Objective of the Project

Evaluate Balanced Scorecard

knowledge and skills within my work
environment and general
experiences.
Effectively Monitor, Measure And
Evaluate the Balanced Scorecard For
Maximising the Performance
Management.

1
 INDEX

1. Introduction 3

2. Background of Balanced Scorecard

3. What is the Balanced Scorecard?

4. Balanced Scorecard – Concept

5. Utilizing The Balanced Scorecard

14

as A Strategic Management Tool

6. Steps to create the Organizational Balanced

Scorecard 18

7. BSC Implementation in Bilcare

21

 Introduction

 Functional Scorecard in Bilcare

 Automation – MPOWER - COVENARK™

 Vision./ Mission

2
 Core objective

 Implementation of BSC

 Feedback and Review system –

Performance Management

8. Conclusion

28

9. Annexure

I. Introduction

It is found that though in many corporations a defined strategy

exists at the corporate level, the deployment of the same at
the operational level is not uniform and in many cases absent.
This causes misalignment of organizational strategy and
hampers achievement of organizational goals due to poor
deployment.

It is observed that though many organizations have excellent

business strategy there are severe lapses in the execution at
the operational level. Cascading business strategy as
appropriate to Projects becomes a great challenge.

The Balanced Scorecard has specific focus on four

perspectives – Financial, Customer, Internal and Learning. It
also has a focus on balancing long term and short-term goals
of an organization. It is observed that organizations, which do
not have a robust framework to deploy a “Balanced” set of

3
goals at the Project level, fail to achieve organizational
alignment and integration.

The objective of developing such a framework was the

following:
• Create a sustainable strategic position at the project
level
• Focus on Financial as well as non-financial goals at the
Project- level
• Balance short-term and long-term organizational
objectives
• Create a Learning organization

II. Background of Balanced Scorecard

The concept of ‘Balanced Scorecard’ was first introduced in

the journal “Harvard Business Review” (January-February,
1992) by Robert S. Kaplan and David P. Norton. The basic idea
behind the introduction of the Balanced Scorecard was that
the traditional financial measures (like ROI, EPS etc.) alone
cannot provide a clear and comprehensive performance target
or focus attention on all the critical areas of the business that
bear significant impact on its long-term survival, growth and
development, rather it requires a balanced presentation of
financial as well as operational measures. The Balanced

4
Scorecard is an organizational framework for implementing
and managing strategy at all levels of an enterprise by linking
objectives, initiatives and measures to an organization’s
strategy.

The Balanced Scorecard is a strategic management system

(not only a measurement system) that enables organizations
to clarify their vision and strategy and translate them into
action. When fully deployed, the Balanced Scorecard
transforms strategic planning from an academic exercise into
the nerve centre of an enterprise. The scorecard provides an
enterprise view of an organization’s overall performance. The
scorecard integrates financial measures like ROI, RI, Dividend
yield, EPS etc. with other key performance indicators around
customer perspectives, internal business processes and
organizational growth, learning and innovation.

III. What is the Balanced Scorecard?

The balanced scorecard is a management system (not only a

measurement system) that enables organizations to clarify
their vision and strategy and translate them into action. It
provides feedback around both the internal business processes
and external outcomes in order to continuously improve
strategic performance and results. When fully deployed, the
balanced scorecard transforms strategic planning from an
academic exercise into the nerve center of an enterprise.

5
Kaplan and Norton describe the innovation of the balanced
scorecard as follows:

"The balanced scorecard retains traditional financial measures.

But financial measures tell the story of past events, an
adequate story for industrial age companies for which
investments in long-term capabilities and customer
relationships were not critical for success. These financial
measures are inadequate, however, for guiding and evaluating
the journey that information age companies must make to
create future value through investment in customers,
suppliers, employees, processes, technology, and innovation."

IV.Balanced Scorecard – Concept

The long-term success of any organization is determined by
the capabilities and the competencies it has developed. One of
the tools for organizational appraisal that is gaining immense
popularity is the Balanced Scorecard, developed by Robert S
Kaplan and David P Norton in 1992. This innovative tool is

6
unique in two ways compared to the traditional performance
measurement tools.
They are–

1. It considers the financial indices as well the non-financial

ones in determining the corporate performance level and
2. It is not just a performance measurement tool but is also
a performance management system.

In the words of the proponents of this tool “the Balanced

Scorecard” retains traditional measures. But, financial
measures tell the story of past events, an adequate story for
industrial age companies for which investment in long-term
capabilities and customer relationships were not critical for
success. These financial measures are inadequate however,
for guiding and evaluating the journey that information age
companies must make to create future value through
investment in customers, suppliers, employees, processes,
technologies and innovation.” These words give the idea
behind the development of this framework. Today’s businesses
require a better understanding of their customers (both
existing and potential) and their needs, better-streamlined
processes and highly skilled people for ensuring future survival
and sustainable growth. This shows that the focus of action
has rightly considered the non-financial aspects apart from the
financial indices. This tool is the end result of sustained efforts
to find an ideal tool to measure performance and provide a
link to strategy and action. The decisions about the future
actions form the key to success of any enterprise in this fast-
changing business environment.

7
The aim of the Balanced Scorecard is to direct, help manage
and change in support of the longer-term strategy in order to
manage performance. The scorecard reflects what the
company and the strategies are all about. It acts as a catalyst
for bringing in the ‘change’ element within the organization.
This tool is a comprehensive framework, which considers the
following perspectives and tries to get answers to the following
questions –

1. Financial Perspective - How do we look at

shareholders?
2. Customer Perspective - How should we appear to our
customers?
3. Internal Business Processes Perspective - What
must we excel at?
4. Learning and Growth Perspective - Can we continue
to improve and create value?

Hence, from the above lines we can say that this tool has
considered not only the financial results to be important but
also those factors, which actually drive an organization
towards future successes as mentioned earlier. The tool has
given stress on the other areas which are required to ‘balance’
the financial perspective in order to get a total view about the
organizational performance improve the same. The framework
tries to bring a balance and linkage between the –

(A) Financial and the Non-Financial indicators,

(b) Tangible and the Intangible measures,

8
(c) Internal and the External aspects and
(d) Leading and the Lagging indicators.

The Four Perspectives: Cause and Effect Relationship

The four perspectives as mentioned above are highly

interlinked. There is a logical connection between them. The
explanation is as follows: If an organization focuses on the
learning and the growth aspect, it is definitely going to lead to
better business processes. This in turn would be followed by
increased customer value by producing better products which
ultimately gives rise to improved financial performance.

1. Learning Growth
2. Business Process
3. Increased customer value
4. Improved financial performance

1. The Learning and Growth Perspective

This perspective includes employee training and corporate

cultural attitudes related to both individual and corporate self-
improvement. In a knowledge-worker organization, people --
the only repository of knowledge -- are the main resource. In
the current climate of rapid technological change, it is
becoming necessary for knowledge workers to be in a
continuous learning mode. Government agencies often find

9
themselves unable to hire new technical workers, and at the
same time there is a decline in training of existing employees.
This is a leading indicator of 'brain drain' that must be
reversed. Metrics can be put into place to guide managers in
focusing training funds where they can help the most. In any
case, learning and growth constitute the essential foundation
for success of any knowledge-worker organization.

Kaplan and Norton emphasize that 'learning' is more than

'training'; it also includes things like mentors and tutors within
the organization, as well as that ease of communication
among workers that allows them to readily get help on a
problem when it is needed. It also includes technological tools;
what the Baldrige criteria call "high performance work
systems." One of these, the Intranet, will be examined in detail
later in this document.

2. The Business Process Perspective

This perspective refers to internal business processes. Metrics

based on this perspective allow the managers to know how
well their business is running, and whether its products and
services conform to customer requirements (the mission).
These metrics have to be carefully designed by those who
know these processes most intimately; with our unique
missions these are not something that can be developed by
outside consultants.

10
In addition to the strategic management process, two kinds of
business processes may be identified: a) mission-oriented
processes, and b) support processes. Mission-oriented
processes are the special functions of government offices, and
many unique problems are encountered in these processes.
The support processes are more repetitive in nature and hence
easier to measure and benchmark using generic metrics.

3. The Customer Perspective

Recent management philosophy has shown an increasing

realization of the importance of customer focus and customer
satisfaction in any business. These are leading indicators: if
customers are not satisfied, they will eventually find other
suppliers that will meet their needs. Poor performance from
this perspective is thus a leading indicator of future decline,
even though the current financial picture may look good.

In developing metrics for satisfaction, customers should be

analyzed in terms of kinds of customers and the kinds of
processes for which we are providing a product or service to
those customer groups.

11
4. The Financial Perspective

Kaplan and Norton do not disregard the traditional need for

financial data. Timely and accurate funding data will always be
a priority, and managers will do whatever necessary to provide
it. In fact, often there is more than enough handling and
processing of financial data. With the implementation of a
corporate database, it is hoped that more of the processing
can be centralized and automated. But the point is that the
current emphasis on financials leads to the "unbalanced"
situation with regard to other perspectives.

There is perhaps a need to include additional financial-related

data, such as risk assessment and cost-benefit data, in this
category.

12
The Model – An Explanation

Hence, from the aforesaid model, it is clear that the following

are to be done so as to utilize the Balanced Scorecard as a
strategic management tool:

1. The major objectives are to be set for each of the

perspectives.

2. Measures of performance are required to be identified under

each of the objectives which would help the organization to
realize the goals set under each of the perspectives. These
would act as parameters to measure the progress towards the
objectives.

13
3. The next important step is the setting of specific targets
around each of the identified key areas which would act as a
benchmark for performance appraisal.

Hence, a performance measurement system is build around

these critical factors. Any deviation in attaining the results
should raise a red signal to the management which would
investigate the reasons for the deviation and rectify the same.

4. The appropriate strategies and the action plans that are to

be taken in the various activities should be decided so that it is
clear as to how the organization has decided to pursue the
pre-decided goals. Because of this reason, the Balanced
Scorecard is often referred to as a blueprint of the company
strategies.

An example will help the readers to understand it better. Some

of the
Objectives together with a measurement measures are given
below.

14
Hence, the above paragraphs show that all the four areas have
been given equal importance in measuring performance level.
The measures and the objectives, however, depend upon the
type of business the 0rganization is in. The financial indicators
are complemented by the non-financial ones. Since, objectives
and goals are set for each of the critical success factors under
each of the heads, it brings about a focus on the strategic
vision.

Thus, all activities would be directed towards achievement of

the long-term goals which have been set by the top
management. The identification of the key result areas (KRAs)
help an organization in moving towards the right strategic
direction. This tool creates a link between objectives,
measures, targets and initiatives. It is, therefore, absolutely

15
clear that the Balanced Scorecard acts as a focal point for the
organisation’s efforts, designing and communicating priorities
to the managers, employees, investors and the customers.
V. Utilizing The Balanced Scorecard As A
Strategic Management Tool

The tool has become a weapon for organizations to identify the

pressure points, conflicting interests, objectives setting,
prioritization of objectives, planning and budgeting. The four
main important steps that need to be taken care of are-

1. Translating the Vision

It is to be remembered that the vision of any organization

should be understood by each and every employee of the
organization. If it is understood by the top management only,
then it is definite that the organization will fail to realize its
goals. Hence, before starting with the strategic
implementation process, the organizations needs to be clear
about the reason for its existence, where it wants to see itself
after a certain number of years and properly decide its
business definition. The managers should build a consensus
around the organisation’s vision and strategy. The strategies,
in fact, emanate from the vision and mission of the company
which means that a linkage is formed between the strategies
of the different business units and the vision of the
organization. The lofty statements must be translated into an
integrated set of objectives and measures. Thus, by using this
tool, the overall strategic objectives for the company gets
clarified which helps to achieve consensus across different

16
business units on the overall strategic objectives for the
company.

2. Communicating and Linking

Just communicating the vision and the strategies is not an end
in itself. The strategic goals and the measures to be set in the
different areas have to be decided upon. The long-term
strategic goals have to be translated into both departmental
and individual goals which should be aligned to each other in
order to realize the long-term goals. In fact, each and
everyone at different levels in the organizational hierarchy
needs to be educated about the action plans and reasons for
accepting the same. The tool contains three levels of
information :

1. It describes the corporate objectives, measures and the

targets
2. It helps in deciding the business unit targets and
3. It helps in framing the departmental and the individual
objectives which will help in attaining the objectives of
the business unit directly which would lead to the
attainment of the corporate goals. The employees are
given the freedom to decide their measures, objectives
and the targets attainment of which would move the
organization in the right strategic direction. Then the
compensation level is linked to the performance level
which in reality involves a lot of subjectivity.

3. Business Planning

17
This step helps in the resource allocation process. One has to
keep in mind that objectives form an important criteria in
deciding the quantum of resources that are required to be
allocated to the various departments, activities and the
processes. No strategy can bring successful results to an
organization if the allocation is not in line with what is required
to meet the results. This allocation is dependent on the
budgeted estimates which are decided on the basis of the said
objectives. Hence, through this step the Balanced Scorecard
tries to bring about integration between strategic planning and
the budgeting exercise. The short-term milestones are also
needed to be figured out which in totality brings about a
linkage between strategic goals and the budgets. This
procedure helps in actualizing what has been set by the
organization. Thus, this step brings about a shift from the
‘thinking’ exercise to the ‘doing’ stage and the organization
tries to achieve the long-term goals through the short-term
actions.

4. Feedback and Learning

The first three steps as mentioned above help in the strategic
implementation process. But, for knowing whether the
organization is in a position to achieve the strategic goals and
whether it is in the right track, the process of feedback and
learning is essential. The strategic learning consists of
acquiring knowledge about which way the organization is
moving to, testing whether the premises considered before
hold true even now and finally making adjustments wherever
required. The corrective measures are required so that the
necessary rectifications are made which will help an

18
organization pursue the correct path. Another point is that an
organization gets to know whether the cause-and effect
relationships among the different perspectives really hold true,
to what extent they are strongly linked and also whether
positive results are being obtained. In case, an organization
realizes the existence of a gap in the cause effect
relationships, an immediate correction would be required so
that a positive relationship can be build among the various
factors. Thus, the tool with its specification of the causal
relationships between performance drivers and objectives
allows corporate and the business unit objectives executives
to use their periodic review sessions in order to evaluate the
validity of the unit’s strategy and the quality of its execution.
Also, this feedback and learning exercise may force an
organization to change the measures set in each of the
perspectives and adopt those, which if attained would ensure
the success of the corporate and the business strategies.

Before creating Strategy map Management should plan

a process of continuous improvement called the Plan-
Do-Check-Act cycle. For our purposes, the PDCA cycle

• PLAN: Design or revise business process components to

improve results
• DO: Implement the plan and measure its performance
• CHECK: Assess the measurements and report the
results to decision makers
• ACT: Decide on changes needed to improve the process

PDCA cycle can be illustrated as follows:

19
This 'wheel within a wheel' describes the relationship between
strategic management and business unit management in a
large company. There are actually several separate business
units, of course, each with its own set of metrics, goals, targets
and initiatives. But this figure illustrates the idea that the
business activities constitute the DO part of the overall
strategic effort.

VI. Steps to create the

Organizational Balanced Scorecard

Formulate improvement Actions and Assign Data ownership

Create Strategy Map Formulate, Performance Measures and

Targets, Develop & Align Strategies, Identify Vision and
Mission

Vision and Mission

The Balanced Scorecard process starts with determining or
updating the mission and vision, because it is advisable to

20
clarify the shared view of the organisation’s future direction
right from the start.
The mission and vision should reflect the organisation’s
values. The organizational mission contains an
organization’s identity and indicates its reason for existing.
The mission involves what is perceived as being a shared
view of the organisation’s underlying principle: why do we
exist, what we are doing here together, for whom do we
exist, who are our most important stakeholders. The
‘mission statements’ if effectively articulated can fit the
employees of the organization in the right place and steer
them towards the common goal.

A vision is perceived as the most ambitious image where

the organization wants to be in the future. The vision
should be challenging, but not impossible. The vision
clearly says where are we going, how do we envision the
future, where do we want to be.

Good business leaders create a vision, articulate the vision,

passionately own the vision, and relentlessly drive it to
completion.”

Develop and Align Strategies :

Every organization should pursue a unique strategy, based
on its interpretation of the external and internal situation.
The strategy should involve a view of future challenges in
the operating environment and the sector. This is a long-
term view of the objectives and means required to achieve
the vision, mission and values.

21
In a Balanced Scorecard process, goals and objectives are
set at management group level, after determining analyses
and policies, and are then filtered down to operations or
processes, teams and, where necessary, all the way down
to individual level. The effectiveness of the strategy will
ripple through all departments, which can then be used to
compare the actual results with expectations.

Create Strategy Map

Strategy maps and scorecards go hand in hand. A strategy
map is a visual representation of an organization's strategy
and the processes and systems necessary to implement
that strategy. A strategy map will show employees how
their jobs are linked to the organization's overall objectives.
The strategy map is used to develop the Balanced
Scorecard a strategy map that describes how an
organization creates value by connecting strategic
objectives in explicit cause and effect relationship with
each other in the four BSC objectives (financial, customer,
processes, learning and growth). A way to think of this is
the organization’s vision and mission statement answer the
questions, “Where do we want to go?” and “Why are
we here?” whereas the strategy map and scorecard
answer, “How are we going to get there?” Strategy
map is the key to improve the business performance. .
Designing strategy map and creating balanced scorecard
performance metrics that tightly link critical success factors
to strategic goals. With a properly cascaded strategy map,

22
changes in strategy can quickly be mirrored in the
measurement system.

Formulate performance measures and targets

Everyone recognize the saying “What you measure is what
you get.” Scorecards make it a reality. Measures drive
behavior! Selecting appropriate performance measures is
more art than science. A performance measure is some
objective measurement of an aspect of a business that is
critical to the success of that business. Such performance
measures are a component of the conceptual scorecard for
a business and can be associated with a number of
different business activities. Through continuous reporting
of the actual scores against the KPI targets, an organization
is kept on track. The scorecard’s critical role is that it puts
the measures (key performance indicators, or KPIs) in the
context of the strategy. To express the strategy in
measurable objectives, the management should balance
between leading and lagging indicators to progress toward
the corporate vision. A leading indicator is a measure that
has a causal effect on time-lagging indicators. Leading
indicators are valuable to track because merely sanctioning
and reporting them serves to drive behavior—which is the
intent. Think of leading indicators as cumulatively adding
power to the alignment and achievement of the
overarching strategic objective. The results of each
indicator must be compared to a target. The performance
against each measure should be keyed to challenging but
attainable targets. Through continuous reporting of the

23
actual scores against the KPI targets, an organization is
kept on track.

VII. BSC IMPLEMENTATION

in
BILCARE LIMITED

Bilcare is a unique research-based organisation with a vision to

provide state-of-the-art and comprehensive packaging
solutions to the pharmaceutical and Healthcare sector. The
main focus is scientific designing through path-breaking
methodologies and optimization of packaging solutions.

By introducing the Balance Score card in the Bilcare organization all the
Role and responsibilities are properly defined. No over lapping of the
work is done.

Functional Scorecard in Bilcare

 S & M – Sales and Marketing Department – Total 16

Leader Scorecard and one Head S &M Scorecard
 IS Score card – Total 4 Score card of IS leader and Global
IS
 Procurement Department – Total 4 Score of Procurement
Leader and Head Procurement
 R& D Score card – Total 4 Score card of RS leader and
Global RS
 Some are in process

24
Automation Balanced Scorecard

The implementation of the strategy depends upon effective

execution of the operational details. Use of information
technology for this purpose will be a key element for effective
use of Balance Scorecard.

MPOWER provided the automation tool, COVENARK™

STRATEGIST, to automate this comprehensive and intricately
linked balanced scorecard structure. It helped the top
managers of Bilcare to successfully position their strategy
across the organization and reap the benefits of a seamless
strategy deployment and performance measurement solution.

Step 1
Strategy Review

Vision –

• Build Research Driven enterprise of the century to service the life

sciences globally

Mission by 2010-
• By 2010, Team Bilcare will lead the world in Pharma packaging

Core Business objective

• By 2010 convert from 100% generic supplies to 100% customized

solutions and grow at 80% CAGR with 25% EBIDTA and 15% PAT

The next step will be to meet the leadership team to confirm strategic direction
and priorities. Consequently, the Strategic map will be built.

25
Step 2
The Strategy MAP Development

Mapping a strategy through use of Balanced Scorecard is an

important step to evaluate organizational perspective,
objective in terms of Strategy Map. This process will be to
develop and refine objectives to finalize strategic map.

Step 3
Measurements, Targets and Initiatives.

The process will be to rank initiatives and the measure or

indicators is selected to best represent the factors that lead to
improve customer, operational and financial performance.

Once the initiative have been endorsed by all participants in

the workshop, a document will be prepared and again

26
discussed in final executive workshop to be attended by top
manager for finalization.

The out put will be a Balanced Scorecard which now contains

all elements, namely strategic map, objective measure,
targets with priority order and initiative.

Dependent Measurement Template

27
Initiative Template

28
29
INTIATIVE MAPPING (PROJECT MAPPING)

Step 4
Implementation Plan
The detailed Plan to implement the strategic management
system across the organization is developed. The essential
components of plan are
• Education and Communication Strategy
• Plan for Cascading to lower levels
• Linkage to Compensation

30
Feedback and Review system (Performance Management
system is done by applying BSC)
Improvements in organizational / project performance can only be
achieved if performance is reviewed continuously using the balanced
scorecards.

One of the most effective methodologies is the “Dashboard”

methodologies, where we can set up for the “green” space, “yellow”
“Grey” and “red” space for each of the KPMs at the project level.

Where green denotes- KPM on target, yellow denotes- acceptable level of

deviation and red denotes- that the performance deviation needs
immediate recovery plan. The dashboard methodology helps the executive
management to focus on the vital few which needs focus and act on them..
The green, yellow and red spaces are set up based on past benchmarks
and comparative data.

Balanced Scorecard

31
VIII. Conclusion –

This tool is being used by several organizations throughout the

world. Bilcare limited as a Global company also started using it
because it gives certain advantages - which are cited below :

• It translates vision and strategy into action.

• It defines the strategic linkages to integrate performance
across organizations.

32
 • It communicates the objectives and measures to a
business unit.
• It aligns the strategic initiatives in order to attain the
long-term goals.
• It aligns everyone within an organization so that all
employees understand how they support the strategy.
• It provides a basis for compensation for performance.
• The scorecard provides a feedback to the senior
management if the strategy is working.

A great scorecard is not enough

 Get the strategy right.
 Senior management commitment – a must.
 Realize - BSC is a major change process.
 Involve more & more people.
 Communicate & educate – to create awareness.
 Ensure Personal alignment – KRAs, Compensation.
 Link strategy & budgeting.
 Use it
 Use it !

References
Translating Strategy Into Action: The Balanced Scorecard, Robert S
Kaplan and
David P. Norton, Harvard Business Press
Web Site
www.balancedscorecard.org

Guidance : Mr. Sanjay Limaye – Head Business Excellence

: Dr. Soniya Yadwadkar – Head HR. Corporate

33
34