Best Practice Implementation CSFs Lesson Learned Balanced Scorecard

Best Practice Implementation: CSFs & Lesson Learned Balanced Scorecard Conference Nikko Hotel, Kuala Lumpur 13 -14 July 2004 Presenter: Ungku Harun Al’Rashid Ahmad Vice President, Corporate Services Group and Managing Director, Knowledge Worker Exchange Sdn Bhd MULTIMEDIA DEVELOPMENT CORPORATION SDN 1

WHAT MAKES THE IMPLEMENTATION OF THE BALANCED SCORECARD IN THE ORGANISATION SUCCESSFUL? ? IS IT THE DESIGN & IMPLEMENTATION ? IS IT THE PEOPLE ? Or, IS IT THE NATURE/CULTURE OF THE ORGANISATION 2

AGENDA n Balanced Scorecard (BSC) n BSC Guiding Principles n Critical Success Factors While Implementing Scorecards n MDC BSC Lesson Learned – Phase (I) : Planning & Design n MDC BSC Lesson Learned – Phase (II) : Implementation & Carry Through n Summary 3

Premise Behind Balanced Scorecard The Premise behind the Balanced Scorecard is that measurement motivates behaviour The Premise Measurement Communicates Values, Priorities And Direction The Conclusion Measurement Must Be Linked To Strategy Balanced Scorecard 4

BSC Implementation Barriers The PEOPLE Barrier The VISION Barrier Personal goals, knowledge building, and competencies are not linked to strategy implementation Strategy is not understood by those who must implement it…and not translated into objectives Strategy The OPERATIONAL Barrier The MANAGEMENT Barrier Key processes are not designed to leverage the drivers of business strategy Management systems are designed for operational control and tied to budgets, not strategy 5

Principles of Strategy Focused Organization Components and timeline for making strategy a Continual process Mobilization Phase § Target Setting § Initiative Rationalization Migration Phase § Link Strategy & Budgeting § Strategic Initiative Mgt. § Governance Process Design 3 -4 months 2 -3 years Strategic Management Phase § Strategy update § Scorecard update § Updates to planning and budgeting § Link strategy to goals and Incentives § Link Strategy to Performance reviews Steady State 6

AGENDA n Balanced Scorecard (BSC) n BSC Guiding Principles n Critical Success Factors While Implementing Scorecards n MDC BSC Lesson Learned – Phase (I) : Planning & Design n MDC BSC Lesson Learned – Phase (II) : Implementation & Carry Through n Summary 7

Guiding Principles While Scorecarding • WHAT GETS MEASURED GETS DONE • People will do what they are measured on and rewarded to • People must not be held responsible for what is not measured & reported • KEEP IT SIMPLE • Need to be simple and easy to understand & communicate • Information should be collected honestly • MEASURES MUST BE MEANINGFUL • To the people who use them • Related to business objective & success factors • Objective & quantifiable • People must be able to visualise and act on it • MEASURES MUST BE CONTROLLABLE • People being measured must be able to control their outcome 8

AGENDA n Balanced Scorecard (BSC) n BSC Guiding Principles n Critical Success Factors While Implementing Scorecards n MDC BSC Lesson Learned – Phase (I) : Planning & Design n MDC BSC Lesson Learned – Phase (II) : Implementation & Carry Through n Summary 9

CSF – Implementing Scorecard • Must Be Driven from Top of the Organisation • Effective Communication Throughout the Project • Require Change of Behaviours • Linking Rewards to Performance Measures • Design & Implement Change Management Programmes • Continuously Managing the Change • Empower People to Change 10

AGENDA n Balanced Scorecard (BSC) n BSC Guiding Principles n Critical Success Factors While Implementing Scorecards n MDC BSC Lesson Learned – Phase (I) : Planning & Design n MDC BSC Lesson Learned – Phase (II) : Implementation & Carry Through n Summary 11

BSC Implementation: Lesson Learned (I) (1) Business Planning Process (2) Non Existence of Strategy Paper / Doc. Phase I : (3) People are Scared to Be Measured Major Challenges During Planning & Design (4) Wrong Scorecard Team Or Dept. Champions (5) Too Many Measures Identified 12

BSC Implementation: Lesson Learned (1) Business Planning Process (2) Non Existence of Strategy Paper / Doc. (3) People are Scared to Be Measured (4) Wrong Scorecard Team Or Dept. Champions (5) Too Many Measures Identified • Business planning usually underdeveloped, with no owners and takes a long time • There is no strategic planning unit / person responsible for the strategy development • Too many people involved in developing the strategy thus resulting in too many versions of the strategy documents • Problem with strategy implementation and carry through 13

BSC Implementation: Lesson Learned (1) Business Planning Process (2) Non Existence of Strategy Paper / Doc. (3) People are Scared to Be Measured (4) Wrong Scorecard Team Or Dept. Champions (5) Too Many Measures Identified • Most of the strategy is not stretchable enough – confusion on the terms i. e. programmes, objectives & strategy. • Less focus on customers and financial. • Too many initiatives identified. Objectively should focus on key areas / programmes – about 6 – 8. • Do we have a strategy ? ? • Lack of historical data that can be used as a benchmark 14

BSC Implementation: Lesson Learned (1) Business Planning Process (2) Non Existence of Strategy Paper / Doc. (3) People are Scared to Be Measured (4) Wrong Scorecard Team Or Dept. Champions (5) Too Many Measures Identified • Individual performance review is not linked to the organisation’s performance • Scorecard will clearly define the roles and responsibility for each employee • Measures often scares the employee instead of motivating them to succeed • Why bother ? ? More information = more work – furthermore, it’s not linked to monetary returns 15

BSC Implementation: Lesson Learned (1) Business Planning Process (2) Non Existence of Strategy Paper / Doc. (3) People are Scared to Be Measured (4) Wrong Scorecard Team Or Dept. Champions (5) Too Many Measures Identified • Should have 150% support from CEO and top management before implementing BSC • Champions must be credible, senior and have a good understanding of the organisation / department • Strong analytical and thinking skills • BSC Team should comprise of different level of people from different departments and background 16

BSC Implementation: Lesson Learned (1) Business Planning Process (2) Non Existence of Strategy Paper / Doc. (3) People are Scared to Be Measured (4) Wrong Scorecard Team Or Dept. Champions • Ideally 6 – 8 measures per employee • 20 – 40 are chosen – for them more is better! • Confused with nitty gritty details – i. e. number of meeting attended, hours spent in the meeting • Perfect measures don’t exist! (5) Too Many Measures Identified 17

AGENDA n Balanced Scorecard (BSC) n BSC Guiding Principles n Critical Success Factors While Implementing Scorecards n MDC BSC Lesson Learned – Phase (I) : Planning & Design n MDC BSC Lesson Learned – Phase (II) : Implementation & Carry Through n Summary 18

BSC Implementation: Lesson Learned (II) (1) CEO Commitment on the Project (2) Mismatched Number During Data Collation (3) Problems with Owner and Communication (4) Develop a Structured Education Campaign Phase II : Major Challenges During Implementation & Carry Through (5) Managing the Change Process 19

BSC Implementation: Lesson Learned (1) CEO Commitment on the Project (2) Mismatched Number During Data Collation (3) Problems with Owner and Communication (4) Develop a Structured Education Campaign (5) Managing the Change Process • Need to show more buy-in and appreciation towards this project • Moved to ‘new toys’ • Doesn’t act or address the Performance issues • Take it as flavour of the week project; and separate it from the strategy discussion / performance monitoring 20

BSC Implementation: Lesson Learned (1) CEO Commitment on the Project (2) Mismatched Number during Data Collation (3) Problems with Owner and Communication (4) Develop a Structured Education Campaign (5) Managing the Change Process • Difficulty in aligning scorecard due to different budget cycle / coding • Budget initiatives doesn’t work parallel with scorecard implementation • Standard template required to ensure monthly data / figures are consistent throughout the whole organisation • Data collation / performance tracking is not a practice! 21

BSC Implementation: Lesson Learned (1) CEO Commitment on the Project (2) Mismatched Number During Data Collation (3) Problems with Owner and Communication (4) Develop a Structured Education Campaign (5) Managing the Change Process • Scorecard team / champions are expected to perform the job for the staff • Owners don’t want to take responsibility for KPIs and project • Structured communication plan has to be developed • Continuous communication using different mode of communication need to be undertaken 22

BSC Implementation: Lesson Learned (1) CEO Commitment on the Project (2) Mismatched Number During Data Collation (3) Problems with Owner and Communication (4) Develop a Structured Education Campaign • Clearly explain the terminology and premises behind the Balanced Scorecard • Address employee in a small group to initiate discussion and feedback • Use laymen terms while explaining and provide them with the manual • Education campaign must be continuous (5) Managing the Change Process 23

BSC Implementation: Lesson Learned (1) CEO Commitment on the Project (2) Mismatched Number During Data Collation (3) Problems with Owner and Communication (4) Develop a Structured Education Campaign (5) Managing the Change Process • Address the how-to • Inability of the staff to get out of their norm make it hard for change • Confused because there are too many steps / forms to be filled up • You might need to pamper your staff in order to ensure successful change process – i. e. one-on-one discussion • Stress on Strategy Focused Organisation - the employees role 24

AGENDA n Balanced Scorecard (BSC) n BSC Guiding Principles n Critical Success Factors While Implementing Scorecards n MDC BSC Lesson Learned – Phase (I) : Planning & Design n MDC BSC Lesson Learned – Phase (II) : Implementation & Carry Through n Summary 25

SUMMARY THE SUCCESS OF THE BALANCED SCORECARD IMPLEMENTATION DEPENDS ON: 1. The Strategic Planning Process 2. The Support and Buy-in from the CEO / Senior Management 3. The BSC Project Team / Champions in Managing the Project 4. The People – To Change Their Attitude, Internalise and Deliver the Targets 5. The Communication Plan – Effectiveness & Structure According to Jim Collins in his book “Good to Great” – To make a breakthrough from a flywheel, all that matters is the culture of discipline Disciplined people with disciplined thought executing disciplined action, will turn a company from GOOD to GREAT … 26

Thank You 27