CATEGORIES OF PERFORMANCE

  1. CUSTOMER (STAKEHOLDER)SATISFACTION
  1. QUALITY PRODUCTS AND SERVICES
  1. INNOVATION AND CREATIVITY
  1. EMPLOYEE COMMITMENT
  1. FINANCIAL PERFORMANCE

TYPES OF INDICATORS

LAGGING INDICATORS

PERFORMANCE DRIVERS

ORGANIZATIONAL LEVELS

CORPORATE

BUSINESS

FUNCTIONAL

BUSINESS

SCENARIO PLANNING
BALANCED SCORECARD

Kaplan, Robert S. and Norton, David P. Translating Strategy Into Action: The Balanced Scorecard. Harvard Business School Press. Boston, Ma.

FINANCIAL

1. 4.

REPEAT

CUSTOMERVISION AND STRATEGYINTERNAL BUSINESS

PROCESSES

2.3.

LEARNING AND GROWTH

FINANCIAL

Business unit strategy / Revenue
Growth and mix / Cost reduction/
Productivity improvement / Asset utilization
GROWTH /
  1. Sales growth rate by segment
  2. % revenues from new products, services, customers
/
  1. revenue per employee
/
  1. investment (% of sales)
  2. Research and development (% of sales)

SUSTAIN /
  1. share of targeted customers and accounts
  2. cross selling
  3. % revenues from new applications
  4. customer and product line profitability
/
  1. cost versus competitors
  2. cost reduction rates
  3. indirect expenses
/
  1. working capital ratios
  2. return on equity by key asset category
  3. asset utilization rates

HARVEST /
  1. customer and product line capability
  2. % unprofitable customers
/
  1. unit costs (per unit of output, per transaction)
/
  1. payback
  2. throughput

CUSTOMER

Customer acquisition

Customer satisfactioncustomer retention market share

Customer profitability

Customer satisfaction = value = product or service attributes + image + relationship

value / Product/service attributes / image / Relationship
functionality / quality / Price or cost / time / Communication or signaling / -delivery of service
(e.g., knowledgeable people, convenience, responsiveness)
-long term commitments
-qualifications
Strategic
Core customer

Customer satisfaction = assesses the satisfaction level of customers along specific performance criteria within the value proposition

Customer acquisition = measures, in absolute or relative terms, the rate at which a business unit attracts or wins new customers or business

Customer retention = tracks, in absolute or relative terms, the rate at which a business unit retains or maintains ongoing relationships with its customers

Customer profitability = measures the net profit of a customer, or segment, after allowing for the unique expenses required to support that customer

Market share = reflects the proportion of business in a given market

INTERNAL BUSINESS UNIT PERSPECTIVE

Manage risk

Innovation processoperations processpost sale service process(

(Important for

-long cycle development

-most costs incurred

-where to gain your competitive advantage

Customer need identify the create the product build the product deliver the productservice the customer need

Identified market or service or service or servicecustomer satisfied

Manage the business

Strategic themes

Strategic measures

-quality

-cycle time

-yield

-throughput

-costs

Innovation

  1. What range of benefits will customers value in tomorrow’s products?
  2. How, through innovation, can we preempt competitors in delivering those benefits to the market?

Typical research measures

- % of sales from new products

- % of sales from proprietary products

- new product introduction versus competitors

- new product introduction versus planned

- manufacturing process capabilities

-time to develop next generation of products

Product development measure

-Break even timeSales

Profit

BREAK EVEN TIME

CumulativeInvestment

Cost and

revenues Investigation time to market

Developmentmanufacturing and sales

Time (months)

Balance pressures to reduce cycle time and increase yield with measures of innovativeness of products produced.

Operations Process

TQM

ISO 9000

JIT

Cycle time (applies equally to manufacturing and service)

Manufacturing cycle effectiveness MCE (e.g., JIT production flow)

MCE = processing time (Note: The closer to 1, the better the MCE.)

throughput time

where throughput time = processing time + inspection time + movement time + waiting and storage time

Typical process quality measures

-process ppm defect rates

-yields (good items produced/good items entering the process)

-waste

-scrap

-rework

-returns

-% processes under statistical control

-waiting time

-information accuracy

LEARNING and GROWTH PERSPECTIVE

  1. Employee capabilities

Staff competencies

-Strategic skills

-Training levelsEmployee satisfactionEmployee retention

-Skill leverage- involvement with decisions- % key staff turnover

Technology/infrastructure- recognition

-Strategic technologies- access to sufficient

-Experience capture information

-Proprietary software- active encouragement to Employee productivity

-Patents/copyrights be creative & use initiative- revenue per employee

Climate for action- staff support

-Key decision cycle- overall satisfaction

-Strategic focus

-Staff empowerment

-Personal alignment

-Morale

-teaming

  1. Information system capabilities
  1. Motivation, Empowerment, and Alignment

Measures of suggestions made and implemented

-number of suggestions per employee

-number of suggestions implemented

Measures of improvement

Measures of individual and organizational alignment

Measures of team performance