Scorecards/Dashboards

AnyAirline
Financial
Increase Profitability

Operating Efficiency

More Passengers

What will drive operating efficiency?

More customers on fewer planes

Fewer Planes

Customers
Lowest Cost

How will we do that? Attract targeted customer segments who value price and on time arrivals

On-Time Flights

Internal
Fast Ground Turnaround

What must the internal focus be?

Fast turnaround Will our people do that?

Learning & Growth

Focus on Process Redesign

Educate and compensate personnel for cycle time reduction

Why the Scorecard?

The Organization will become more strategically focused People at all levels have relied heavily on tactical performance measurements Need more balanced approach to looking at performance, both tactical and strategic. Only 5% of a workforce tends to understand their companys strategy. 86% of executive teams spend less than one hour per month discussing strategy.

Where it started . . .
Introduced in 1992, by Robert Kaplan and David Norton, the Balanced Scorecard is the most commonly used framework for ensuring that organizations execute their strategies.

Some Basic Principles

Quantifies the Organizational Strategy in measurable terms Strategy is summarized on a Strategy Map over four views of performance (perspectives). Must capture a cause-effect relationship between strategic objectives over the four perspectives on the Strategy Map. Critical Components include: - Measurements - Targets - Initiatives Everything must be linked: Goals to Objectives, Objectives to Measurements, Measurements to Targets.

Four Views of Performance

Strategic Objectives

Strategy can be described as a series of cause and effect relationships. Provides a line of sight from strategic to operational activity working on the right things.

Stakeholders
If we succeed, how will we look to our stakeholders?

Internal Processes
To satisfy our customers, at which processes must we excel?

Learning & Growth

"To execute our processes, how must our organization learn and improve?"

Agency Investments
In order to succeed, what investments in people and infrastructure must we make?

Before we can map your strategy . . .

Get down to a set of quantifiable strategic objectives:
Too vague
Improve Customer Service

More precise

Reduce average customer wait times by 30% by year end

Make sure your objectives have a direct relationship to your goals and your goals have a direct relationship to your mission and values.

Strategy Map: Capture a Cause Effect Relationship from the Bottom Up

Stakeholder Improved Returns on Investments More rapid and accessible services

Internal Process

Economic Model Process

Reduce Re-Activities thru ABC/M

Establish Web Based Self Services

Learning & Growth

Expand Global Facility Reach

Leadership Development

Knowledge Management

Investments

Facilities and Fixed Assets

Human Capital

IT Infrastructure

Examples of Measurements by Perspective

Stakeholder / Customer
Current customer satisfaction level Improvement in customer satisfaction Customer retention rate Frequency of customer contact by customer service Average time to resolve a customer inquiry Number of customer complaints

Internal Processes
Number of unscheduled maintenance calls Production time lost because of maintenance problems Percentage of equipment maintained on schedule Average number of monthly unscheduled outages Mean time between failures

Learning and Growth

Percentage employee absenteeism Hours of absenteeism Job posting response rate Personnel turnover rate Ratio of acceptances to offers Time to fill vacancy

Investments
% of facility assets fully funded for upgrading % of IT infrastructure investments approved # of new hire positions authorized for filling % of required contracts awarded and in place

From expectation to execution

Multiple Choice Question Create a Tight Model

The Balanced Scorecard process captures a cause and effect relationship based on having all parts linked together. Strategic goals link down to objectives, objectives link down to measurements, and measurements link to: a. Mission b. Goals c. Budgets d. Targets

Multiple Choice Question and the answer is . . .

d Measurements should be linked to targets. We want a one-to-one relationship so that measurements are actionable to the Organization

Without Measuring, Decision Makers Have No Basis For:

Knowing what is going on in their enterprise Effectively making and supporting decisions regarding Investments, plans, policies, schedules, and structure Specifically communicating performance expectations to subordinates Identifying performance gaps that should be analyzed and eliminated Providing feedback that compares performance to a standard Identifying performance that should be rewarded

Multiple Choice Question Appropriate Measurement

The measurement, % of employees following a supervisor approved competency model, would most likely be placed in which perspective of the Balanced Scorecard? a. b. c. d. Stakeholder / Customer Learning and Growth Company Investments Internal Processes

Multiple Choice Question and the answer is . . .

b this measurement relates to helping grow the workforce and this would most likely fit with the Learning and Growth perspective of the Balanced Scorecard.

Three Criteria Used for Scorecard

1. Relevant Addresses an operational or strategic performance issue Is results- or outcome-focused Provides useful information to enable decision making Measurable Quantifiable and Objective Facilitates Analysis Can be done in a timely manner with high accuracy Data are available and collectable Actionable Can be tracked to an appropriate person or team responsible for the activity measured Measure relates to process inputs that can be controlled/adjusted to address concerns

2.

3.

A Closer Look at How Things Link

Transportation Safety Example
Mission: Protect people and property

Strategic Goal #1: Reduce damage caused by motor vehicle accidents

Annual performance goal 1A: Reduce deaths per crashes to 1.10 per 100m miles traveled by 2005

Measure: Fatality rate per 100m miles traveled

Checklist for Setting Targets

Targets match up with measurements, one to one. Targets require improving current levels of performance. Targets are a stretch, but achievable: they may require improvements to existing processes. Targets are quantifiable so that the target communicates if the expected performance was met. Long-term targets are established before short-term targets. Financial/Budget related targets are established before nonfinancial targets.

Multiple Choice Question Sequence Of Steps

The basic steps for creating a Balanced Scorecard include: A = Align your strategy map to other organizational units B = Create your strategic plan including goals and objectives C = Extend your strategy map into measurements and targets D = Map your strategy over four perspectives The sequence or order of these steps is (left to right): Step 1 a. A b. C c. B d. C Step 2 C A D B Step 3 B D A A Step 4 D B C D

Multiple Choice Question and the answer is . . .

c Step 1 or B Start with your strategic plan Step 2 or D Map your strategic plan Step 3 or A Align your strategy map Step 4 or C Extend the strategy map into measurements and targets

KPI as a Decision Tool

Metrics Data Volatility

80 70 60

Measurements

50 40 30 20 10 0 Req
100 80 60 40 20 0 -20 J F M

Volatility
Planned Actual

KPI

Issue

Decision

Coding

Data

BCWS ACWP CV

Volatility

Decision Feedback

Process Measures
Stakeholder needs: Objectives: Customer complete, defect free order, accurate invoice ; Company costs & cash Data to assure that we maintain customer satisfaction, no dip in level of service Continue normal cash receipts and collection activities % orders adjusted % not entered within 24hours # orders/person % orders with backorders % shipped late costs per order

Quality

# disputed invoices (&$)

% sent within 24hrs of ship date costs per invoice

days past due; write off as % sales % current

Time
Productivity

Order Request

Customer Order Taken

Product Shipped

Invoice Sent

Payment Collected

Resources and Cost

Financial Performance Personnel

Cost

Earned Value

Effort

Staff

Experience

Dashboard is Built from Dependent Layers

Jesse James Garretts Elements of User Experience: http://www.jjg.net/elements/

Business Goals and Stress Drive Strategy

Surface
Customers

Bosses

Skeleton
Structure Scope
Users Project Manager Maintainers

Strategy

Team

Scope supports task-centric

Surface Skeleton Structure Scope Strategy

Resources and Cost

Financial Performance Personnel

Effort

Structure Defines Metrics Correlation

Surface Skeleton

Structure
Scope Strategy

The skeleton describes screen layout

Surface Skeleton
Structure Scope Strategy EVM Productivity Completion People

Change

Quality

Risk

The Surface Describes Finished Dashboard

Surface Skeleton
Structure Scope Strategy