Sharing & Growing

Writing down what we have learned from experience or reading sharpens our own understanding & thinking on the subject. Publishing it (in HR Era) adds value because we gain from critical as well as appreciative comments of readers. Publishing also makes us well-known amongst fellow professionals & makes our contribution permanent.

We invite you to use HR Era as your medium of self-expression, sharing, and growth.
Email your contributions to Rajeev@HREra.com  

Contents

1. Balanced Score Card: An Effective Tool for Strategy Implementation - by Rajeev B Bhatnagar

2. Moderator's Space

3. Tomato Soup for the Soul

4. Experience Shared:

Visiting Families of Staff Members - by Hima Bindu, Sonata Software
 

HR Era is a Free fortnightly for HR Professionals with 3000 subscribers. To subscribe, simply send an email to HREra-subscribe@yahoogroups.com  . Visit our website at http://hrera.com
 

1. Balanced Score Card: An Effective Tool for Strategy Implementation - by Rajeev B Bhatnagar

Balanced Score Card is primarily a technique for implementing strategy and not developing organizational strategy. In other words, it is a technique for operationalizing the vision / mission / strategy of the organization.

Why it is difficult to implement strategy?

Kaplan and Norton worked with several fortune 500 companies and found that top managements in many of these huge organizations were not happy with implementation of strategy. The strategy was identified and known at the top level. However the implementation was inadequate.

Kaplan and Norton’s research indicated that there were 4 barriers in effectively implementing organizational strategy. 

(i)                 Vision Barrier : Strategy is not understood by those who must implement it.

(ii)               Management Barrier : Management systems / reviews are designed for operational control and little time is spent on reviewing implementation of strategy.

(iii)             Operational Barrier  : The budgeting process is separated from strategic planning process in many organizations. The two are not linked.

(iv)             People Barriers : Personal goals, incentives and competencies of staff are not linked to strategies.

 Kaplan and Norton found these four key barriers in implementing strategies and they have addressed these barriers in designing Balanced Score Card system.

Balanced Score Card – A New Approach to Strategy Implementation

The basic premise of Balanced Score Card is: Measurement Motivates. In other words what gets measured gets done. Hence Balance Score Card focuses on setting strategic & other objectives and measurements at all levels in the organization and then measuring their achievement in a systematic manner.

Setting strategic & other objectives and measuring them has following distinct advantages:

ü      Gives clarity & concreteness to fuzzy / vague concepts that are stated in strategy.

ü      Objectives and measurements, when they are cascaded down, become a tool to communicate strategy and not a simple tool to control.

ü      Building the Balance Score Card for the whole organization develops consensus and teamwork through out the organization.

A second important premise of Balanced Score Card is the four perspective framework it specifies. Kaplan and Norton found that in organizations decision-making is dominated by financial parameters. There are two difficulties with this.  

ü      Firstly financial parameters reflect past decisions or factors or trends, which had created value in the past. These factors may or may not add value in future. In other words, organizations do not focus on factors which will add value to organization in future. Using Financial measurements alone is like driving a car by seeing the review mirror.

ü      Secondly financial measures motivate short-term behavior at the expense of long term health of the organization.

In order to address the above difficulties Balance Score Card proposes four prospective framework which includes: 

(i)                 Financial perspective

(ii)               Customer perspective

(iii)             Business process perspective

(iv)             Organization learning perspective

 Strategic & other objectives are set & measured in all the above four areas which brings the “Balance” in BSC .

In view of the foregoing, Balanced Score Card is defined as:

“a framework that focuses on shareholders, customers, internal and learning requirement of a business in order to create a system of linked objectives, measures, targets and initiatives which collectively describe the strategy of an organization and how that strategy can be achieved.”

Summary of a Corporate Score Card of a Retail Clothing Company

Foundation of Balanced Score Card

Incidentally, the four prospective frameworks on Balance Score Card reflects the evolution of Management thinking in modern times.

If we look at the period from 1850 to 1975, it is the traditional phase in which Management thought focused on financial parameters. In next phase from 1975 to 1985 management thought focused on customer awareness and though making money continued to be the aim, emphasis was given to achieving these thru selling products, serving customers. The next phase from 1985 to 1995 can be called internal business processes phase. During this period Management’s primary aim continued to be making money, but was focused on internal process like quality assurance, business process re-engineering, Total Quality Management, core competencies. The period from 1995 till date can be called the People’s Phase. In this period Management thinking has focused on people as “the only competitive advantage.”

The above four phases in evolution of management thinking are encompassed in the four perspectives of Balance Score Card.

Balance Score Card as a Performance Management System

We are all familiar with use of scorecards for individual performance. For instances in schools we had individual mark sheets and in organizations we have our individual bonuses and rewards.

BSC is a scorecard for an organization as a whole (occasionally for function in the organization like HR score card).

BSC can be compared to the dashboard of a car. While driving the car we need to look at few things (not all the things that are going inside the mechanical body of the car). The dashboard of the car provides measurements which are essential to driving the car. However, non-essential measurements like car tire pressure are not displayed on the dashboard.

Similarly in an organization, Balance Score Card identifies selected  measurements, which are required to navigate the organization forward through the uncertain future. In other words, the important parameters which CEO needs to monitor are captured in the BSC. BSC serves as performance management system for the organization. The specific dials / measurements needed in BSC flow from the mission / vision / strategy and as & when the strategy undergoes a change, the dials which need monitoring also change.

BSC as a Management System:

Corporate objectives flow from SWOT analysis of the company and vision and mission statements. Based on corporate objectives, corporate Balanced Score Card is drawn up. In the BSC strategic measures, targets and action plans are defined. Based on this, these objectives / measure are cascaded to individuals through Individual Performance Measures (IPMs).

Advantages of BSC to Organization:

The BSC provides a strategy map for the whole organization. Some of the advantages are: 

ü      It helps to navigate the organization like a dashboard in a car

ü      It aligns entire organization

ü      It brings clarity / transparency in understanding. Accountability also improves.

The combination of transparency and accountability is a killer combination and it brings a highly performance oriented culture in the organization. Month on month when we watch the dashboard of organizational performance, departments and people who are not able to make it, become obvious. It brings in a “Shape up or ship out,” culture.

Implementation of BSC in an organization

 Implementation of BSC in an organization can take 4 to 6 months. In first 1 to 2 months, the consultants identify the measurements which need to be included in the Balanced Score Card. Experience indicates that 80 to 85% of the measures which an organization is already using find a place in the Balance Score Card. However 15 to 20% of new measures are also added which is really an indication that objectives / measures of strategy are being dovetailed in the BSC.

In the 4 to 5 months, the consultants help in cascading down the Balanced Score Card.  Measures / Targets are set for all levels from the CEO to down. It is felt that strategic objectives have a place up to L4 in the organization (L1 being the CEO, L2 being direct reports CEO and so on).

Difference between MIS and BSC:

Most companies have MIS (Management Information System), which involves reporting of many measurements. The difference between MIS and BSC are as follows: 

(i)                 In MIS there are literally hundreds or even thousands of thing that we want to measure. However in BSC only a few of them are selected those which have strategic significance.

(ii)               MIS tends to measure what is easily available. However BSC adds 15 to 20% new measure to an organization. These are the missed-out strategy measures which need to be on the radar.

Pitfalls in implementation of BSC

Experience shared by people who have been part of BSC implementation shows that some of the pitfalls / precautions as under: 

(i)                 Sometimes too many strategic objectives are put in a single BSC. If the objectives become unachievable, people tune-off from BSC. 

(ii)               People may resist or dislike the measurement. So we have to do our best to carry them and create an environment in which people are not afraid about being measured.  

(iii)             For implementation of Balance Score Card upto and including the lowest levels in the organization, it must be a top driven initiative & top management support is essential. 

(iv)            Simplicity is important. If people feel that BSC has made their life difficult then they would resist.

Contributed by Rajeev B Bhatnagar

DGM- Personnel, Larsen & Toubro Limited, Chennai. Email: Rajeev@HREra.com or Rajeev@Lntecc.com

 

2. Moderator's Space

Dear Friends,

Please forgive me for sending such a long article!

Having participated in a presentation by Cedar Enterprises on Balanced Score Card, I was tempted to share some details. Cedar has implemented BSC in about 200 organizations in Asia and is connected with Kaplan & Nortan. The presentation was made by Mr. Advait Kurlekar, Director (Consulting).

warm regards

Rajeev B Bhatnagar

Rajeev@HREra.com

 

3. Tomato Soup for the Soul - Ambar Nanavaty

[This is an actual collection of applications & letters written by people from a non-English speaking country]

1. A candidate's application:

"This has reference to your advertisement calling for a 'typist and an accountant - Male or Female'... As I am both for the past several years and I can handle both, I am applying for the post.

2. An employee applied for leave as follows:

"Since I have to go to my village to sell my land along with my wife. Please sanction me one week leave."

3. Another employee applied for half day leave as follows:

"Since I've to go to the cremation ground and I may not return, please grant me half day casual leave"

4. Another leave letter written to Administration dept:

"As my mother-in-law has expired and I am responsible for it, please grant me 10 days leave."

5. Actual letter written for application of leave:

"My wife is suffering from sickness and as I am her only husband at home I may be granted leave".

6. Letter writing: -

"I am well here and hope you are also in the same well."


Sent by Ambar Nanavaty

Email: ambar_nana@yahoo.com
 

Hi!

I have been a reader of HR Era for quite some time now.

I shared the .. "Experience Shared: Visiting Families of Staff Members - by Madanmohan, GM (Corp HRD), NeST" with my ex-colleagues at Infotech Enterprises Limited, Hyderabad.

My DGM had made a few notes on the same as under:

From: T.Gopala Krishna [SMTP:gopalt@infotech.stph.net]
Subject: RE: LG's Family Ambassador scheme?

Hi Bindu,

I appreciate your move to share this info with your other HR colleagues.

In this context I would like to add a few of my thoughts. You know I spent half of my life in manufacturing units and dealing hard-core unions. In manufacturing environment we used to have umpteen number of initiatives like this.

When I was in SOL we used to have on lady officer who was exclusively taken to visit the houses of all employees mainly to build a strong bond between the families and company. She used to take care of the health related problems of the family, children education, finance management etc. She used to conduct family get-together for the families in the factory where in all the employees and family members participate for the whole day ending with cultural events and prizes distribution.

Another initiative most companies used to take was timely relief in heath related exigencies. In the event of some health related exigencies including the family members of the employees, the companies used to go out of their way to help the employees to come out of the problem. This includes protecting pay, medial attention through good hospitals, monitory loan /grant for medical treatment, transport, personal attendance, visits by important people in the company etc. This is the time any employee will look at the company for some help and this undoubtedly builds an inseparable bond.

There were cases where we got CM relief funds [=Govt Welfare Funds] in addition to Lions club donation to get some of the family members of employees who could not afford high medical expenses and got major surgeries done.

There is no doubt that this type of initiative improves the relation tremendously. These things have to be done with lot of conviction, but I really do not know how sincerely these type of initiatives are taken up in IT environment where the turn over of employees is so heavy and people are looking at only a short term association with the organizations.

Regards,
Gopal.


May be it would make a good sense to check out with our colleagues in the IT sector to see if something like this happens and if so how.

Thanks,
Hima Bindu.
Human Resources
Sonata Software Limited
Bangalore.
6610330 Ext-4502.

Email: himabindu.bl@sonata-software.com

[ Please send your responses directly to Hima Bindu with a copy to HR Era. ]
 

Copyright (C) 2003 by HREra.com