Speaker: Ravi Parthasarthy

1. An Introduction to the
BALANCED
SCORECARD
Ravi Parthasarathy
BSc., MHR., MBA (USA)
BSC & OD Expert
©Peopleplus 2010

2. Profile of Mr. Ravi Parthasarthy
• Current: Sr. Vice President & Head Group HR,
Karle Group
• Previous: CEO/Director – People Plus
Consultants, Director on Board – Anu Labs
• Mr. Ravi Parthasarathy has graduated in Science
and holds a Post graduate degree in Masters in
Human Resources & MBA in International
Management & Finance, Marketing from
Buffalo University, State University of New
York, USA.
©Peopleplus 2010

3. Profile of Mr. Ravi Parthasarthy
• Mr. Ravi Parthasarathy is a highly accomplished
Management professional with 30 years of extensive
experience in blue-chip companies in India and
Singapore having worked in Singapore for over 12 years,
with specialization in Process Improvements, Re-
Engineering, Productivity and Quality Systems, HR &
OD and in Executive Development. He was trained as
Trainer in Blue Star and Unilever and has trained over
4000 professionals personally. He is also involved in
NGOs and Social welfare organizations. He was active in
Singapore Institute of Management for over 10 years and
was trained by Dr. Kaplan and Dr. Norton in Balanced
Scorecard. ©Peopleplus 2010

4. Profile of Mr. Ravi Parthasarthy
• He brings with him rich experience for having
worked in various Indian Companies such as :
• Kothari Group of Companies
• Taj Group Hotels, Blue Star Ltd., Mumbai
• Hindustan UniLever, Mumbai,
• Dr. Reddy’s Laboratories Ltd., Hyderabad,
• Technip India Ltd, Chennai, etc.
• People Plus Consultants, Singapore, USA
©Peopleplus 2010

5. Objectives of this Session
• Recap of Strategic Planning Process
• Birth of BSC and what is BSC
• Barriers to Strategy Execution
• Cause and Effect Relationship Model
• Balance in the Balanced Scorecard
• Balance Scorecard and the HR Scorecard
©Peopleplus 2010

6. Strategic Planning Process
FUTURE Vision
Mission
Objectives
Key Result Areas
Performance Indicators
PRESENT Strategies Action Program Activities Tasks Resources
S W
O
SWOT Analysis
T
PAST ©Peopleplus 2010

7. Problems of Strategy The Balanced
Implementation Scorecard is:
You can’t measure A
MEASUREMENT what you cannot Measurement
describe System
+
Alignment
You can’t manage A Strategic
MANAGEMENT what you cannot Management
measure System
Focus
+
You can’t A
COMMUNICATION communicate what Communication
you cannot describe Tool
“Measurement is the foundation of management.”
©Peopleplus 2010

8. Who are the different STAKEHOLDERS of
an Organization and What are they
Interested in?
©Peopleplus 2010

9. What is the Balanced Scorecard?
PROFITABLE The BSC
GROWTH Retains the
Financial traditional
Perspective financial
New Revenue Current Business Productivity Use of Assets measures
Customer Value Proposition
Customer Best in Best Total Best Total Cost
Perspective Product/Service Solution
The BSC links
the financial
Internal Product Customer Operational measures with
Perspective Innovation Intimacy Excellence the drivers of
future
performance
Learning Skills Technology Environment
and Growth
©Peopleplus 2010

10. Vision-Mission Barrier
Only 5% of the work force
understands the strategy
People Barrier
One of 4 managers have
BARRIERS incentives linked to strategy
STRATEGY TO
EXECUTION
Management Barrier
Strategy is not regularly
discussed and prioritized
Resource Barrier
Budgets not linked to strategy
Source: Kaplan & Norton ©Peopleplus 2010

11. Vision-Mission Barrier
Only 5% of the work force
understands the strategy
People Barrier
One of 4 managers have
BARRIERS incentives linked to strategy
STRATEGY TO
EXECUTION
Management Barrier
Strategy is not regularly
discussed and prioritized
Resource Barrier
Budgets not linked to strategy
Source: Kaplan & Norton ©Peopleplus 2010

12. Vision-Mission Barrier
Only 5% of the work force
understands the strategy
People Barrier
One of 4 managers have
BARRIERS incentives linked to strategy
STRATEGY TO
EXECUTION
Management Barrier
Strategy is not regularly
discussed and prioritized
Resource Barrier
Budgets not linked to strategy
Source: Kaplan & Norton ©Peopleplus 2010

13. Vision-Mission Barrier
The BSC overcomes Vision-
Only 5% of the work force Mission Barrier through the
understands the strategy translation of strategy
The BSC is a shared understanding of the Vision-Mission strategy
translated into:
Financial
Customer
Internal
Learning&Growth
©Peopleplus 2010

14. Vision-Mission Barrier
Only 5% of the work force
understands the strategy
People Barrier
One of 4 managers have
BARRIERS incentives linked to strategy
STRATEGY TO
EXECUTION
Management Barrier
Strategy is not regularly
discussed and prioritized
Resource Barrier
Budgets not linked to strategy
Source: Kaplan & Norton ©Peopleplus 2010

15. People Barrier
„cascading‟ the scorecard
One of 4 managers have overcomes the People Barrier
incentives linked to strategy
STRATEGY TOP-DOWN BOTTOM-UP
Profitable
Growth
employee
Financial
New Increase Efficie
Expand
Sources in nt Use
of
Revenue
Current
Business
Productivi
ty
of
Assets driving the sees his/her
strategy to contribution to
Customer Value
Proposition customer all the strategy
Product Service Image
Customer scorecard employees
at all levels “line of sight”
Understand Total
Efficient Use
New
Products
the
Customers
Solutions
Homebuilder
CRM. Productivity .
of Assets process
Internal scorecard
Increase Employee
Competence
• Employee • Revenue per
Satisfaction Employee personal
Learning& scorecard
Skills Systems Align Personal Goals
Growth alignment and focus
©Peopleplus 2010

16. Vision-Mission Barrier
Only 5% of the work force
understands the strategy
People Barrier
One of 4 managers have
BARRIERS incentives linked to strategy
STRATEGY TO
EXECUTION
Management Barrier
Strategy is not regularly
discussed and prioritized
Resource Barrier
Budgets not linked to strategy
Source: Kaplan & Norton ©Peopleplus 2010

17. Management Barrier
strategic learning overcomes the
Strategy is not regularly Management Barrier
discussed and prioritized
The Balanced Scorecard translates the vision and strategy into a
coherent set of measures in four balanced perspectives
Strategy Map Objective Measure Target Initiative
• Grow • Annual • Marketing
Financial Revenue Revenue Gross +30% program
Growth from new Sales
products The Balanced
Customer New Products
• Satisfy • Customer • CRM Scorecard
Customer Profitability +20% Program
Needs describes how
Internal World-Class • Fast Time to • Time to from 9 • Cycle Time the strategy will
Product Market Market down to Reengineering
Development 6 months be executed
Learning &
• Acquire, • Staff • Skills
Growth Highly Skilled
Develop Competence 90% Development
Workforce
Skills Program
©Peopleplus 2010

18. Vision-Mission Barrier
Only 5% of the work force
understands the strategy
People Barrier
One of 4 managers have
BARRIERS incentives linked to strategy
STRATEGY TO
EXECUTION
Management Barrier
Strategy is not regularly
discussed and prioritized
Resource Barrier
Budgets not linked to strategy
Source: Kaplan & Norton ©Peopleplus 2010

19. Resource Barrier
Strategic Resource Allocation
Budgets not linked to strategy overcomes the Resource Barrier
Financial
Customer
Internal
Learning&Growth
Budget
linked to the
strategy
©Peopleplus 2010

20. Resource Barrier
Strategic Resource Allocation
Budgets not linked to strategy overcomes the Resource Barrier
Selecting and Managing Initiatives
1 Other CRM SCM
projects
On-going & proposed SRM
CSR
strategic initiatives re- TQM
examined JIT,QDP
Marketing
Projects
2
Screen, assess, and identify
“Linked and Strategic”
CRITERIA:
initiatives
Balanced Scorecard strategies should
be linked to the
3 overall strategic
Select strategic initiative that goals
will grow the enterprise List of Priorities
©Peopleplus 2010

21. Cause and Effect Relationships and the Balanced Scorecard
STRATEGY MAPS – a chain of cause-and-effect logic that connects
the desired outcomes with the drivers
Revenue
WHAT?
Financial Growth
Loyal Customers WHAT?
HOW?
Customer
Quality Product WHAT?
HOW?
Quality Quality HOW?
WHAT?
Internal Production Materials
Learning Skilled Workforce +
HOW?
& Growth Technology
©Peopleplus 2010

22. Cause and Effect Relationships and the Balanced Scorecard
A strategy is a set of hypothesis about CAUSE and EFFECT.
Revenue
EFFECT
Financial Growth
• A chain of cause and effect
Loyal Customers CAUSE
EFFECT relationships can be established
Customer as a vertical dimension through
Quality Product CAUSE
EFFECT
the four BSC perspectives.
Quality Quality • The BSC tells the story of the
Internal CAUSE
EFFECT
Production Materials strategy
Learning Skilled Workforce + CAUSE
& Growth Technology
©Peopleplus 2010

23. The ‘Balance’ in the Balanced Scorecard
1 – Balance between the tangible assets and intangible assets
Revenue
Financial Growth
Loyal Customers
Customer
Quality Product
Internal
Quality
Production
Quality
Materials
tangible assets
Learning Skilled Workforce +
Technology
intangible assets
& Growth
In order to extract value from the intangible
assets, these must be transformed.
©Peopleplus 2010

24. The ‘Balance’ in the Balanced Scorecard
2 – Balance between the financial measures and non-
financial measures
Objectives Measures Targets Initiatives
Revenue
Financial Growth
Financial
Loyal Customers
Customer
Quality Product
Quality Quality Non-Financial
Internal Production Materials
Learning Skilled Workforce +
& Growth Technology
©Peopleplus 2010

25. The ‘Balance’ in the Balanced Scorecard
3 – Balance between the internal and external constituents
Revenue
Financial Growth
Loyal Customers External – where we (effect)
Customer want to go
Quality Product
Quality Quality
Internal Production Materials
Internal – what we (cause)
Learning Skilled Workforce + have to do
& Growth Technology
©Peopleplus 2010

26. The ‘Balance’ in the Balanced Scorecard
4 – Balance between lag and lead indicators of performance
Objectives Measures Targets Initiatives
Revenue
Financial Growth
lag lead
horizontal
Loyal Customers dimension of the
Customer BSC
Quality Product
Quality Quality
Internal Production Materials
Learning Skilled Workforce +
& Growth Technology
vertical dimension
of the BSC
©Peopleplus 2010

27. The VMO KRA PI SPAT RES Model
FUTURE Vision
The Balanced Scorecard translates the
Mission strategy into the four perspectives
Strategy
Objectives Financial
Customer The „VERTICAL‟
Key Result Areas cause and effect
Internal
dimension of the
Learning strategy
Performance Indicators & Growth
PRESENT Strategies Action Program Activities Tasks Resources
S W
O
SWOT Analysis
T
PAST ©Peopleplus 2010

28. The Balanced Scorecard Model and the
VMO KRA PI SPAT RES Model
Vision – Mission – O KRA PI SPATRES
horizontal
CAUSE AND
EFFECT
dimension
Revenue Growth Financial Finance
Vision - Innovative Products
Customer Marketing
Mission World-Class Internal
Product Dev‟t Internal Operations
Stable High-Talent Learning
Workforce HR
&Growth
vertical
vertical CAUSE ALIGNMENT
AND EFFECT
dimension

29. Measures
©Peopleplus 2010

30. Thank You !!!
Email: pravi202@gmail.com
Mobile: +91 9705124824