MESYUARAT PENGURUS NEGERI 12006 BSCKPI NEGERI DISEDIAKAN OLEH

MESYUARAT PENGURUS NEGERI 1/2006 BSC/KPI NEGERI DISEDIAKAN OLEH: ABD RAHAMAN RASID PENGURUS KANAN JABATAN PERANCANGAN KORPORAT/PENGURUS PROJEK EIS 1 B FEBRUARI 2006

SCOPE & OBJECTIVE OF PRESENTATION § Introduction and Background § To explain basic concept on Balanced Scored Card (BSC) § To highlight BPM Destination Statement § To elaborate on BPM Corporate Scorecard § To propose State Scorecard, Branch and Hub § To get feedback from State Manager

BALANCED SCORE CARD (BSC)

CONCEPT BSC Formal Definition: A tool that translates an organization’s mission and strategy into a comprehensive set of a performance measures that provides the framework for a strategic measurement and management system MY DEFINITION: A SYSTEMATIC WAY FOR MANAGEMENT TO PLAN AND EXCUTE STRATEGY FOR THE WHOLE ORGANIZATION

WHY BSC? § Traditional reliance on financial measures (e. g: ROA) § The rise of intangible assets § The importance of reputation ( part of intangible asses) § Organizations face difficulty in executing strategy

Barriers to Strategy Execution Only 10% organizations execute strategy Barriers to Strategy Execution Vision Barrier People Barrier Management Barrier Resource Barrier Only 5% workforce understands the strategy Only 25% managers have incentives linked to strategy 85% executive teams spend less than 1 hour/month discussing strategy 60% of organizations don’t link budgets to strategy Source: Robert S. Kaplan & David P. Norton

BSC: HAS FOUR PERSPECTIVES q FINANCIAL q CUSTOMER q INTERNAL BUSINESS PROCESS q LEARNING & GROWTH

BSC: FOUR PERSPECTIVES FINANCIAL PERSPECTIVE To succeed financially, how should we appear to our shareholders? CUSTOMER PERSPECTIVE To achieve our vision, how should we appear to our customers? INTERNAL PERSPECTIVE To satisfy our shareholders & customers, what business processes must we excel at? LEARNING & GROWTH PERSPECTIVE To achieve our vision, how will we sustain our ability to change and improve?

BALANCED SCORECARD: AN OVERVIEW Financial Perspective Shareholder Productivity Strategy Value Product/Service Attributes Customer Perspective Internal Perspective Learning & Growth Perspective Price Quality Manage Operations Human Capital Time Function Growth Strategy Relationship Image Partnership Brand Manage Customers Manage Innovation Information Capital Organisation Capital

FINANCIAL PERSPECTIVE

FINANCIAL PERSPECTIVE Shareholder Value Productivity Strategy Improve Cost Structure § Reduce expenses § Improve yields Increase Asset Utilization § Manage capacity from existing assets Growth Strategy Expand Revenue Opportunities § New products § New markets § New partners Enhance Customer Value § Improve profitability from existing customers

CUSTOMER PERSPECTIVE

CUSTOMER PERSPECTIVE Customer Perspective FINANCIAL PERSPECTIVE § Customer Profitability § Market Share § Account Share § Customer Acquisition Product/Service Attributes Price Quality Selection Availability Functionality § Customer Retention Relationship § Customer Satisfaction Image Service Brand Partnership Customer Value Proposition

INTERNAL PERSPECTIVE

INTERNAL BUSINESS PROCESS FINANCIAL PERPECTIVE INTENAL PERSPECTIVE CUSTOMER PERPECTIVE § Acquire raw materials § Convert raw materials to finished products § Distribution Operation Management Processes that produce & deliver products & services Customer Management Processes that enhance customer value § Select targeted customers § Acquire targeted customers § Retain customers § Grow business with customers Processes that create new products & services § Identify new products & services § Manage research & development § Develop new products Innovation Management Process

LEARNING AND GROWTH

LEARNING AND GROWTH FINANCIAL PERPECTIVE CUSTOMER PERPECTIVE LEARNING & GROWTH INTERNAL PERPECTIVE Human Capital Information Capital Organization Capital § Attitude § Skill § Knowledge § System § Database § Network § Leadership § Culture § Teamwork

BALANCED SCORECARD: OBJECTIVES, MEASURES, TARGETS & INITIATIVES FINANCIAL “To succeed financially, how should we appear to our shareholders? ” CUSTOMER Objectives “To achieve our vision, how should we appear to our customers? ” Objectives Measures Targets LEARNING & GROWTH “To achieve our vision, how will we sustain our ability to change & improve? ” Initiatives Objectives Measures Targets “To satisfy our shareholders & customers, what business processes must we excel at? ” Initiatives Objectives Vision & Strategy Measures INTERNAL BUSINESS PROCESS Initiatives Measures Targets Initiatives

MEASUREMENT

MEASURING BUSINESS STRATEGY PERSPECTIVES Financial GENERIC MEASURES ROI, ROA, ROE Customer Satisfaction, retention, acquisition, market share Process Response time, new products, cost, product & service quality Learning & Growth Employee satisfaction, information system, competency, value system

MEASURES Two Types of Strategic Objectives Outcome (Lag) Measures Purpose • Focus on the performance results at the end of a time period or activity Examples • “year-end-budget expense” • “client satisfaction” • “cases per caseworker” Strengths • Usually objective and easily captured Issues • Outcome measures reflect success of past, not current, activities and decisions Driver (Lead) Measures Purpose • Measure intermediate processes and activities Examples • “hours spent with clients” • “$ spent on automation”. Strengths • More predictive in nature • Allows organisations to adjust behaviors for performance Issues • Based on hypotheses of strategic “cause and effect” • Often difficult to collect supporting data

STRATEGY MAP

BSC TERMINOLOGY Strategy Map: Diagram of the cause-and-effect relationships between strategic objectives Strategic Theme: Operating Efficiency Financial Increase Shareholder Value Defend Current Business More customer KEY PERFORMANCE INDICATOR (KPI) Statement of what strategy must achieve and what’s critical to its success How success The level of Key action in achieving the strategy performance or programmes rate of required to will be achieve measured and improvement needed objectives tracked Customer Exceptional Value Services Internal One Stop Solution Strategic Objectives Measurement Create Product & Services Offerings / Bundles Learning Improve Strategic Skills & Competencies Create Product & Services Offerings / Bundles • # of cross sell business bundles Target • 8 new business bundle Initiative • Develop cross-sell business bundles

FROM STRATEGY TO ACTION PLAN: LOAN BUSINESS STRATEGY MAP Strategy ROA Objective BALANCED SCORECARD Measurement § Profitability Target ACTION PLAN Initiative § Identify new customers § Offer new limit § RM 2 million to existing customers § Increase loan § Loan approval Customers § Attract new customer § No. customer § 700 Fast Service § Fast loan approval § Days taken to approve loan § One week Decision making § Review New authority limit § Day taken to approve loan § One week § Proposal to Management Knowledge § Enhance Knowledge on corporate loan Number of training/year 2 times § Find suitable courses Grow Revenue Budget § Corporate advertisement RM 10, 000 RM 4, 000

INITIATIVE

INITIATIVES Initiatives Are Defined to Help Close the Performance Gap OBJECTIVE Increase Customer Satisfaction Objectives articulate the components of our strategy MEASURE / TARGET 90% Measure Customer Satisfaction Survey Rating gap $M 45% Target 90% favorable overall Target Actual Measures track our progress toward achieving and communicating the intent of the objective INITIATIVE Implement automated case management system and train Every Rep in 99 Initiatives help close the gap between our current and desired performance

CASCADING

CASCADING What does cascading the BSC means? • The process of developing BSC at each division and business unit levels • The scorecards must align with organization highest level scorecard by identifying the strategic objectives and measures • Lower level scorecard will also include additional measures and initiatives that reflecting the specific opportunities and challenges faced at that level

BALANCED SCORECARD: THE CASCADING PROCESS Mission, Vision & Value BRANCH STATE DEPARTMENT CORPORATE Strategy Financial O M T Customer I O Financial O M T I O M T I O O M T T I O M T I O: Objectives I T M T I O M T I L&G I Team & Personal BSC Note: T L&G Internal I M L&G Internal Customer Financial O T Customer Financial O M Internal M: Measures T: Targets I: Initiatives O M

Three Ways to Cascade Cascading is accomplished using one of three approaches Corporate Shared Identical Objectives Contributory Translated Objectives Hybrid Identical, Translated and Unit Specific Objectives Business Unit

GLOSSARY Balanced Scorecard: A tool that translates an organization’s mission and strategy into a comprehensive set of a performance measures that provides the framework for a strategic measurement and management system Cause and Effect Relationship: A cause and effect relationship identifies the initiatives, responsibilities or activities (causes) necessary to achieve an objective or target (effect) Customer Value Proposition: Defines who the customer is and what they want Initiative: Key action programs to achieve objectives or close gap between measures performance and targets. Initiatives are often known as projects, actions or activities. Lag Indicator: Measures to determine the outcome of an objective that indicate company performance at the end of a period. These are results-oriented and do not reflect a process. Lag indicators often appear in BSC’s outcome-oriented Financial and Customer perspectives.

GLOSSARY Lead Indicator: Measures that indicate progress againts a process or behavior. These measures are helpful in predicting the future outcome of an objective. Lead indicators tend often appear in the Internal and Learning & Growth perspectives. Measures: Statement of how success in achieving an objective will be measured and tracked. Measures are written statements of WHAT we will track and trend over time, NOT the actual targets such as direction and speed. A measure should include a statement of the unit to be measured (RM, %, rating). Objective: Concise statement articulating a specific component of what the strategy must achieve/what is critical to its success. Each perspective usually contains 3 -6 primary objectives that state a key aspect of the strategy to be achieved over the next 3 -5 years. Objectives are best stated as action phrases and may include the means and/or desired results as well as the action. E. g: “ Increase market share through current customers” Strategy Map: A visual representation of an organization’s strategy and the processes and systems necessary to implement that strategy. A strategy map will show employees how their jobs are linked to the organization’s overall objectives