Balanced scorecard in 16 weeks not
16 months – the implementation
lessons
Presented by David Parmenter
waymark solutions limited
May 2008
Website: www.waymark.co.nz
Blog: www.davidparmenter.com
Email: Parmenter@waymark.co.nz
Do you have some form of “balanced”
performance management system? (e.g.
looking at more three or more
perspectives)
 Yes
 No
If you have some form of balanced
scorecard, how quick was the
implementation across most of the
organization?




within 16 weeks
between 16 weeks - 6 months
about a year
well over a year
The KPI book has
reached #1 in
performance
management on
www.amazon.com
www.waymark.co.nz to order, see link to www.amazon.com
This webcast is 5th in a series on
winning KPIs
1. introduction to winning KPIs
2. implementing KPIs - A 12-Step Process
3. implementing KPIs in Smaller
Organizations (<200 Staff)
4. finding your organization’s critical success
factors
5. balanced scorecard in 16 weeks not 16
months – the implementation lessons
History of 16 weeks => 16 months
 lack of commitment
 lack of finishing ability (Sir Edmund)
 lack of understanding of its importance (fitting it in, and
often being put down)
 over cooked BSC (many changes, SMT latest brain
wave)
 once BSC set up it is thrown out when new SMT
members arrive
 scorecard not delivered until very end if at all Vs K&N
60 days target for SMT to start using the BSC
11 implementation lessons #1
1.
2.
3.
4.
5.
6.
Appoint an external facilitator
SMT commitment and education
Start off with a six perspective scorecard
Focus on the critical success factors
Follow the 10/80/20 rule
Select a small team
11 implementation lessons #2
7. “Just do it”
8. Use existing systems for the first 12
months
9. Trap all performance measures in a
database so they are available to all
10. BSC designs are an art form not a science
11. Maybe you need to rename
L1: Select a external facilitator – your role!
 Without this position being filled, dangers lurk
everywhere.
 It is important that the external project
facilitator’s role takes a backseat, as a mentor
would, as soon as possible as the project team
gains confidence
 Catch-up meeting once every two weeks, with
key documentation being reviewed via e-mail in
the intervening period.
Benefit 1: the SMT sold the concept and kept interested
Benefit 2: project team has a mentor
The external project facilitator should be:




free of any proprietary applications
be well versed in performance measures
have well-rounded consultancy skills
have the credentials so that the SMT will
listen and follow advice
 be able to motivate those they come in
contact with
 their role will be full time for the first three
weeks and then part time as the project team
takes over
L2: SMT commitment & education
 SMT has to be totally dedicated to the BSC
both during and after the project
• sell BSC concept through a half day workshop (it is a
daily not monthly involvement!)
• regular feedback loops to ensure SMT involvement in
development
• weekly involvement during 16 weeks
 Many projects fail due to lack of ongoing
monitoring of KPIs by SMT or change of CEO!
Benefit 1: the SMT should get a buzz from being involved in such a
dynamic project
Benefit 2: and the BSC will help the SMT rethink strategies
“I think senior staff can simply view development of a
BSC as an end in itself and do it 'to keep the boss
happy'. They are not strategic in their perspective so
don't see the BSC as a tool to help them better
understand and manage their organization. This can be
reflected in a loss of interest when the process of
development gets tough, such as deciding on KPIs to
use and the trade-offs to be made. While SMT is
important I think the CEO is critical. He/she must be
the central driver and carry around the embryo BSC
with them all the time, talk about it frequently etc.”
A waymark client
“The scorecard development process should not be
delegated to a middle management task force. For the
BSC to be effective, it must reflect the strategic vision
of the SMT. If the SMT are not leading the process
they will continue to conduct operational reviews that
emphasize meeting short term financial targets, thereby
bypassing and undermining the fundamental rationale
for developing a BSC in the first place.”
Kaplan & Norton
L3: Start off with a six perspective
balanced scorecard template
FINANCIAL
Utilisation of assets
Optimisation of
working capital
Focus on top 10% of
Customers, etc
CUSTOMER
Seamless service
Increased customer
satisfaction
etc.
ENVIRONMENT/
COMMUNITY
Supporting local
business
Green globe 21
Community leadership
INTERNAL
PROCESS
Delivery in full on time
Effective relationship
with key stakeholders
Optimising technology
EMPLOYEE
SATISFACTION
Positive company
culture
Retention of key staff
Increased recognition
LEARNING AND
GROWTH
Empowerment
Increasing expertise
Adaptability
etc.
Benefits of a six perspective
balanced scorecard
 Employee satisfaction perspective
emphasizes the importance of
• the amount and regularity of recognition
• regular staff satisfaction surveys - a rolling sample
basis
 The environment/community perspective
will help the organization become an
employer of choice
• CEO of NZ Food manufacturer
• “The hip bone is connected to the thigh bone.”
Benefit: using the suggested six perspective names will be adopting a
better practice and give you more time to focus on finding the CSFs
L4: Focus on the critical success factors
 Debating the "perspectives", their names and the
design of the scorecards – Suggest 6 perspectives
 SMT should focus on providing the project team
with CSFs
 When you have the right CSFs it easier to find the
KRIs, PIs and KPIs)
 Have a moratorium on changing the perspective
names - fine tune 6-12 months later (when more
knowledge and experience gained)
Benefit: The SMT will invest time scoring goals – not own goals
With 40 or so success factors there is
confusion and a lack of focus
 too many measures
 strategic plans with too many diverse and
contradictory initiatives
 lack of communication and direction to
operational and support staff
Most organizations know their success
factors - however few orgs have:
 worded their success factors appropriately
 segregated out success factors from their
strategic objectives
 sifted through them to find their critical ones
– their CSFs
 communicated the CSFs to staff
Finding your critical success factors
(step 6) is a three phase process
1. finding out the SFs that have been mentioned
over the last ten years or so
2. holding a two day workshop
3. presentation to the SMT and Board to obtain
agreement on the CSFs
Short listing the CSFs – by relationship
mapping
Increase repeat
business
Retention
of key staff
Increased
recognition
4 OUT
L5: Follow the 10/80/10 rule
Key result indicators
Performance indicators
Result indicators
Key performance indicators
10
)
) 80
)
10
Tells you how you
have done in a
perspective
Tells you what to do
Tells you what you
have done
Tells you what to do
to increase
performance
dramatically
4 types of performance measures
KRIs
peel the skin to
find the PIs
PIs&RIs
peel to the core
to find the KPIs
KPIs
Reasoning for the 10/80/10 rule
 Kaplan and Norton recommend no more than 20
KPIs. Hope and Fraser suggest less than 10 KPIs
 Often KRIs confused with KPIs e.g. return on
capital employed
 KRIs are more for the Board - management needs
to get into more detail
 Easier to limit measures rather than try and thin
down over 300 measures
Benefit:
The
KPI
will immediately
on SMT
the end
 Do
not
justteam
consolidate
measuresfocus
for the
product ( the 10/80/10), and not trying to identify 80 KPIs in 200
odd performance measures.
L6: Select a small team
 Individuals with an in-depth understanding of
the business
 2 - 4 staff who need to be committed full time
(presentation skills, innovation, completion,
knowledge of org. & sector, ability to bring
others on board etc )
 Combine oracles with young ‘top guns’
 Avoid having any SMT on the team
Benefit: The project will be given a good start and will be
protected against procrastination.
KPI team structure
CEO
SMT
Business unit
coordinators
KPI project team
(up to 4 members)
KPI team
coordinators
External facilitators
teams building their
own performance
measures
Interested
stakeholders
L7: “Just do it”
 The exact structure of result indicators,
performance indicators and KPIs is rarely
“right first time”
 SMT and BSC team need to ensure there is a
“just do it” culture
 project team should not spend too much time
on external research
 get access to a performance measures
database
Benefit: you probably have a better chance of getting a scorecard that
works in 16 weeks than you have in 16 months
Use these books & material on
www.bettermangement.com
www.waymark.co.nz to order, see link to www.amazon.com
L8: Use existing systems for the first
12 months
 Much can be done with standard applications such
as Excel, PowerPoint and Access
 The company’s intranet can hold the 24/7, daily
KPIs
 Share ideas through SharePoint Team Services and
the BSC web page
 purchases can be done more efficiently and
effectively 12 months down the track (forecasting,
reporting and BSCs can be jointly sourced)
Benefit: by focusing on an immediate solution using existing in-house
software the project time-scale of 16 weeks will not be compromised by
delays in system development
L9: Trap all performance measures in
a database so they are available to all
 all performance measures found could be
relevant to other business units and teams.
 use existing database allow access through KPI
intranet home page
 improves consistency and completeness of team
scorecards
 database will need purging on a regular basis to
eliminate duplication
Benefit: creating a comprehensive and user-friendly resource for all.
Performance indicator database
Type of PM ( Person
KRI,PI, RI, KPI) responsible
System where
data is going
to be gathered
Name of Performance measure
Calculation of measure
Number of initiatives implemented from
the quarterly rolling client survey
Number of initiatives implemented out
of total arising from survey
PI
Pat Carruthers IT Team
Number of referrals from key clients
How many clients came from a
referral basis from our key customers
PI
Pat Carruthers Sales Team
Teams interested in using measure
Recommended
display (e.g. type
of graph)
Frequency of
measurement
(24 by 7, daily,
weekly,
monthly)
Customer
Focus
Number
Customer
Focus
BSC
perspective
Linkage to success factors
xx
xx
xx
xx
xx
monthly
Maintain key customer
satisfaction



Line graph over 12
monthly
months for 4 offices
Maintain key customer
satisfaction



xx
L10: KPI reporting formats are an
art form not a science
 select a better practice template quickly
 have a moratorium on format changes - fine
tune 6-12 months later (when more knowledge
and experience gained)
 entrust the BSC team to finalize BSC template
 in the meantime record all SMT suggested
modifications for future evaluation
Benefit: Swift adoption of better practice reporting templates.
L11: Maybe you need to rename
 many failed balanced scorecards due to
"garbage in, garbage out“
 “scorecard” may have negative connotations
 what about "navigator"; "compass"?
 have a naming competition for all staff to enter
 particularly important where SMT have prior
negative experiences with balanced scorecards.
Benefit: A project name that galvanises the organisation
Tourist operation case study





CEO knowledgeable on BSCs
one day one-to-one with the CEO
developed using excel scorecards
project leader was the financial accountant
progress slow due to process inefficiencies
eating up project time
 change of CEO delayed project
implementation
Navy case study




Used the standard 4 perspectives
Controlled project themselves
Involved all the forces
Accepted that they would never get it 100%
right first time
 Accepted that they had too many measures
 Some measures causing problems as they did
not vet enough
Financial sector organization case study
 CFO attended winning KPIs course
 Commenced project using a project manager
from outside who did not attend the course
 Team involvement is high
 Confusion over measures as the 10/80/10 not
sold hard enough
 Senior management commitment not evident
Suggested next steps
 read my paper on www.bettermanagement.com – it is
free to access
 acquire the book “Key Performance Indicators –
developing, implementing and using winning KPIs”
 ban further development of measures until the CSFs
have been agreed
 hold the two day CSFs workshop (may need a
facilitator)
 listen to my other web casts
 attend my KPI master class if you are to be in the
KPI project team (see www.davidparmenter.com)
These books came out in 07
www.waymark.co.nz to order, see link to www.amazon.com
Thank you for participating
in this web seminar
Hope to see you at a workshop
see www.davidparmenter.com
for venues
John Wiley & Sons have published
Amazon link on www.davidparmenter.com