How to most effectively use the balanced scorecard approach (BSC) in a company for strategic planning, business planning and reporting
The seminar involves working through the BSC /BSC methodology and KPI management, mastering the BSC/KPI as a management technology for goal-setting and visualizing strategic goals, monitoring the implementation of strategy and reporting, and the basis for creating motivational maps for employees responsible for achieving strategic goals.
The seminar is based on the systematization of practical long-term experience of using the BSC in various holdings and companies, includes examples of real problems from practice, possible solutions, and examples of situations. The 1-day seminar includes 2 practical classes (formation of a strategic map, decomposition of top-level goals/indicators down to divisions).
The seminar is aimed at department heads interested in acquiring systemic knowledge and practical skills in working with a balanced scorecard ( BSC ), a KPI management system. The seminar will also be useful for employees directly responsible for forming the KPI system in the company.
The seminar is held both in a corporate format, for a specific company order, and in an open format. The seminar program includes balanced theoretical, methodological and practical blocks:
- A typical problem is the gap between a company’s strategy and operations
- What is a balanced scorecard (BSC ) ? History of the emergence and development of the BSC methodology . Definition of the main concepts of BSC . BSC as a management technology. Explanation using examples of the BSC methodology: examples of correct and incorrect strategic maps, analysis of the reasons that determine the incorrectness of a strategic map in practice.
- Practical task: create a strategic map of the company, analyze the results of group work , discussion.
- Basic relationships: goal – indicator – project – process. Achieving an understanding of how these concepts are related. Discussion using examples from practice.
- Indicator. Classification of indicators. Indicator properties. Indicator map, indicator map in QPR, in Business Studio, in KPI Suite. Cabinet of curiosities of “pseudo-strategic” indicators. Examples from practice.
- Cascading/decomposition. Cascading/decomposition logic, description of decomposition technology. Types of indicator systems and features of cascading depending on the type of BSC system used . Understanding the cost of using management technology in practice (different methodical solutions lead to different labor intensity of work). The concept of balanced indicators. Options for understanding balanced indicators. Examples from practice.
- Practical task: perform a decomposition of company-level goals and indicators , analysis of the results of group work, discussion .
- Linking the BSC to the motivation system. Employee motivation map. Example of a motivation map. Options for manipulating indicators. Examples from practice.
To understand how the seminar is organized, some of the slides and discussion questions from the seminar are revealed, and the structure of the content of the seminar is also provided.
At the beginning of the seminar, we will discuss the dream… The dream of many managers is to have 2 buttons with 2 signal lights, red and green, and with their help to respond specifically only to the most important questions, acute problems… In general, this ideal is achievable if a number of conditions are met and there is competence to create dashboards (dash boards – a panel of devices/indicators), to create their own dashboards for managers at different management levels.
The workshop will cover how to build dashboards and how dashboards can be useful if the data is trustworthy…
Strategic maps of companies and motivational maps of employees can act as dashboards, which makes it easier to perceive complexities if a number of conditions are met
At the seminar we will discuss a situation in which it is necessary to determine what is better and make a choice of only 1 of 2 alternatives: 1) a good strategy and poor implementation, or 2) vice versa… a mediocre strategy and its good implementation
The answers, the pros and cons of each option, are not always and not obvious to everyone… The third option (both can be done well) is too desirable and a simple answer, which is too difficult to implement in practice…
It is important to “package” the strategic plan correctly and convey it to the consciousness of the staff in clear, consistent images, goals, indicators, plans and projects, as well as to establish processes for the formation of plans and reporting that are adequate in terms of effort and usefulness.
The history of the emergence of the BSC approach will be revealed. Alternatives to the BSC method.
What does BSC as a technology include?
All central concepts of the BSC technology will be revealed, including the concept of the “strategic map”
Let’s look at several options for company indicator trees and discuss how they differ from the company’s strategic map.
The BSC approach will be considered in the integrated management system. Also, it is planned to consider and analyze examples of strategic maps of companies.
The group is expected to have a practical task: to develop a strategic map of the company
The most common mistake of substituting a project for a goal will be considered, and what are the consequences of this substitution… As well as the substitution of an indicator measuring the achievement of a strategic goal (or the target state of a management object) with an event/action, work plan/task, we will discuss why this substitution of concepts is bad…
There will also be a cabinet of curiosities of situations from the series “what not to do?”
A separate topic is the development of logical “chains” of indicators in the strategic map, within the framework of establishing cause-and-effect relationships between goals in the strategic map
It is also planned to consider a SMALL but very important question of how the key concepts are related to each other: GOAL, INDICATOR, PROJECT, BUSINESS PROCESS. This question is often hushed up or not fully disclosed, but understanding the relationship of basic concepts significantly simplifies the application of the BSC methodology.
For effective KPI management, it is important to understand the “nature” of indicators, their properties, and classification. Why understand the “nature” of indicators?
At least in order to understand how to correctly calculate the % of indicator fulfillment at the end of the reporting period, how the level of indicator fulfillment will affect the bonus payment. Ideally, all such issues should be resolved not at the end of the reporting period, but at the beginning, before the approval of the company’s business plan and work plans of the departments
There will also be a cabinet of curiosities of situations from the series “what not to do?”
How are different properties of different indicators from the general classification of indicators used in practice? An example on methods for calculating the % of indicator achievement
What should and can an indicator map be? A working version of the indicator map in MS Excel will be presented to the seminar participants
Options for indicator cards in other BPM systems (business performance measurement) – QPR, Business Studio, KPI Suite, will be presented and explained to the audience
What is the logic of cascading/decomposition? Examples from practice will be given
Practical task: perform decomposition of top-level goals and indicators into the corresponding divisions according to the organizational hierarchy
Options for implementing the BSC approach in practice will be considered, within the framework of which, as can be seen from the figure below, management by KPI is a special case, 1 of 4 options.
Based on the approach adopted in the company to apply the BSC, one or another decomposition option will be applied as a consequence.
The use of different methods of goal setting in practice is expressed in different labor intensity, different time costs for development, coordination, etc. Each option has its own “cost of the method” (“cost of owning the method”), even if it seems that there is no method at all, or it exists and is based on the most obvious common sense.
Formation of a motivation map within the framework of the BSC approach. Examples from practice
Defining Responsibility: Simple group discussion tasks can help remove uncertainty about many aspects of using the BSC in practice.
If necessary, individual issues in the development of motivational maps can be highlighted – weight distribution, “weighting of indicators”.
The question: “How is the issue of using the same indicator for several employees, but with different weights, resolved in your BSC/KPI system?” is a kind of “litmus test” for testing the system for rationality and labor intensity of calculating the % of achievement (effectiveness) for all goals and indicators at all levels of the company’s (group of companies’) hierarchy.
Additionally (at the request of the customer/seminar participants), the topic of automation of the balanced scorecard , the KPI management system is covered, with a demonstration of examples of the model of goals and indicators.
The optimal group size is 15-16 people, taking into account the educational focus of the format and the completion of practical tasks in groups.
An interesting example of BSC implementation and BSC-based management automation: QlikView RusAppetit
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