Transcript balanced scorecard - Prof. Ranjan Kumar Bal
WELCOME
BALANCED SCORECARD
A NEW MEASURE OF ENHANCING ENTERPRISE EFFECTIVENESS Prof. Ranjan K. Bal Former President, Indian Accounting Association
INTRODUCTION
HBR: One of the most influential management ideas of the past 75 years.
New tool for measurement of overall / holistic corporate performance.
Shift
from
lopsided approach
to a
one balanced
Translate companies vision and strategy into tangible objectives and measures.
Enhances Enterprise Effectiveness
KPMG study
On “Measuring Performance of the
Organizations of the Future
” FINDING: “Over-reliance on summary
financial performance measures (Viz. ROI) was hindering an organization’s abilities to create future economic value
.”
BSC
Robert Kaplan & David Norton
1992 HBR : “The Balanced Scorecard : Measures that Drive Performance” 1996 – BOOK : “ The Balanced Scorecard :Translating Strategy into Action”
BSC
Balances:
Financial and Non-financial performance measures
Evaluates
:
Short-run and long-run performance in a single report.
APPLICATION OF BSC
Many Fortune 500 Companies More than 50 Indian Companies
Tata Group Companies Dr. Reddy’s Lab Bharati Tele RPG Godrej
PERSPECTIVE OF BSC
FINANCIAL CUSTOMER VISION & STRATEGY INTERNAL BUSINESS PROCESS LEARNING & GROWTH
BSC
Enables an Organization to answer the following questions:
How should it appear to its
shareholders
?
How should it appear to its
customers
?
What business
processes
must it excel at ?
How will it sustain its ability to
change
& improve ?
FINANCIAL PERSPECTIVE
REVENUE / INCOME GROWTH COST MANAGEMENT ASSET UTILISATION ROI
CUSTOMER PERSPECTIVE
CUSTOMER RETENTION CUSTOMER ACQUISITION CUSTOMER SATISFACTION MARKET SHARE
Customer is the only valid reason for the existence of a business.
Peter F. Drucker
INTERNAL BUSINESS PROCESS PERSPECTIVES VALUE CHAIN
: R & D DESIGN PROD. MARKETING DISTRIBUTION CUSTOMER SERVICE
Process Innovation Product Reengineering: Quality Operational Efficiency - IT
HUL & INFOSYS “Reengineering is the fundamental rethinking and redesign of business processes & products.”
Marketing and innovation should come before worries about finances.
Peter F. Drucker
LEARNING & GROWTH PERSPECTIVE
EMPLOYEE CAPABILITIES INFORMATION SYSTEM CAPABILITIES MOTIVATION , EMPOWERMENT
LEARNING & GROWTH Arun Moira
:
Member, Planning Commission, GOI
To be a leader: - Continuous Learning - Bigger Dream
Stephen Covey
: Sharpening the Saw
Ajim Premji
on JRD:
JRD
was a life-long learner.
“ Knowledge is being doubled in every 18 months.”
Dedicated employees are key to the success of any corporation.
Peter F. Drucker
IMPLEMENTING A BSC
PROCESS Identify Vision Identify Strategies Identify Perspectives Identify Measures Create Action Plan Evaluate Follow Up
ENVIRONMENT OF SAIL
Steel industry witnessing a
boom
Increased steel
consumption
: 30 Kg Vs. 144 Kg High bargaining power of
buyers
Bargaining power of
suppliers
Threat of
new entrants
& competition Threat of
substitutes
SAIL’s CORPORATE PLAN 2012 To continue in the business of steel & steel related activities To enhance market share in growth segments To improve profits by cost reduction & high value added products To achieve excellence in quality To secure availability of key raw materials To build customer centric processes,systems & procedures
SAIL’s CORPORATE PLAN: Comments
Shows strategic goals, but inter-relationship is absent Comprehensive, but lacks focus Lacks focus on Product Profitability No focus on Operational Excellence
No focus on Attracting & Retaining HR To develop a Culture of Accountability & Appreciation
“A manager’s job is to pursue the interests of the society.”
Peter F. Drucker
The Father of Modern Management