Implementation Of The Balanced
Scorecard
Question #1
• What is your experience level with the
Balanced Scorecard in your firm?
– Beginner (We know very little about it)
– Intermediate (We have started but have stalled in
our use of the BSC)
– Advanced (We are using the BSC successfully in
our firm
Today’s Agenda
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•
Historical Perspective
Future Thinking
Implementation
Your Plan
HISTORICAL PERSPECTIVE
Historical Perspective
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•
Partner Compensation drove the plan
Charge Hours
Performance What?
Once a Year… at the most
Why Change?
•
•
•
•
Staff is changing….
You are changing…
Business model is changing….
Process must change….
FUTURE THINKING
Balanced Scorecard
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•
•
•
What is it?
Why are we interested?
How do we use it?
Where do we go from here?
Background
• “Harvard Business Review” 1992
R.S. Kaplan and D.P. Norton
• Organizational Performance Measurement
• Successful Strategy Implementation
• Widespread Acceptance
4 Characteristics
1. Top Dow Reflection of the Firm
2. Forward-Looking
3. External and Internal Measures
4. Helps you stay focused!
Balanced Scorecard for CPA
Firms
Myth
-orPossibility
The Pay for Performance Theory
Mission
What we believe in.
What we do to exist.
Core Values
Vision
What we want to be.
Strategy
Our Game Plan
Pay For Performance
What we need to do.
Behavior Motivation
Strategic Initiatives
Personal Objectives
What I need to do.
Outcomes
Satisfied
Partners
Happy
Clients
Effective
Processes
Motivated
Employees
Facts of Life
• Fact #1:
Most organizations do not successfully
execute their strategy
• Fact #2
To successfully execute your strategy,
YOU MUST HAVE ONE!
Question #2
• Do You Have A Written Strategic Plan That
Everyone In The Firm Knows About?
– Yes
– No
Steps to Success
• Step 1 - Clearly Defined BUSINESS Strategy
– Written
– Communicated
– Supported by IT Plan
Steps to Success
• Step 2 - Find a way to:
– Communicate Strategy
– Measure Success
– Motivate and Reward
So you can successfully execute your
strategy!
Barriers to Success
#1 - The Vision Barrier
• Most employees don’t understand the
business strategy
• Employees represent the key asset in a
knowledge based business
• Communicating and understanding is a key
to success
#2 - The People Barrier
• Is compensation linked to performance?
• Is performance measured in the “right” way?
• Does compensation reinforce achieving
strategic objectives?
#3 - The Resource Barrier
• How are budgets related to strategy?
• Long term vs. Short term
• Measures and evaluation
#4 - The Management
Barrier
• Where is management attention?
• What is being measured?
• Financial results, and BEYOND!
Question #3
• Which Barrier does your firm suffer from?
– Vision Barrier
– People Barrier
– Resource Barrier
– Management Barrier
– All of the Above
– None of the Above
Breaking Down the Barriers
Overcoming the Barriers to Success
• The Vision Barrier
– Translate Strategic Goals into tasks, performance
standards, and desired outcomes.
• The People Barrier
– “Cascade” scoreboard down to individual level.
Reward value creation.
Overcoming the Barriers to Success
• The Resource Barrier
– Budgets keyed to strategic objectives. Priorities
toward long term goals.
• The Management Barrier
– Lead towards the strategy. Check the right things.
Balance among conflicting priorities.
Balanced Scorecard 101
Financial
• Increase firm profits
• Increase client profitability
• Increase leverage
– Personnel
– Technology
– Services
• Increase employee earnings
Client Development
• Define client profiles
– Average revenue
– Cost to obtain
– Cost to retain
– Lifetime value
• Client surveys
• You are responsible for setting
the rules
Internal Operations
•
•
•
•
Revenue per FTE
Days in WIP & AR
Turn around time
Maintain quality
Learning & Growth
•
•
•
•
•
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Define core competencies
Define standards, policies & procedures
Develop a training curriculum
Develop a personal training plan
Mentoring
Cross training
IT Is An Internal Business Process
• Only Part of One Out of Four
Perspectives
• Integrated With All Other
Components
• Driven By Business Objectives
• Success Measured By Business
Results
• Evaluate Your Own Priorities and
Successes!
No more than
FOUR
performance measurements
in each category!
Measure – How?
Objectives and Measures
• Performance Objectives: Establish WHAT to
measure
• Performance Measures:
– Establish HOW to measure
– Leading and Lagging
Objectives and Measures
Objectives
Measurements
Increase Revenue per FTE
Revenue per Staff
Increase client satisfaction and loyalty
Client surveys and visitations
Improve staff training
Individual training plans, tasks
accomplished
Number of processes reviewed and
documented
Streamline internal processes
Cause and Effect
• Effect: Client retention in excess of 95%
• Causes:
– Timeliness
– Customer Service
– Relationship Building
• If . . . . Then . . . (else)
Indicators
Cause
Effect
# of proposals outstanding
Net income
# of sales calls
Reduced WIP/AR
Defined/Improved Processes
Market Share
Absenteeism
Sales
Employee Satisfaction
IMPLEMENTATION
Critical Success Factors/Measurements
Financial
• Revenue per FTE aligned
with industry metrics
• Increase Revenue Per FTE to
$120
• Build New Revenue Source
– External Consulting
• Increase Revenue in
Consulting Division by 25%
• Average rates per hour that
are at market average
• Increase Rates Per Hour to
an average of $80/hour
Critical Success Factors/Measurements
Clients
• Increase the Net Promoter
Client Survey score of 5.8
• Improve Net Promoter
Client Score to 7 in 2010
• Increase time spent with
top 20% of clients
• Complete the DOS
Conversation with top 20%
of clients
• Increase service offerings to
the top 20% of clients
• Cross sell one new service
to 25% of firm's existing
clients
Critical Success Factors/Measurements
Internal Processes
• Consistent paperless
processes implemented
across the firm
• Develop written paperless
process and decrease paper
by 25%
• Owner/Manager
Communication firm wide
strengthened
• Implement a consistent
Owner/Manager monthly
meeting
• Increased ability to segment
client market
• Research and implement a
CRM system for the firm by
6/30/2010
Critical Success Factors/Measurements
Learning/Growth
• Each team member has a
learning plan
• Develop a learning plan for
each team member by
4/30/2010
• Consistent ongoing training
for all staff
• Implement a monthly lunch
and learn book club
• Team members have peer
interaction and coaching
• Assign a peer mentor for
every staff member from a
differing location
Cascading Scorecards
Translate Firm Goals, Objectives, and Measures
to Individual Performance
Sample Firm Balanced Scorecard
Objectives
Increase Revenue Per FTE to $120
Score 1- Value
10
8.33%
-
Increase Revenue in Consulting Division by 25%
8.33%
-
Increase Rates Per Hour to an average of $80/hour
8.33%
-
Perspective
Weight
Financial
Improve Net Promoter Client Score to 7 in 2010
8.33%
-
Complete the DOS Conversation with top 20% of clients
8.33%
-
Cross sell one new service to 25% of firm's existing clients
8.33%
-
Client
Develop written paperless process and decrease paper by 25%
8.33%
-
Implement a consistent Owner/Manager monthly meeting
8.33%
-
Research and implement a CRM system for the firm by 6/30/2010
8.33%
-
Internal Processes
Develop a curriculum for each employee
8.33%
-
Hire a learning coordinator
8.33%
-
Provide a training facility
8.33%
-
Employee
Learning & Growth
Firm Totals
100.00%
-
Sample Partner Balanced Scorecard
Objectives
Weight
Perspective
Financial
Score Value
1-10
Delegate 20% of managed book
8.33%
-
Manage head count to $120k per FTE
8.33%
-
Manage the increase of the consulting division for 25%
growth
8.33%
-
Client
Insure client surveys are completed quarterly
8.33%
-
Complete DOS survey's with 20% of personal clients
8.33%
-
Sell an additional service to 25% of current clients
8.33%
-
Internal Processes
Learn the paperless office and lead by example
8.33%
-
Lead the monthly manager meeting for stronger
communications
Identify reports within the CRM system for firm sales
opportunities
8.33%
-
8.33%
-
Employee
Learning & Growth
Attend 40 hours of internal training
8.33%
-
Lead the initiative of hiring and promoting a learning
professional in the firm
Develop and teach a module for the managers leadership
program
8.33%
-
8.33%
-
Firm Totals
99.96%
-
Sample Staff Balanced Scorecard
Objectives
Weight
Score 1- Value
10
Perspective
Financial
Increase productions to $175,000
8.33%
-
-
Identify cross sales for 25% of current clients
8.33%
-
-
Target 5 new clients of $5,000 or more
8.33%
-
-
Client
Complete satisfaction surveys on 5 clients
8.33%
-
-
Complete DOS Worksheets on top 5 clients
8.33%
-
-
Identify 1 community service to be involved with in a
leadership position
8.33%
-
-
Internal Processes
Serve on paperless committee
8.33%
-
-
Attend the monthly owner/manager meetings
8.33%
-
-
Learn how to use CRM system and use the system as
required
8.33%
-
-
Employee
Attend 40 hours of internal training
8.33%
-
-
Complete Boomer P3 Management Training
8.33%
-
-
Complete individual learning plan
8.33%
-
-
Learning & Growth
Firm Totals
100.00%
-
Firm Name
Administrative Staff
Name_____________________Office_________________Date____________
Total
Score Value
Points
8.33
0.00%
Objectives
Perspective
Produce monthly reports and distribute to partners by 3rd of each month.
Financial
Order office supplies and marketing materials - identifying ways to stay within the
firms budget each month
Send "welcome packets" to new clients within 24 hours of request
SUBTOTAL
8.33
0.00%
8.34
0.00%
25.00
-
0.00%
Answer all phone calls within 2 rings
12.50
0.00%
Complete the DOS worksheet on 5 clients per month
12.50
0.00%
Client Satisfaction
SUBTOTAL
Internal Processes
-
0.00%
Serve on the firms Tax Processing Committee - attending monthly meetings
8.33
0.00%
Complete "back scanning" on clients identified by the partner level.
8.33
0.00%
Insure compliance on firm's policies and procedures
8.34
0.00%
SUBTOTAL
Learning & Training
25.00
25.00
-
0.00%
Attend internatl training on ProFX by 9/1/20XX
8.33
0.00%
Develop and deliver a training course on T&B procedures by 8/15/20XX
8.33
0.00%
Attend a quarterly function at the local Chamber of Commerce
8.34
0.00%
25.00
-
0.00%
TOTAL 100.00
-
0.00%
SUBTOTAL
What’s Next
• Decide whether this approach has value for
your firm
• Additional learning and research
• Decide to implement, and take action
YOUR PLAN
1.
2.
Start with your strategic plan
Don’t start without the total commitment of the MP or
CEO
3. Commitment is different than support
4. Use a facilitator
5. Start with the partner group
6. Use the positive focus and game plans to reduce time
7. Schedule quarterly meetings in advance
8. Insure performance funds
9. Focus on limited objectives
10. Use graphics for positive visuals around the office
Resources
Our repertoire of tools for helping CPAs develop leadership and
management skills and fulfill their potential:
• CPE Webinars – Attend webinars on management and leadership of accounting firms.
• CPA Leadership Report – A comprehensive exploration of new ideas in the accounting world. It is
a monthly review of the best management and leadership articles published in the accounting press.
• Leadership Forum Report – Commentaries from the profession’s thought leaders.
• Best Practices Tips – Best management ideas of the month.
• Directory of Resources for Accounting Firms – Find what you need.
Follow our group on Linkedin and Facebook.
Thank you!
sandra.wiley@boomer.com
www.boomer.com