance metrics.  As a non-revenue-producing department, human resources employees were generally written off as costs.  Verizon decided to break with tradition and link human resources activities to productivity, product cycle times, sales and other metrics to determine how these activities affected overall business goals.

The Solution

Because the Balanced Scorecard approach puts the focus on measurable performance, and on bringing all business functions into alignment, it was the perfect choice for Verizon’s objectives.  Human resources needed to determine department goals that supported and could be measured against Verizon’s overall corporate strategy: “To profitably offer an complete bundle of high-growth telecommunications services.”

The human resources leadership team came up with five strategic directions:

• Talent: enlarge talent pool, invest in professional development, ensure workplace diversity
• Leadership: find ways of identifying high-potential employees and grooming them for leadership roles
• Customer Service and Support: determine retention issues, promote HR-related products and services available to employees, support employee engagement
• Organizational integration: create better information-sharing systems between business units and with the unions
• Human resources capability: build human resources capacity by rotating key talent, creating a measurement system that highlights dept achievements and invest in tech solutions

Next, the team created a measurement model to support these strategic directions.  They started by asking company presidents in each business area what their human resource-related questions and concerns were, and developed 118 performance measures, organized into four perspectives (strategic, customer, operations, financial) that answered these questions.

They assigned targets for each of these perspectives, with one-quarter of these targets being taken from benchmark data for the telecommunications industry, and the remaining targets being based on a projection of internal data against which they could measure their actual performance.

To communicate their Balanced Scorecard results throughout the organization, they usedPbViews software. This enabled them to report, online, the quarterly Scorecard results.  It also allowed them to show how the results cascaded through all levels of the organization, including a color-coding system that allowed them to visually identify problem areas at a glance.

Online video and audio resources to train employees to use Scorecard data were also made available online.

Because both the measurement systems and the targets were new, a period of adjustment took place.  After six months, the Balanced Scorecard targets and measurement protocols were adjusted and refined, and also changed as needed to reflect changing organizational goals.  Most importantly, compensation throughout the department was now linked to these targets.

The Result

The Balanced Scorecard approach achieved significant results within the organization, both in terms of targets reached and in terms of effecting a change in mindset throughout the human resources department.

One of the main targets set was to reduce call center employee turnover.  The Balanced Scorecard gave the human resources department the tools to determine what issues were causing employee dissatisfaction and helped them rectify the problem. They ultimately achieved a reduction of 1%, which represented a savings to the organization of $23.6 million.  The Balanced Scorecard not only enabled them to set targets, but also gave them the tools to measure their performance and express improvements in actual cost savings.

Not only did the Balanced Scorecard help human resources to set and achieve specific targets, it allowed them to reframe themselves as a profit-conscious department.  From being a largely unaccountable part of the organization, they now feel as though they are driven by, and responsible to, Verizon’s overall corporate strategy.

Trademarks mentioned in this article belongs to the respective owners.

admin Case Studies Case Studies, telecom, telecommunications

The Summary

The National Marrow Donor Program set an ambitious goal of facilitating 10,000 transplants per year by 2015.  They needed a strategic plan that would allow them to evaluate organizational performance based on overarching goals rather than approaching projects and initiatives discretely. The Balanced Scorecard approach helped them develop a broader strategy that included multiple perspectives and allowed them to leverage total organizational strengths.  The Scorecard also helped them access the data they needed to make timely and informed funding and operational decisions.

Introduction

Launched in 1987 with a registry of just 10,000 volunteers, The National Marrow Donor Program (NMDP) now includes seven million donors and over 150,000 cord blood units, the largest and most racially and ethnically diverse registry of its kind in the world. Since its inception, the NMDP has arranged for more than 35,000 transplants, giving these patients a second chance at life.  Medical advances are making marrow and umbilical cord blood transplants available to more patients all the time, and in 2009 alone, the NMDP facilitated more than 4,300 transplants.

The Challenge

In order to meet the needs of all patients, NMDP is committed to meeting the needs of all its patients, which means it must more than double the rate of transplants to reach 10,000 per year by 2015.

Although they had a strategic plan in place, they realized that it focused on activities and projects without reaching as far as specific outcomes.  The strategy was also too narrowly focuses on processes and financial considerations; they needed a broader strategy that accounted for customer and stakeholder perspectives and helped them build on the strengths of their people, knowledge base and technology.

With an ambitious, long-term organizational goal, NMDP needed to know with pinpoint precision where performance improvements were needed and how to take corrective action.  Organization leaders needed to be able to track the way performance was affecting strategic objectives and make impactfulfunding decisions, instead of simply evaluating individual projects and initiatives.

And the organization needed to get everyone working in synchronization towards a single result with an easily understood strategy document that was relevant across all departments.

The Solution

The process began with a comprehensive SWOT analysis and the development of renewed vision and mission statements and strategic themes during an intensive session involving NMDP officers and senior management.

They emerged with a new, more concise and straightforward mission statement—“We save lives through cellular transplantation – science, service, and support”—that specifically defines their mission and the areas that support it.  They also developed an Overarching Strategic Result that gave the organization a concrete goal to work towards: “Meeting the need for 10,000 transplants per year by 2015.”

Next, four strategic themes were developed to provide specific goals towards supporting the Mission Statement and reaching the Overarching Strategic Result:

• Global Access and Acceptance  (overcoming barriers to transplants such aslack of insurance, transportation, and post-transplant support)
• Deliver Excellent Stakeholder Experience (make sure a cell source donation is available when it’s needed)
• Research (pursue research to improve cell transplantation as a therapy)
• Culture of Excellence (seek out talent, structure and resources needed to continually improve transplant services)

Next, detailed roadmaps were developed for each theme area, with specific objectives identified.  The four maps were combined into an organizational strategy map of 13 strategic objectives, 46 strategic measure and seven strategic initiatives. This Scorecard was named Vision into Action (ViA) and with board and senior management approval, it was cascaded throughout the organization to the different departments.

A ViA communications team was appointed to communicate the Scorecard itself and the organization’s progress towards Scorecard goals throughthe distribution of newsletters, intranet messaging, contests, e-mails from the CEO, leadership training, all-staff meetings and employee check-ins.  These communications activities helped every employee to understand and get excited about their role in supporting the Overarching Strategic Result.

At the same time, groups of five to 10 key members of each department held sessions to develop their own Objectives, Measures and Initiatives. They were tasked with outlining each department’s contribution to the Strategic Objectives and NMDP mission, and creating a toolkit to identify gaps, overlaps and synergies between departments, identify priorities, correct unsuccessful measures and establish a funding request process for new opportunities.

In 2009, the NMDP decided to automate their Balanced Scorecard processes and reporting usingCorVu, a performance management and business intelligence software system.This made the collection of measurement data much easier and more consistent.  It also allowed specific reports to be made available to different audiences, providing a tailored view of the information they needed to make informed decisions.

The Result

The implementation of the Balanced Scorecard approach has given NMDP a clear set of Strategic Objectives in support of the ambitious but critical goal of doubling their capacity by 2015.

All departments enter measurement reports into the software system each quarter, along with comments on performance and predictions for the end of the fiscal year. This information is accessible to senior management, giving them a complete and timely picture of each department’s performance, and allowing them to address issues promptly.

The Strategy Maps providesimple, at-a-glance references that can be used during staff meetings to guide discussions on performance measures and to establish corrective action plans for department measures that are shown to be underperforming based on measurement data.  The data also allows them to celebrate and learn from successful measures.

The Balanced Scorecard has also allowed NMDP to allocate resources more intelligently; all requests for funding must be supported by specific and tangible descriptions of the ways in which they further the ViA Strategic Objectives.

Although currently restricted to management, soon all employees will be able to access the ViA Balanced Scorecard data online using the CorVu application, providing direct access to relevant strategy and supporting data throughout the organization at every level.

Trademarks mentioned in this article belongs to the respective owners.

admin Case Studies Case Studies, health care

BSC Designer helped CAJA RURAL DE SALAMANCA to improve the strategic and control efficiency

It has been a year since CAJA RURAL had started implementation of the Balanced Scorecard system using BSC Designer tool. Easy to understand but powerful software product became a perfect solution to organize the implementation process softly. Let’s check out the experience,  AGUSTIN GARCÍA, the director of planning and control shared with us!

Introduction

CAJA RURAL DE SALAMANCA is a big financial institution located in Spain. It provides a wide range of financial services including loans, credit card operations, savings, checking and many others. The company showed economic growth in the recent years. Dealing with such great number of activities inside the company and increasing number of customers, the top management decided to implement the system of Balanced Scorecard. After research was conducted, BSC was considered a perfect tool that could help not only to create a well organized structure of activities but also to understand the company’s goals and perspectives and to make a realistic expectations and forecasts of the future performance growth.

The Challenge

The process of localizing changes, mangers expected from Balanced Scorecard system to perform, already helped the heads of the company to better understand the entity of their business and its purposes. The four years plan of implementation consisted of lots of goals to be achieved, including:

• Development of the strategic department;
• Building a chart of activities to get the map of company’s perspectives (Strategy map);
• Reviewing the strategic and planning activity, finding leading and lagging indicators;
• Establishment of the linking process between strategic and operational activities;
• Monitoring of the operational activity to be directed on strategic goals;
• Improvement of company’s performance (as the most important one);
• And others.

As a department, responsible for strategy, planning and control department started to provide the implementation of Balanced Scorecard as well as choosing the tool, that could present a useful dashboard, saving time and resources. After viewing several dashboard programs, BSC Designer was chosen as a tool providing every function, was needed. Also BSC Designer appeared to be easy to use (that saved a lot of time of teaching personnel how to use the software).

After the dashboard had been chosen, the department of planning and control started implementation, centralizing the utilization of the program. The evaluated areas were commercial and marketing, Human resources, General Intervention, Investments, Organization and Data processing. The calendar has been adapted to the period of performance of each department’s actions. The time horizon is four years, but the actions of the department are in a year.

BSC Designer solution

The director of planning and control became the one, responsible for providing the information to the program BSC Designer in coordination with a group of work that designs and realizes the follow-up of the Strategic Plan. The output information was used by the Headquarter and departments heads.

The technical support was realized in the department of planning and control: their function was to solve any appeared problem along with email and telephone support service of BSC Designer. For example, one of the problems was the need of reports in Spanish; it was successfully solved in several days.

Year ago, when the implementation process started, it was decided to use BSC Designer offline: the goals were evaluated periodically and revised by the working group. But the management thinks over the possibility to set up online functioning of the program, creating a network of dashboards which could improve cascading model of management and reduce the reduce and time waste on providing up to date information.

As for activities and departments monitoring, the group responsible for BSC, proceeded to an analysis of internal processes in collaboration with department heads, bearing in mind the needs of the client and also had begun to receive, collect and analyze the information for Customer, Innovation and Learning and Financial Perspectives.

CAJA RURAL’s specialists used not only project’s tree model of BSC Designer but also some other functions the tool can provide. The mostly used functions were:

• Imported indicators: the function was used to consolidate information imported from the Entity;
• Strategy Map: company’s specialists carried out a strategic map with causality entering each of the strategic objectives;
• Reports: the team used reports (both HTML and MS Excel based) for monitoring the Strategic Plan and to report the results of their work to the upper hierarchy level (Headquarter). The most commonly used reports are were the HTML Report and the Dashboard Report;
• Custom formulas: specialists use custom formulas occasionally (several indicators needed some special formulas to be calculated).

Result

After a year since the starting date of BSC system’s implementation process, provided by BSC Designer as a dashboard, the company had successfully develop its strategic activity – the important management subsystem, letting the company the direction where to move.

The department of planning and control, the team responsible for system’s implementation had reviewed the strategy, determining the strategic goals and their weights. Inputting this information to BSC Designer’s project step by step, the team had created a clear and exact strategy map. BSC had managed to transfer specific goals agreed with the vision of the Financial Institution. After that, the strategic goals begun to be translated into operational tasks with help of departments heads. The process of this translation is not finished by now but the management has excellent expectations about it.

By now, the level of current implementation is for department of planning and control. All other departments are only starting to work under the system’s coverage. But BSC already gave some benefits to the company. For example, it allowed standardize the Strategic Plan of the Entity for four years. Also, together with the Strategic Plan and BSC, Caja Rural has made a strategic map that supports the actions proposed by each department. This is going to provide and evaluate the objectives of the Plan.

For a big company, it needs time to implement any system or application; even new calculator could be implemented for months. Balanced Scorecard is not something easy to implement, it needs a huge amount of work to link build BSC map and to link it with every subsystem of management. In other words, the entire management system should be overviewed according to the company’s strategy. BSC Designer is aimed to help the brave managers, who decided to implement this system, providing them with useful tools to prevent time and resources waste and make their job easier. After the implementation is over, the program can provide its maintenance, calculating performance values, organizing linking to the parts of database and atomizing the process of BSC functioning in many other ways.

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Balanced Scorecard helps UNUM Insurance to Manage New Operational Complexities and Diverse Stakeholder Groups

Summary

UNUM Insurance was growing exponentially in size and complexity.  They had reached and outgrown their five-year financial goal, and needed to set new goals capable of directing and motivating their organization to engage employees, optimize operations and meet the expectations of a range of stakeholders.  The Balanced Scorecard helped them set appropriate goals that employees could understand and use to increase customer service and company profitability.

Introduction

UNUM is a Fortune 500 company and a market leader in disability, group life, long term care and voluntary benefits.  In 1998, when the company first implemented a Balanced Scorecard approach, it had 7,200 employees; today it has more than 10,000 staffing operations in the US, Canada, the UK, the Pacific Rim, Europe, Bermuda and Latin America.

The Challenge

UNUM was coming out of a period of rapid growth and acquisition that had resulted in a much more complex organization.  Although from 1986 to 1992, the company had achieved its stated five-year goal of earning six dollars a share with a 15 per cent return on equity, it now needed to set its next-phase goals.  For this next five-year period, an exclusive focus on financial results would no longer serve the best interests of the corporation or adequately direct and motivate its employees.

UNUM needed to set new goals that would be relevant to the organization in all its complexity and meaningful to all employees.  After pursuing a narrowly focused and easily measurable goal for five years, the challenge would be to develop new goals appropriate to the business’ growing complexity while ensuring that they were still tangible, measurable and understood by everyone in the company. Most importantly, all goals needed to support excellent shareholder returns and represent the interests of all UNUM’s stakeholder groups: customers, shareholders and employees.

The Solution

UNUM adopted the Balanced Scorecard approach to help them set and balance a number of targets related to financial, customer, employee and productivity goals.

A team of senior managers who represented different areas of the corporation was assigned to develop these targets and the corresponding Scorecard areas.  Subcommittees wee appointed for each focus area, and employees were co-opted to provide input and test the draft goals and measures.  Participants were charged with developing a Scorecard that supported the corporate vision: “We will achieve leadership in our businesses.”  The corporate vision is internally understood to mean a focus on special risk-relieving products that meet customers’ needs and establish and sustain profitability for the company.

The UNUM Balanced Scorecard was developed with four perspectives that covered all stakeholder groups: 1) UNUM people; 2) operating effectiveness; 3) customer satisfaction; and 4) shareholder value.  Next, they identified time-limited and quantifiable achievements in each perspective area.

The UNUM people perspective was intended to instill the “mind of a customer, pride of an owner” into all employees.  A set of employee expectations and aspirations was developed, and a new 360-degree performance review process engaged all employees in thinking strategically about their own performance and that of others organizationally above and below them. A benchmark survey was implemented as a tool for gauging progress. The company also implemented a ‘1998 Goals Stock Option Plan’.Each UNUM employee was provided with a stock option grant to purchase 300 UNUM shares once the grant was vested, a move that fostered a true sense of ownership among employees.

The operating effectiveness perspective was supported by an commitment toincrease customer value by rethinking, improving and streamlining UNUM’sbusiness processes, with a clear goal of keeping operating costs at no more than one-half the rate of the top line.

For the customer satisfaction perspective, each UNUM area with an external customer chain was charged with developing a customer value measurement tool that would help the company determine its customers’ assessment of the overall value of our products and services.

The shareholder value perspective was expressed through “Money Machine,” an easy-to-understand presentation designed for employees.  The presentation walks the audience through the whole organization’s process, from sales to customers to the issuing of shareholder dividends, allowing everyone to clearly see how their individual efforts affect shareholder value.  UNUM also made superior long-term value to shareholders a formal goal, measurable in terms of dividends plus share price appreciation.

The Result

Using the Balanced Scorecard approach to manage new business complexities brought UNUM closer to its ultimate goal of world leadership in disability and special risk insurance.

The company improved its operating cost structure by 22 per cent over a 1992 base year, and was on its way to achieving the 1998 target of 33 per cent.

UNUM exceeded its people-focused goals, and won a raft of top employer awards from Fortune, Working Mother, BusinessWeek and Equal Opportunity magazines. The new sense of “ownership” among employees was also evident in initiatives such as the “trust workshop” developed by employees at UNUM America.  The workshop explored trust barriers between employees and managers, and key findings from the workshop were shared throughout the organization.

By making Shareholder Value a goal, they have given investors, stockbrokers and financial analysts a ‘yardstick’ by which UNUM’s progress toward its other stated goals can be measured. Their attitude is that companies that meet their goals win favour with investors and therefore enjoy a more favourable capital position.

And although UNUM did not reach their aggressive goal of reaching top-quartile performance of the Standard & Poor’s 500 at 1997 year-end, the company did make the second quartile, and delivered annualized returns of 30.2 per cent.  This excellent performance helped rank the company 39^th of the 457 current Standard & Poor 500 companies with 10-year stock histories.

Trademarks mentioned in this article belongs to the respective owners.

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Summary

The Royal Air Force (RAF) relied on granular data from its front-line stations to inform strategic decision-making around the important issue of readiness for war.  However, station commanders and subordinate staff were unable to see how the data requested was related to strategic goals, poorly equipped to collect certain data, and generally unmotivated to provide quality information.  Implementing a Cascading Scorecard approach improved data-collection methods and aligned station goals to organization-wide goals so that data was meaningful all the way up (and down) the chain of command.

Introduction

The RAF, in conjunction with the Defence organizations, is responsible for delivering the UK Defence Vision: defending the UK and its interests; strengthen international peace and stability; and being a force for good in the world.

The RAF has 50,000 Service and civilian personnel and more than 500 aircraft. It supports operations in the Gulf region, Kosovo and Afghanistan and maintains a presence in Cyprus, Gibraltar, Ascension Island, and the Falkland Islands.

Its key peacetime responsibility is to maintain the required readiness levels of its forces in support of the requirement to operate as an expeditionary air force.

The Challenge

Senior commanders in the RAF relied on data supplied by individual air force stations to know the current and forecast readiness of their forces to meet a range of war scenarios.  Approximately 30 stations, made up aircrew and supporting ground staff, are the best source of information on the stations’ readiness for war. Without a deep-level understanding of the current state of operations at each station, senior commanders are unable to deploy resources effectively and provide strategic guidance and direction.

However, senior management found it difficult to motivate station staff to deliver data on performance indicators. Staff reported that the type of information that higher management wanted was at a granular level that staff members themselves found irrelevant to their own, local strategy.  They complained that the current system didn’t capture data that was meaningful to them, which meant that they needed to measure it strictly for the purposes of reporting it, not because of its intrinsic value to their own efforts and goals.

This state of events made it challenging to facilitate the consistent collection and reporting of quality data, and it also suggested that local and organizational goals were out of alignment.  The RAF needed to realign goals at all organizational levels and motivate station staff to contributethe quality, granular data essential to strategic management and review.

The Solution

Working closely with a research and advisory organization, the RAF used a Cascading Scorecard approach to create local performance management systems that would provide the meaningful reports senior commanders needed to make informed decisions. After a series of strategic maps, key performance questions and key performance indicators were developed to set strategic objectives, a supporting data flow that moved from junior staff to senior RAF commanders was implemented.

First, the senior commanders of each local station were engaged in the project through a series of one-on-one interviews to determine their perception of the objectives and needs of the station.  The interviews were supplemented by on-site reviews of each station to determine how they worked.  The resulting information was turned into a value creation map charting the resources required to deliver the station’s overall mission. The consulting organization and the station commanders collaborated to refine these maps, which articulated each station’s core competencies, performance drivers, key resources and objectives.  The resulting strategic map for each station is designed to fit on a single sheet of paper, providing an easy to grasp, at-a-glance overview.

Next, through a series of workshops, station staff articulated the key performance questions that helped them to understand strategic elements and objectives and measure performance. An example might be, “Is the station meeting its pilot training target?”  For each question, approximately two key performance indicators were agreed upon and captured in a spreadsheet that tracked the source, ownership, weight, frequency, and a host of other data attributes.

When the data was cascaded from overarching station mission to key performance indicators, a critical shortcoming in the pre-existing data collection process was uncovered.

Much of the data was being collected by junior staff thatwasill-equipped to provide the information required.  These staff were dispersed across the wide geographic range of the RAF stations, and, sitting behind their desks, were unable to collect all the data needed.  As well, they did not have the analytical skills to populate their spreadsheets with the right data.  This problem was addressed by assigning more senior staff to provide strategic guidance on ways to collect and represent data that would meaningfully answer key performance questions.  It was also discovered that junior staff were reluctant to submit data because they feared that data capture errors, incomplete data and other factors beyond their control could skew or dilute the information submitted and result in poor decisions made at higher levels.  Once they understood that station commanders were able to annotate the raw data with their own judgments and input before sending it on to senior commanders, they felt more confident and motivated to produce data as requested.

The final stage in the process was to ensure that the resulting management information is used to make informed decisions and improve station performance. Regular meetings were set in which station executives review data and discuss performance, and an annual review of the performance management system has been set.

The Result

After implementing the Cascading Scorecard approach, the RAF has moved from a habit of measuring what’s easy to measure to measuring what needs to be measured to support their strategic goals.  They have improved their data collection process, uncovered shortcomings in their pre-existing data collection methods and supported junior staff to collect and deliver strategically meaningful data with confidence.

By creating a simplified one-page strategy map, they achieved buy-in by busy station commanders, and have empowered them to look beyond their immediate priorities to see how station efforts feed into the RAF as a whole.  Clear, concise and easy to grasp, the one-page map has the potential to become the primary strategy communication tool among participating stations.

Most importantly, the onerous task of reporting seemingly meaningless performance information to superiors has become an exercise in performance management.  Instead of being viewed as a necessary evil, station executives can now see how this data relates to their station’s newly articulated strategic goals, and can also envision how station goals relate to RAF’s organization-wide goals.

Trademarks mentioned in this article belongs to the respective owners.

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