A Balanced Scorecard Hall of Fame™ Profile

Mellon Europe

HARVARD BUSINESS
SCHOOL PUBLISHING
What is the Balanced Scorecard Hall of Fame?
The Balanced Scorecard Hall of Fame for Executing Strategy™, administered by Balanced
Scorecard Collaborative, recognizes organizations that have achieved breakthrough
performance largely as a result of applying one or more of the five principles of the
Strategy-Focused Organization. These principles, formulated by Balanced Scorecard
creators Robert S. Kaplan and David P. Norton, are described in detail in their book
The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the
New Business Environment (Harvard Business School Press, 2001). BSC Hall of Fame
members are personally selected by Drs. Kaplan and Norton.
To learn more about Hall of Fame selection criteria and Hall of Fame members,
visit bscol.com.

The Five Principles of the Strategy-Focused Organization

Each of the five principles of the Strategy-Focused Organization include specific
management best practices that contribute to the achievement of breakthrough
results. These best practices—validated through ongoing research with Hall of Fame
organizations and hundreds of other users of the Balanced Scorecard around the world—
must be embedded in any organization that wants to make strategy execution a core
competency.

Principle #1. Mobilize Change Through Executive Leadership

Executive leadership, driven by a need for change, supports the drive to
establish a new way of managing based on a performance-oriented culture.

Principle #2. Translate the Strategy into Operational Terms

The Balanced Scorecard is used to translate the strategy into a language
that everyone understands.

Principle #3. Align the Organization to the Strategy

The scorecard is used to cascade the strategy to all parts of the
organization and align resources needed to accomplish the strategy.

Principle #4. Motivate to Make Strategy Everyone’s Job

The reward and recognition system is used to align
individual behavior with performance objectives called for
by the strategy.

Principle #5. Govern to Make Strategy a Continual Process

Strategy execution is linked to the budget, and a reporting system
based on scorecard measures is used to provide feedback on
strategic performance.
Balanced Scorecard Hall of Fame Profile: Mellon Europe
Table of Contents
Profile ..................................................................................1
Key Results, Takeaways ..............................................10
SFO Spotlight (best practices) ................................11
To Learn More ................................................................14
ABOUT Mellon Europe
Industry: Financial services
Established in 1968 through an association with
the Bank of London and South America, Mellon
Europe is the London-based international arm of Mel-
lon Financial Corporation (MFC). Headquartered
in Pittsburgh, Pennsylvania, MFC is the fifth-largest
global custodian bank and the 11th-largest asset
manager in the world. A diversified financial services
firm that originated as a bank in 1869, its asset
management businesses include a raft of familiar
names, among them: The Dreyfus Corp., Newton
Investment Management, The Boston Company
Asset Management, Franklin Portfolio Associates,
and Mellon Capital Management. MFC’s total assets
under management, administration, or custody as
of Q1 2005 exceeded $4 trillion, with Mellon Europe’s
share comprising more than 20% of that total. MFC
counts among its competitors State Street Corp., Cred-
it Suisse Group, Fidelity Investments, and Citigroup.
Mellon Europe’s businesses, like its parent company’s,
include asset management, asset servicing,* mutual
funds, treasury services, and private wealth manage-
ment. The company has 12 business lines, most of
them London-based. They include Mellon Global
Investments, Mellon European Fund Services, ABN
AMRO Mellon Global Securities Services, and Newton
Investment Management.
The company has offices throughout the United King-
dom, Ireland, Spain, Germany, the Netherlands, Italy,
and Switzerland, and manages additional
businesses located in Australia, Japan, Hong Kong,
Dubai, Brazil, Chile, and Singapore.
Headquarters: London
Employees: 2,500 (MFC: 20,000-plus worldwide)
Inducted into the Balanced Scorecard
Hall of Fame: 2004
* Asset services typically include custody, securities lending,
investment accounting, foreign exchange, recordkeeping,
and other services needed by institutional clients.
Far-flung financial-services giant Mellon Europe set
out to present a unified front and sharpen Europeans’
awareness of the mighty Mellon brand. The key
weapon in its arsenal? Savvy execution of the BSC
methodology.
“Though the European Union has done much to unite
the diverse countries of Europe, there are still many
languages, tax codes, and 42 different regulatory
bodies that complicate the way business is conducted.
Mellon Europe’s challenge [is] to execute a global
strategy at a local level in a competitive market full
of opportunities for expansion—and ensure that
the brand gets the right traction to win the right
business.” 1 With these words, Mellon Europe chairman
Jack Klinck articulated the overarching challenge
facing his organization, a major division of Mellon
Financial Corporation (MFC).
The chairman was also keenly aware of additional
hurdles his company would have to surmount.
When he took office in early 2001, Mellon Europe
had just defined an aggressive goal of contributing a
set percentage to the corporate revenues of its parent
company, and to nearly doubling that percentage
by 2007. The organization was also grappling with
challenges stemming from a series of major acquisitions
and restructurings it had initiated in the 1990s as
part of its growth strategy. Not the least of these
challenges was overcoming the lack of alignment
among the company’s various business lines. Some
executives focused on their own “silos,” which made
it difficult for line leaders to formulate clear strategies
and implement strategic initiatives efficiently for the
overall benefit of Mellon. Furthermore, few managers
felt a personal sense of ownership of key corporate
initiatives.
Klinck cites an example: “Some lines of business
and shared-service departments were undertaking the
annual budgeting process without consulting each
other. Not surprisingly, their budgets often did not
tally at the end of the exercise, and competing priorities
were difficult to reconcile.” The result? In 2001,
budgets weren’t adequately reflecting the priorities
of the businesses or meeting MFC’s consolidated
expectations.
The turbulent markets and investor unease character-
izing the worldwide business landscape at the turn
of the millennium further underscored the need for a
new strategy that would unleash the value locked in
1 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe
Mellon Europe’s many businesses. Moreover,
Europe’s financial services scene had begun to
shift in response to new forces. For instance, at the
same time as aging populations are putting growing
pressure on European governments to fulfill pension
obligations (Europe’s pension system is largely state-
sponsored), they are also creating a big demand for
investment savings and pensions products and services.
Along with the opportunity such trends presented,
Mellon Europe faced marketplace challenges. Mellon
was unusual as a specialist in asset servicing and
This last goal—dominating overseas
markets—would be particularly
demanding, given the fragmentation
characterizing the financial services
industry. In Europe, financial products
customers will always prefer to buy
from a local institution.
asset management in a playing field of mostly gener-
alists, which posed added competitive challenges.
To leverage new opportunities as well as meet its
pressing challenges head-on, Mellon Europe’s strategy
would need to accomplish five overriding objectives:
1. Emphasize alignment
2. Strengthen awareness of the Mellon brand
3. Refocus executives’ attention on key markets
4. Motivate business line leaders to boost
performance of their lines
5. Help MFC strengthen its dominance of its
overseas markets
This last goal—dominating overseas markets—would
be particularly demanding, given the fragmentation
characterizing the financial services industry. “On
a country-by-country level, you find exceptionally
strong local institutions,” Klinck acknowledged in
an interview published in a January 2002 issue
of Mellon News, an internal MFC publication. “In
Europe, financial products customers will always
prefer to buy from a local institution.” Moreover,
“the markets for our combination of services remain
highly fragmented in Europe.”
In the same interview, the chairman warned against
thinking of Europe as “a single, large homogeneous
region.” He explained: “Delivering top-class service
levels and wonderful products is not a guarantee to
success. It sure helps, but our challenge is to under-
stand the nuances of the disparate peoples and build
long-term relationships. You often hear the phrase
‘Think global, act local.’ It’s a motto Mellon must
take to heart.”
Klinck concluded the interview with a call for
strengthening the Mellon brand. As he explained,
Mellon Europe was “bringing a new mindset to the
market,” and that had generated interest. Europeans
were taking notice of the deals Mellon Europe was
concluding. “That’s good,” Klinck said, “because…
not enough people in Europe know about Mellon
Financial Corporation.” According to the chairman,
Mellon Europe’s more aggressive approach to
communications, its leveraging of its marketing
dollars, and the clarity of its branding strategy were
already starting to pay dividends. Mellon Europe
set out to capitalize on this momentum.
Operation “One Mellon”
After using the BSC to help define his personal
performance objectives soon after arriving in London,
Klinck realized the BSC methodology could help
Mellon Europe articulate and execute its strategy and
strengthen its alignment to MFC’s competitive strategy.
He quickly received approval and a budget from
Martin McGuinn, MFC’s chairman and CEO, to launch
a scorecard program. Fittingly, the initiative became
known as “One Mellon,” its main purpose being to
align all the Mellon entities throughout Europe and
enhance the unified organization’s performance.
Later that year, Klinck and his executive team (the
heads of Mellon Europe’s then 14 business lines and
10 shared services units) began developing an initial
strategy map and scorecard to reflect the company’s
One Mellon initiative. The map reflected the company’s
support of MFC’s strategy, financial objectives, and
corporate vision. Here’s a sampling of the themes
and objectives featured in the first version of the
strategy map:
Financial perspective: “Organic growth,” “Growth
through acquisition,” and “Cost efficiency and
productivity.”
Client perspective: “Shared services to provide
superior knowledge, value, and service to their
customers at a reasonable cost,” “Consistently deliver
2 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe
on the ‘Mellon Promise,’” “Broaden and deepen
relationships with our customers,” and “External
recognition and internal understanding of image
and brand.”
Internal perspective: “Nimble, robust decision-
making process” and “Leverage synergies to make
One Mellon greater than the sum of its parts,
through an integrated, stable, scalable model.”
Learning and growth perspective: “Instill
management accountability and ownership,” “Attract,
develop, and retain superior talent consistent with
our vision and values,” and “Clear, consistent, and
relevant messages that are communicated inclusively,
and that celebrate our successes.”
Rolling Out “One Mellon”
The One Mellon BSC became operational during
the second quarter of January 2002. That quarter, the
newly formed Mellon Europe Strategic Performance
Forum (made up of business line and support service
representatives who oversee strategy execution)
began using a traffic light system to signal performance
on the scorecard measures that had been defined.
Though some objectives on the One Mellon scorecard
still lacked defined measures, the working version
of the strategy map was enough to get executives
talking more than ever about strategy.
Chairman Klinck also continued to stress the
importance of One Mellon. In a memo from
December 2002, he noted:
One Mellon represents a stepping stone in those
growth aspirations and will, at the same time, be
a unifying force for good, helping us work better
together, with the clear aim of making Mellon
Europe…greater than the sum of its parts.
One Mellon is all about [achieving] supercharged
performance for our businesses and [getting]
shared services working with the business lines to
achieve this. We each have an important part to
play in ensuring our initiatives achieve success
and sustain momentum.
During 2002, a core BSC team—consisting of the
firm’s chief administrative officer, the Balanced
Scorecard Collaborative consultant who first worked
with Klinck on his personal objectives, and members
of the company’s internal consulting team—facilitated
the cascading of the corporate-level scorecard to
several key business lines and shared services units,
including Newton and Mellon Europe Fund Services,
and HR and IT. For example, Mellon Europe Fund
Services’ strategy map contained the objective
“Cross-sell non-MEFS products,” which supported
the corporate-level theme of leveraging synergies
across the organization. And the HR department’s
map featured the overarching theme “HR will
ensure Mellon is recognized internally and externally
for its performance-driven culture,” which reflected
the company’s new focus on measuring strategic
performance.
As 2003 unfolded, additional business lines (such as
Mellon Global Investments and Mellon European
Fund Services) and shared services units (including
corporate sourcing, audit, and risk management)
developed strategy maps and scorecards. Participants
in this round of cascading—which included every
line-of-business and shared services head—operated
under the guidance of a reconfigured core team led
by then-BSC program manager Wale Buraimoh, along
with several “BSC Champions” trained in the method-
ology. (The BSC Champions group, one of several
new organizational structures Mellon Europe created
to support its scorecard initiative, is described in
more detail on p. 8.)
Early in 2004, the company began using lessons
and feedback from the business lines’ scorecard-
development experiences to refine the One Mellon
strategy map and scorecard. Scorecard reporting
also improved, and some objectives were changed
to reflect a change in emphasis or in broader market
issues. Objectives that had been accomplished were
phased out.
The revised strategy map puts greater emphasis on
the strategic priorities that span the European entities.
Three clear themes run through the perspectives—
themes that represent the key strategic messages
from corporate to Europe:
1. Revenue Growth
2. Execute! Execute! Execute! (MFC Chairman and
CEO Martin McGuinn’s mantra)
3. Cost Efficiency and Productivity
There are clear tensions among the themes—
opportunities for revenue growth can, at times,
compete with expense management—hence, the
new internal perspective objective “Balance short-
term financial targets with long-term investment in
growth.” Another key internal-perspective objective
that emphasizes Mellon Europe’s cross-business focus
is “Work together to drive cross-selling opportunities
that provide multi-product solutions.” Within the
“Execute! Execute! Execute!” theme are two important
3 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe
new internal-perspective objectives: “Shared
services and lines of business work in partnership to
contribute to business objectives” and “Successfully
integrate acquisitions to realize expected value.”
By late 2004, the company had dropped the
term “One Mellon” as the name of the scorecard
implementation, because the notion of unity was
now embedded in the organizational culture.
The current organization had never
“married” the entities it had acquired.
Each had their own functional areas—
public relations, human resources, and
so forth. They operated in parallel and
independently—thus there was no
unified message about strategic priorities
radiating from these functions out to
the businesses.
Today’s completely revised strategy map emphasizes
the company’s European strategy. The BSC cascade
continues, as several Mellon Europe entities build
their strategy maps and scorecards for the first time,
while other units’ implementations are in more
advanced stages.
Mobilizing the Troops
Mellon Europe used potent tactics to ensure a
successful BSC rollout. For one thing, chairman
Klinck had a strong voice as the effort’s sponsor,
which helped to emphasize the methodology’s
credibility. The company also stressed Mellon
Europe’s connection with MFC’s corporate vision:
becoming the world’s best-performing financial
services company. And it hammered home the
importance of the European businesses’ support
of the parent company’s corporate strategy, which
hinged on building an attractive mix of fee-based
businesses and aggressively managing capital for
high returns.
Implementation leaders also presented the organization
with a compelling case for change—complete
with detailed analyses of Mellon Europe’s financial
position, results from employee surveys, and assess-
ments of operational inefficiencies. The message
became especially powerful when delivered by CEO
McGuinn and Steve Elliott, senior vice chairman of
MFC, at the Leadership Team Road Show.2 At this
event, senior managers appeared at the two main
company locations (London and Edinburgh) to lay
out their vision of a newly efficient organization.
(Employees from other locations were invited to
the London event.) The current organization, they
explained, had never “married” the entities it had
acquired. Each had their own functional areas—
public relations, human resources, and so forth.
They operated in parallel and independently—thus
there was no unified message about strategic priorities
radiating from these functions out to the businesses.
To address this situation, Mellon Europe had central-
ized some functional areas (such as communications
teams and HR functions) within the company. These
groups were now known as shared services areas.
Next came efforts to ramp up these newly reconfig-
ured departments’ skill levels. The main goal? To
build these departments’ capabilities not just for the
present but also for the future. The company had
upgraded its managerial job descriptions and brought
in more senior-level personnel to get shared services
into shape. Over time, executives reasoned, the up-front
costs of this approach would decrease in magnitude
compared with the size of the businesses and the
increased efficiencies gained through centralization.
By laying out the changes Mellon Europe had initiated,
as well as the rationale behind them, the Leadership
Team Road Show presenters made it crystal clear that
the company was fully committed to improving its
strategic performance—and that every business line
leader would need to make the same commitment to
carrying out the new strategy.
Not surprisingly, communicating the BSC to the
thousands of Mellon Europe executives, managers,
and employees operating across many different
countries and in many different cultures wasn’t easy.
To overcome this obstacle, the company worked
to translate information about the BSC into the
most accessible languages possible, and to embed
messages about the methodology broadly throughout
its wide-ranging communication efforts.
The company’s comprehensive communications
program also clarifies how individual and business-
line performance affects Mellon Europe’s ability
to achieve its objectives. The program conveys the
message in a variety of ways, such as: “Our shared
4 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe
values are the glue that underpins all we do in all
our diverse business lines,” “Everyone can contribute
to and have a part to play in Mellon’s success,” and
“We must each understand how Mellon Europe’s
business lines work together and where they come
into contact with one another.”
The communications program has also included
Klinck’s quarterly “Dear Colleague” letter, distributed
to all European employees. In this letter, Klinck
describes in forthright prose Mellon Europe’s current
successes and challenges in carrying out strategy.
He also explains new initiatives and the reasoning
behind them, and expresses his appreciation for
Mellon Europe’s workforce. Some excerpts from
these letters include:
• “These are tough times for the investment industry—
markets are turbulent and investors uneasy. But
we have cause to look forward with real confidence,
albeit tempered by realism. The economic conditions
are stretching, and we must keep focused on
the execution of our strategy. Now is the time to
remember the mantra we need to score that success:
Execute, execute, execute.”
• “The Mellon name is becoming more widely
recognized in our European markets—everything
from our new advertisements and branded
green umbrellas around the city to the network of
clients we’re building up, reinforces the overall
Mellon brand.”
• “Executing on our plans and objectives to the
highest standards is all that my senior management
colleagues in Europe and I ask of you. While
we are constantly evaluating improvements in
operating efficiency, it will be the cumulative effect
of your individual performances that determine
Mellon’s long-term success.”
Additional communication vehicles include “learning
lunches,” at which business line managers educate
employees about the connections between corporate-
and unit-level objectives, providing employees a
clear picture of their role in the overall corporate
strategy. Managers also discuss business and progress
against the strategy. During staff briefings at the
largest business units, senior managers make keynote
presentations on strategy, Mellon Europe’s core
values, and business line performance. And at “a day
in the life” presentations, employees describe ways
in which they collaborate with colleagues across the
business during a typical workday.
Mellon doesn’t rely strictly on formal communications.
As Jan Altink, Mellon Europe’s director of corporate
affairs, observes, a particularly effective way to
communicate strategy to the troops is for managers
to sit down with their people and discuss it face-
to-face. “This has always been the best way, and it
always will be.” Much of this informal approach
occurs through the cascading process, but it is also
reinforced at review time, when the BSC serves as a
foundation and agenda for discussion.
An important element in Mellon Europe’s communi-
cation program is the company’s intranet. Defined
in 2001 as a strategic initiative, the site went “live”
in the summer of 2002, and is accessible by every
employee. It features a BSC section where people
can learn about the BSC and get answers to common
BSC questions. (The site’s BSC section does not
show scorecard results. Instead, BSC performance
results are monitored by senior managers through
the company’s Strategic Performance Forum.) In
addition to the BSC section, the intranet site provides
employee announcements, press releases (including
the company’s induction into the Balanced Scorecard
Hall of Fame for Executing Strategy), and daily press
clippings, along with information about Mellon
Europe’s various business lines and shared services.
As Altink points out, the intranet “has changed the
way we communicate internally and has made each
one of us better informed and better equipped to
deliver on the Mellon Promise: to meet or exceed
our customers’ expectations.”
Creating New Organizational Structures
To help fuel the cascading process and revolutionize
its performance management, Mellon Europe created
several new permanent organizational structures,
all of which rely on the BSC as their guidepost and
meeting discussion agenda. The Mellon Europe
Strategic Performance Forum (MESPF), launched
in 2002, is perhaps the most important example.
Created to oversee strategy execution, the MESPF
meets each quarter to discuss one theme from the
Mellon Europe strategy map and scorecard. At each
meeting, two members of the company’s executive
team lead the discussion on the selected theme—
raising two or three critical strategy-related concerns,
analyzing the implications of identified problems,
and facilitating discussion of potential solutions.
Action steps are assigned, and accountability
affirmed. Each meeting also features a “hot topic”—
a strategy-related issue that has some immediate
relevance or urgency and that often has come to
5 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe
light in scorecard performance reports. Finally,
participants identify and prioritize the major initiatives
needed to drive successful implementation of the
company’s strategy.
Each MESPF meeting generates a “commitment
log” containing action items such as “Explore
opportunities (print or oral) to publicize One Mellon
and Forum progress in the U.S.—possible Mellon
News article” (an early-stage action item) and
“Discussions to take place regarding possible ways
to track cross-sell revenues.” At every MESPF meeting,
review of the commitment log—and progress toward
the items on it—is the first item on the agenda.
The MESPF’s quarterly meetings have sharpened
business leaders’ focus on strategic issues. Thanks
to this new organizational structure, there is also
enhanced transparency of units’ strategic performance
and challenges, more cross-unit collaboration and
problem solving, and a strengthened commitment to
strategy execution.
The BSC has facilitated alignment and
“pressure-testing” between individual
and organizational objectives. “It’s
become much easier for senior managers
and their team members to plan annual
stretch goals and measure performance
in the context of strategic objectives
for the year, clearly visible [through]
strategy maps and associated scorecard
objectives and results,” according to
Sheena Wilson, head of HR.
Inspired by the success of the MESPF, the company
assembled the BSC Champions group—consisting
of representatives from each business line and
shared service department who had received training
in the BSC approach—in 2003. Its members, acting
as internal core team members, began facilitating
scorecard development in their parts of the organiza-
tion. Champions reported to the BSC manager, a
newly appointed, full-time position then occupied
by Wale Buraimoh. Respected in their businesses
and perceived as “up and comers,” BSC Champions
explained the methodology and worked with business
unit and shared services leaders to decide how
messages and strategic objectives could best be
communicated in their parts of the organization. By
selecting bright, high-performing individuals as BSC
Champions, the company sent the message that the
BSC initiative was vitally important.3
Mellon Europe also created new structures focused
on improving organizational performance management.
Previously, performance management had been
limited to employee goal setting and measurement
via annual staff appraisals. To establish an organiza-
tional performance review process, the company
formed an operating committee composed of the
heads of all support services, and an executive
committee consisting of all line-of-business leaders.
The operating and executive committees meet
monthly to review operations, clarify priorities, and
refine strategy and its execution, using the BSC as
agenda and guideline.
The new and existing governing bodies work together
to share information and insights. For instance, the
BSC Champions convey their decisions and insights
to the MESPF. And representatives from Mellon’s
Organizational Effectiveness and Corporate Affairs
teams—which facilitate strategic learning and
disseminate corporate communications, respectively—
also participate in BSC Champions meetings.
“This model has worked well for us,” says Klinck,
“because it distinguishes strategy formulation from
execution. Executives manage strategy formulation,
while implementation of the BSC at local levels is
supported by the BSC Champions. This enables us
to focus implementation at the right levels and clarify
the contribution expected from each level.”
Aligning Employees
Before adopting the BSC, Mellon Europe had
introduced an employee performance management
program (PMP) organization-wide. The program
consists of annual performance planning between
manager and employee; midyear reviews that include
assessments of the individual’s adherence to Mellon’s
shared values as well as self-assessments; and a
comprehensive year-end performance review.
According to Sheena Wilson, head of HR, the BSC
has facilitated alignment and “pressure-testing”
between individual and organizational objectives.
“It’s become much easier for senior managers and
their team members to plan annual stretch goals
and measure performance in the context of strategic
objectives for the year, clearly visible [through]
6 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe
strategy maps and associated scorecard objectives
and results.”
Mellon Europe has steadily accelerated alignment by
linking personal goals with high-level aims. Appraisals
for all employees are linked to corporate and business
line (or support unit) scorecard objectives. The
corporate-level scorecard even contains the measure
“Percentage of performance appraisals completed and
filed on time”—and sets a target of 100% for this metric.
The BSC has not only enhanced employee alignment
to the strategy, but has also brought “greater rigor
and integrity” to the rewards process, notes Wilson.
Because company goals are transparent to employees,
it is easier to identify and reward high performers.
As the PMP and BSC become better synchronized,
the process of differentiating exceptional performance
has become easier.
To further align personal objectives with overall
strategy, Mellon Europe’s BSC program manager is
working with HR to develop a training program that
will enable middle and junior managers to align their
staffs’ goals with departmental objectives. Because
of the company’s PMP, compensation will also be
smoothly aligned once goals line up behind strategic
objectives.
Employee alignment has improved at the highest
levels of the organization. As Klinck explains,
When we started using the BSC, the focus was
solely on developing, aligning, and measuring
objectives at the corporate level. However,
the BSC has helped us do this so clearly that I
was also able to draw my 2002, 2003, and 2004
personal goals directly from the respective
corporate scorecards. This has helped improve
communication of my personal objectives to
stakeholders, and performance is now visibly
more closely linked to corporate performance.
This offers the benefit of integrating my role
completely and objectively into the corporate
strategy development-implementation-refinement
loop, which, in my view, [reflects] the true
purpose of the BSC.
Organizational Alignment
The restructuring of Mellon Europe’s asset servicing
business in 2004 well illustrates how synergy and
alignment have become ingrained in the corporate
culture. The company has affirmed its commitment
to provide a full range of asset services, one of its
core competencies, to the global institutional market-
place, believing it will continue to grow. While
custody, securities lending, foreign exchange, and
performance analytics remain cornerstones of the
business, the company also set out to leverage
significant opportunities for expansion in these areas
through new products, new clients, and new markets.
The near-term focus remains on the United States,
Canada, the United Kingdom, and Europe. But the
company has also pursued opportunities that have
the potential to spur growth in Asia and the Pacific
Rim over the long term.
To these ends, the company restructured this large,
complex business sector to provide additional senior
leadership resources. For example, newly appointed
leaders of components of the asset servicing business
(such as Custody and Investment Manager Solutions)
collaborated to identify ways to leverage natural
synergies across their businesses. One outcome of
this effort was a sharing of several functions, such
as sales and client service administration.
Numerous examples demonstrate how support
groups now view themselves as partners of Mellon
Europe’s revenue-generating businesses, prioritizing
their projects with high-level strategy in mind. When
the Newton Investment Management unit discovered
that the company’s standard level of desktop IT
support was insufficient for its activities, IT and
Newton worked together for the first time to find a
solution. Another example: while working with
Mellon Europe Fund Services, the IT group realized
it would achieve better alignment if project resources
were moved from the business line to IT. That way,
direction from the business would be embedded in
the IT team.
How does Mellon Europe evaluate business line
and support unit alignment? Besides the traditional
vertical appraisal of each line of business and shared
services unit by its U.S. head, there is an annual
evaluation of shared services by the business lines,
which look across the business to assess how well
the shared services support business line objectives.
The chairman also gauges their alignment based
on the number of shared clients. In addition, he
informally assesses their alignment through the goal-
setting process at the beginning of the year and
through periodic reviews during the year.
New Headquarters: Unity Made Visible
In June 2004, Mellon Europe completed a major
initiative: it opened the doors to its new European
headquarters, Mellon Financial Centre, in London.
The Centre brought together 1,500 employees formerly
7 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe
scattered throughout ten locations—and gave
Mellon Europe a distinctive visual presence.
The Centre had been a key initiative in the
internal processes perspective of the company’s
strategy map in 2001, in support of the objective
“Working together better, getting more from people
through synergies.” Remarkable in an age when
large construction projects routinely suffer long
delays and cost overruns, the new headquarters was
completed on time, within budget, and with
no disruption to Mellon Europe’s business. It now
stands as a powerful visual symbol of the unity
that has constituted such a strong theme in the
company’s BSC implementation, and it affirms
MFC’s long-term commitment to Europe.
Today, budgets are no longer developed
in a vacuum. Support departments meet
with each business line manager early in
the budget planning process to agree on
direction and strategic priorities and to
estimate schedules and costs. Meeting
participants identify potential conflicts
and resolve them promptly and with
complete transparency.
The Proof Is in the Performance
By deploying the BSC, Mellon Europe has clearly
addressed the conflicting priorities problem that it
faced just a few years ago. Today, budgets are no
longer developed in a vacuum. Support departments
meet with each business line manager early in the
budget planning process to agree on direction and
strategic priorities and to estimate schedules and
costs. Meeting participants identify potential conflicts
and resolve them promptly and with complete
transparency.
Other results are equally striking. To illustrate, since
the inception of the company’s scorecard initiative,
Mellon Europe has achieved yearly revenue growth
in excess of 20% (in 2004, nearly 30%), while keeping
its shared services costs flat. The company’s customer
roster includes 87 Fortune 100 companies, 388
Fortune 500 companies, and 290 of the Fortune
Global 500. More than 25% of the top 25 European
pension funds are clients of Mellon Europe.
Several Mellon Europe business lines have also
boasted 100% retention of their highest performing
employees. In addition, some lines have outperformed
their peers since the company adopted the BSC. For
example, in 2004, Newton Investment Management
was named number one in the Best Major Balanced
Fund Manager category over one-, three-, and five-
year periods by Professional Pensions, a leading
U.K. industry publication. Newton also finished in
the top three for U.K. and overseas equities in the
Best Defined Contribution Fund Manager category.
Mellon Global Investments was named the Best
Specialist group in Europe over a one-year period
in S&P’s Fund Awards 2004, as well as Best Equity
group in Germany in the 2004 Lipper Awards. And
Mellon European Fund Services and Global Securities
Services were named number one versus their peers
and number two in service in the 2004 R&M
Consultants4 fund administration and global custody
surveys. (The two garnered top ranking in 2003 in
the global custody survey.)
Moreover, thanks in part to Mellon Europe’s efforts
to support its parent company’s strategic direction, in
March 2005 MFC was named the number-one “most
admired” superregional bank by Fortune magazine.
(This followed “most admired” awards from Fortune
in 2002 and 2003.) In selecting admired companies,
the editors of Fortune consider eight specific areas
of leadership: candidates’ innovativeness, people
management, financial soundness, quality of manage-
ment, use of corporate assets, social responsibility,
long-term investment, and quality of products
and services. In 2004, MFC was named top global
custodian in three industry surveys.
Successful use of the BSC has led to personal
achievement as well as organizational success.
In 2004, five Mellon Europe employees won the
coveted Mellon Stars Award—MFC’s most prestigious
employee honor—out of a total of 33 awarded
worldwide. And Jack Klinck, the ultimate BSC
champion at Mellon Europe, was promoted to the
position of vice chairman of Mellon Financial
Corporation in September 2004. In his new role,
he oversees a new portfolio of businesses spanning
Europe and the United States. The chairman sums
up his impressions of the Balanced Scorecard’s
power in these words:
8 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe

The BSC has introduced a structure to our

strategy execution such that there is now increased
ownership and accountability of initiatives across
the business. We are also…less emotional about
agreeing on strategic priorities, because we can see
the organizational cause-effect model more clearly.
This is incredibly motivating for senior managers
who, in turn, are motivating their staff by ensuring
[that] the link between personal goals [and] strategic
objectives is clear….The end result can only be
a strong performing, more integrated and highly
motivated organization to lead us into the next
major phase of our development.
What are Mellon Europe’s goals regarding future use
of the BSC? As two new co-chairmen prepare to take
over Jack Klinck’s role in the summer of 2005, they
inherit an organization already transformed by the
BSC. But Klinck isn’t satisfied with leaving this legacy
at Mellon Europe; in his new role as vice chairman
of MFC and president of the corporation’s Investment
Manager Solutions division, he will be further spreading
the scorecard’s reach, cascading the scorecard into
IMS—with the enthusiastic support of MFC’s Martin
McGuinn and Steve Elliott.
1
Interview published in the Fall 2002 NewsLink, a Mellon
publication.
2
The Leadership Team Road Show is an annual event at which
the CEO and senior vice chairman discuss year-end results,
progress toward strategy, weaknesses, and priorities for the next
year.
3
With the BSC now embedded as a business process and the
remaining cascades proceeding apace, the Champions’ role is
no longer as active.
4
R&M Consultants provides market research to financial
institutions, and conducts numerous annual surveys.

9 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe

KEY RESULTS

• Mellon Europe’s annual revenues grew 21% from 2002 to 2003, and nearly 30% in 2004.
Its shared services costs remain flat since inception of the BSC.
• In both 2003 and 2004, Mellon Europe exceeded its target contribution to the parent
company’s total revenues.
• Also in 2003, Mellon Financial Corporation scored second place overall as “most admired”
company among U.S. financial institutions for the second consecutive year and first in
the “employee talent” and “social responsibility” categories by Fortune magazine. MFC was
named number-one superregional bank in Fortune’s “most admired” companies of 2005.
• The company’s shared services groups now see themselves as partners of the
revenue-generating businesses, prioritizing projects according to strategic importance.
• In June 2004, Mellon Europe achieved a major goal that represented the single biggest step,
both physically and symbolically, in unifying its scattered U.K. and European operations:
opening the doors to its new European headquarters, Mellon Financial Centre, in London.
• Several Mellon Europe business lines have outperformed their peers since the company
adopted the BSC.

TAKEAWAYS

• Active, engaged executive leadership can have a huge impact in buy in and in the
speed of implementation. It’s particularly important in organizations made up of disparate
cultures, such as those resulting from mergers or acquisitions.
• Accept that building and using the BSC is an iterative process. As initiatives and goals
are accomplished, the strategy map and scorecard must be revised.
• A working version of a strategy map is sufficient to get the strategic conversation going—
and a strategic transformation under way.
• Frequent communications from and events featuring top executives signal the importance
of the BSC implementation and strategic effort. They generate do-or-die acceptance and
often excitement.
• Establish new governance structures to support the new way of managing and allow
the BSC to serve as the agenda for key meetings.
• Cross-functional teams can help “spread the word” and cross-pollinate ideas. Their role
gives them visibility within the organization, which confers status and further serves to
promote their effort and the broader strategic effort.

10 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe

SFO SPOTLIGHT

All Balanced Scorecard Hall of Fame organizations exemplify the five principles of the Strategy-
Focused Organization. Mellon Europe is especially noteworthy as an exemplar of the following
SFO best practices:

• Top leadership sponsorship: The chairman, Jack Klinck, has driven Mellon Europe’s
BSC effort from the beginning and remains its primary driver. [Principle #1: Mobilize Change
Through Executive Leadership]

• Case for change clearly articulated: Mellon Europe’s case for change was developed
in 2000, after a major acquisition and amid a changing business landscape. The company
recognized that its businesses suffered from a lack of ownership of Europe-wide initiatives,
inadequate strategy development and execution, a lack of alignment among business units,
inefficient resource management and use, and conflicting corporate priorities. The chairman
led the charge by conducting detailed assessments of business financials, employee surveys,
and operational reviews. [Mobilize principle]

• Program manager identified: A full-time staff member managed the BSC development and
implementation process, supported by the BSC-trained “Champions,” who represent each line
of business and support service area. Their aim is to drive through and manage BSC imple-
mentations in their respective areas. The program manager continues to oversee and coordi-
nate the BSC effort organization-wide under the chairman’s direction. [Mobilize principle]

• Initiatives identified and rationalized: During BSC implementation, executives reviewed

existing initiatives and eliminated those that weren’t strategically relevant. To avoid duplicating
efforts and wasting resources, corporate initiatives were aligned and rationalized against
business-unit initiatives. Key corporate initiatives are shown on the corporate strategy map,
and, where relevant, are aligned to business unit initiatives on the appropriate business unit
strategy map and scorecard. When a business unit initiative can add value to another business
unit, it is also reflected on the corporate BSC and assigned to the executive of the originating
business unit. Initiatives are systematically revised, prioritized, and if need be, eliminated,
when the strategy map is refreshed. Proposed major strategic initiatives (those costing more
than $1 million) are analyzed, and, if approved, managed independently of operational
expenses, so the corporation can more easily evaluate their business benefits. [Principle #2:
Translate the Strategy into Operational Terms]

• Accountability assigned: Every member of the executive team must either own or manage
an initiative on the corporate strategy map. For example, in relation to the objective “Drive
value through leveraging core competencies,” the head of HR is responsible for the associated
measure “consolidated competency rating trend” and the initiative “personal performance
management planning audit.” [Translate principle]

11 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe

SFO SPOTLIGHT

• Corporate role defined: Besides being ultimately responsible for the delivery of support
services to all the organization’s business lines, corporate facilitates funding for all strategic
initiatives. It is also responsible for all corporate initiatives involving business lines and
support services, and facilitates synergies across business lines, such as cross-selling. As
such, corporate is overseer and facilitator of organization-wide strategy execution without
compromising the individual business units’ responsibility for strategy execution. Separating
funding responsibility from execution allows local executives to focus almost exclusively
on strategy execution. [Principle #3: Align the Organization to the Strategy]

• SBUs–Support units aligned: Support service units have their own strategy maps, which
are aligned with business line strategy maps, and support service strategies are developed with
direct input from business line executives. Alignment exercises between business lines and
support services have become a regular activity and help maintain alignment through any
internal or external changes. Business line and support services alignment is stressed in all
budget discussions and reinforced by the intrabank charge-back mechanism that allocates
support service costs to business lines by their usage. Support services are thus committed to
delivering business line and enterprise strategic objectives. These processes recognize and
emphasize the interdependencies among the enterprise, business line, and support service
strategies, and the need for ongoing coordination and communication in strategy execution.
[Align principle]

• Strategic awareness created: Through town hall meetings, the company’s intranet,
and the chairman’s quarterly “Dear Colleague” letter and regular e-mails, employees and
managers receive ongoing messages about strategy. Other vehicles for educating employees
about strategy include staff briefings, learning lunches, and “day-in-the-life” presentations.
[Principle #4: Motivate to Make Strategy Everyone’s Job]

• Strategic review meetings conducted: All business line and support services heads meet
quarterly to review corporate strategy and their alignment to it. The company created new
governing structures, such as the Mellon Europe Strategic Performance Forum, that meet
regularly to address strategic issues and needs. An operating committee (consisting of
support services heads) and an executive committee (made up of all business line heads)
each meet monthly to review operations and strategic issues, using the BSC as an agenda.
[Principle #5: Govern to Make Strategy a Continual Process]

• Planning, budgeting, and strategy integrated: Support services heads attend each
business line’s business-planning briefings to verify and validate their budget forecasts and
make necessary adjustments to agree on strategic direction and priorities. [Govern principle]

12 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe

SFO SPOTLIGHT

• Knowledge sharing linked to strategy: Trained BSC Champions, representing each major
business line and support service, meet regularly with the corporate BSC program manager
to share information and lessons learned. (BSC Champions coordinate BSC implementation
in their part of the organization.) Their findings are forwarded upward to the Mellon Europe
Strategic Performance Forum, which consists of all business line and support service heads.
Among the Champions’ team members are representatives of the Organizational Effectiveness
and Corporate Affairs departments, whose day-to-day roles are to facilitate strategic learning
and corporate communications through various channels. [Govern principle]

• Strategy management office established: Responsibility for strategy formulation,

performance reporting, and strategy execution rests in the chairman’s office, but each
function is delegated and managed at the business line and support services level. A member
of the chairman’s team is dedicated full-time to coordinating strategy management across
the organization. The chairman’s office focuses on ensuring a standardized approach and
consistency in the application of these functions organization-wide. [Govern principle]

13 © 2005 by Harvard Business School Publishing and Balanced Scorecard Collaborative, a Palladium company
Balanced Scorecard Hall of Fame Profile: Mellon Europe
TO LEARN MORE
To learn more about Mellon Europe and its
Balanced Scorecard program, see:
• The Balanced Scorecard Report article
“Mellon Europe: Mobilizing Change Through
Executive Leadership,” by Lauren Keller Johnson,
Contributing Writer, BSR January–February 2005
(Reprint #B0501F).
• Balanced Scorecard Hall of Fame Report 2005,
which features a brief profile on Mellon Europe
and the 17 other Hall of Fame inductees from 2004
(Product #9157).
• The BSC library: BSC portal members with access
to the library can search the keyword “Mellon
Europe” for a complete list of resources, including
conference presentations and executive video
interviews. (For information on becoming a BSC
Portal member, go to www.bscol.com.).
ADDITIONAL RESOURCES
• For more information on the Strategy-
Focused Organization (SFO) principles,
visit BSC Online. Membership is free. Go
to www.bscol.com/bsc_online.
• For additional guidance on the SFO principles,
and to learn about best practices in use at other
organizations that have successfully executed
strategy, go to www.bscol.com/toolkits. Here
you’ll find many resources available for purchase,
including Strategy Execution Toolkits.
• For access to the largest compilation of
published materials on the Balanced Scorecard
and the Strategy-Focused Organization, visit
www.sfo.harvardbusinessonline.org.
Editorial Advisers
Robert S. Kaplan
Professor, Harvard Business School
David P. Norton
President, Balanced Scorecard Collaborative
Edward D. Crowley
Executive Director–HBR Specialty Publications
Publisher
Robert L. Howie Jr.
SVP, Balanced Scorecard Collaborative
Director of Research
Randall H. Russell
Balanced Scorecard Collaborative
Editor
Janice Koch
Balanced Scorecard Collaborative
Writer
Lauren Keller Johnson
Design
Robert B. Levers
About Balanced Scorecard Collaborative
Balanced Scorecard Collaborative (BSCol), a Palladium
company, is a global family of professional service firms
that helps clients use the Balanced Scorecard to successfully
execute strategy. BSCol offers a wide range of services,
including education (conferences, publications, research),
training (public seminars, in-house, online), consulting
(strategy, performance, change), and technology (“BSC
Portal™,” “BSC First Report™,” toolkits). To learn more,
visit www.bscol.com, or call 781.259.3737.
About Harvard Business School Publishing
Harvard Business School Publishing is a not-for-profit, wholly
owned subsidiary of Harvard University. The mission of
Harvard Business School Publishing is to improve the
practice of management and its impact on a changing
world. We collaborate to create products and services in
the media that best serve our customers—individuals and
organizations that believe in the power of ideas.
Ordering Information
To order additional copies of this profile (in print or by
download), call HBSP at 1-800-668-6705 (617-783-7474
outside the U.S.) and request product #1363 or visit
www.sfo.harvardbusinessonline.org and insert the product
number into the search field, or type in “Hall of Fame.”
Here you’ll find a list of all available Hall of Fame profiles
and other products for the Strategy-Focused Organization.
© 2005 by Harvard Business School Publishing and Balanced Scorecard
Collaborative, a Palladium company. Quotation is not permitted. Material
may not be reproduced in whole or in part in any form whatsoever
without permission from the publisher. Balanced Scorecard Hall of Fame
for Executing Strategy™ and Balanced Scorecard Hall of Fame Profiles™
are trademarks of Balanced Scorecard Collaborative. The trademarks
referenced in this publication are the property of their respective owners.
14
 TRANSLATE STRATEGY
INTO ACTION WITH THE
BALANCED SCORECARD REPORT

The ability to execute strategy is the most important

capability an organization needs to quickly adapt and
thrive in today’s global economy. But implementing
strategy may be the single most difficult task you face.
For twelve years, Strategy-Focused Organizations like Motorola, Hilton Hotels,
Equifax, Thomson Financial, Siemens, and literally thousands of others have
been using the Balanced Scorecard to transform strategy into action.

Now you too can benefit from an invaluable tool that’s helping companies
around the world get the most from their Balanced Scorecards—the
Balanced Scorecard Report newsletter. Every issue is packed with the
latest thinking of BSC founders Robert Kaplan and David Norton and
their five principles of the Strategy-Focused Organization—principles
that can help you translate ideas into action—

MOBILIZE change through executive leadership

TRANSLATE the strategy into operational terms

ALIGN the organization to the strategy

MOTIVATE to make strategy everyone’s job

GOVERN to make strategy a continual process

Each bimonthly issue of
Balanced Scorecard Report The Balanced Scorecard Report
takes you behind the scenes is a resource you’ll return to again
through case studies of actual
and again—subscribe today.
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The Balanced Scorecard Hall of Fame™ Profile Series
Learn how each of these Balanced Scorecard Hall of Fame organizations
became strategy-focused. Each individual profile provides a source of
information on how to “do it right”, including a profile narrative, Strategy-
Focused Organization spotlight best practices, key results and takeaways.

Chrysler Group

City of Charlotte

Crown Castle International

Economic Development Administration

(U.S. Department of Commerce)

E-Land

Hilton Hotels

Media General

Mobistar

Motorola’s Government and Enterprise Mobility Solutions

Royal Canadian Mounted Police

Tennessee Valley Authority

Unibanco

U.S. Army

To learn more visit: www.sfo.harvardbusinessonline.org

or call 1-800-668-6705 (617-783-7474 outside U.S.)

Product Number 1363