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Balanced Scorecard

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N H-Rees

on 9 March 2013

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Transcript of Balanced Scorecard

Robert S. Kaplan David P. Norton Business In Context Group Seminar Presentation Tesco's 'steering wheel'
Navigate employees into the future
Helped Tesco stay focused
Monitors progress and measures success
Kept out of sight of customers
Visible to all staff members in store
Updated weekly with traffic light system References

R.Kaplan and D.Norton, (2001) 'The Strategy-focused Organization' Harvard Business School Publishing

MBA Knowledge Base (2010) Tesco’s ‘Steering Wheel’: A tool for strategic Value Creation and Business Transformation. Available at www.mbaknol.com (Accessed: 19 Feb 2013) Thank you for listening
Any questions? Better Strategic planning Our presentation topic is: Case Example - Tesco PLC Balanced
Scorecard "How implementing 'Balanced Scorecard' clarifies strategies for improvements in order to measure performance" What is a balanced scorecard? The balanced scorecard was created by two Harvard graduates called Robert Kaplan and David Norton The Balanced Scorecard is a strategic planning and management system used to align business activities to the vision and strategy of the organization by monitoring performance against strategic goals The creation of a Strategy Map using the Balanced Scorecard
methodology forces an executive team to think hard about the relationship between a strategic objective and the initiatives to fulfill the objective

The strategy map therefore becomes the corner stone in strategic planning and has the added benefit of being the communication medium of the strategy (and the way it will
be measured) to the rest of the organization. Improved organizational alignment and communication The Balanced Scorecard approach necessitates that the method is adopted by the whole organization from departments to directors to enterprise.

The immediate benefit is a common language, common set of strategic objectives and common metric structure.

The best approach is to start small, get the executives and directors on board first and then roll it out over a defined period of time. Quantitative Data

Based on KPI's

Four inter-related areas financial, customer, learning and growth, and the internal process

'Forward looking' how can we improve not what have we done wrong? Operations

Target - We try to get it right the first time-

How it's measured -

• The difference between
Predicted inventory and
actual inventory.

• No excess stocks. People
An interesting job-
• Retention ( lowering of attrition)
• Absenteeism Good Progress Average Progress Room for Improvement Quantitative Data Coloured Indicators (Kaplan.R, Norton D 'The Strategy-Focused Organisation') (MBA Knowlage Base - 'Tesco’s ‘Steering Wheel’: A tool for strategic Value Creation and Business Transformation) Where does the Balanced Scorecard fit in? The balanced scorecard links together the mission and the vision of the directors into tangible plans for the staff.

It allows the staff to be able to see how their targets or goals directly link to the mission of the organization.

It ensures that the values and the overall mission aren't being lost from the top down. Basically, A Balanced Scorecard is a mechanism used to implement a business strategy. Give me an example! Benefits Improved performance Reporting
The Balanced Scorecard focuses on the things that NEED to be reported to management

Management will be clear on what areas need the most attention

Unnecessary reporting will be eliminated The possible difficulties
when implementing
Balanced Scorecard Upkeep - There are different elements that go into making a balanced scorecard for a business, the nature of a business can change over time, requiring the business to change the scorecard in line with these changes. Initial Costs - for a business to be able to attain a scorecard there are large initial costs for things such as training schemes, and there may be a need to hire consultants to aid implementing the scorecard to suit the business. Company development - while the employees are being trained whilst being paid their hourly wage as well as the cost for the program will be high. GIGO - if the initial information
that is put into the scorecard
is garbage then the output from the scorecard will also be garbage,
making it a complete waste of time and money. The scorecard identifies 4 areas, customer, financial, internal business processes and growth. These 4 different sections along with how they are measured, give the user a detailed outline of the improvements required in each section. By first, identifying a need or aim for the section, then identifying a target which if met would achieve the aim along with how the performance will be measured, this in turn will help the user clarify the strategy of the organisation If the goal is not met then the accuracy of information that had been input could have been inaccurate making it a useless measurement of performance. It is good practice to ensure the targets set are SMART targets. A balanced scorecard helps each level of a business understand their role fully therefore increasing commitment and output. To summarize, when each
section of the scorecard
has been met, the strategy
set out by the business
will be achieved, making
performance when measured
at its highest. So how can implementing a
'balanced scorecard'
clarify organisational strategies
for improvement in order
to measure performance?
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