Balanced Business Scorecard

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Scorecard initiative in BSNL
Implementation of
Balanced Business Scorecard
in BSNL
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Agenda

• Generating Scorecards
• Deciding the performance parameters
• Type of performance parameters
• Assigning Weights and targets to performance
  parameters
• Calculating scores
• Responsibility Centres Initiatives

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Generating Scorecards
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How BBS looks like
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Scorecard

• It resembles a grade report / Marksheet
• Parameter Perspective are like Subjects
• Shareholders concern
• Customers concern
• Internal Business Processes
• Learning Growth of Organization and Employees
• Performance parameters are like Questions
• Weights are like marks assigned to questions
• Targets are like desirable marks
• Achievements are your answers to questions
• Score can be more than the maximum marks(100)

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PERFORMANCE PARAMETERS
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Deciding the performance parameters

• Ideally decided by cause-effect relationship of
  strategy map
• Example BD cell

ROCE
Cost / Expenses of BD team
Revenues generated by BD cell
Financial Perspective
Cost of equipment quoted to customer
No of turnkey VPN projects
Customer Perspective
Average No of days For commissioning Turnkey
projects
Strategic tie ups with vendors
Internal process Perspective
Training manpower In network management
Training manpower In sales capabilities
Learning Growth Perspective
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Deciding the performance parameters
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Deciding the performance parameters

• Look at companys/circles BBS.
• Choose from reporting officers Score card, if
  applicable
• Choose from performance parameters from BBS
  posted on the intranet, if applicable.
• List down all the activities performed by the
  officer.
• Choose those which have high priorities or
• which are contributing in strengthening the
  Companys/Circles performance parameter.
• See if the activity is measurable.
• If it is not directly quantifiable or measurable
  then re-define it in a way (or break it into
  sub-activities) that it becomes measurable.
• Put such quantifiable activities/sub-activities
  which are important in contributing towards the
  companys/ circles score card as Key Performance
  Indicator (KPI) in the BBS.
• Place the parameters into four different
  perspectives

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Deciding the performance parameters

• For example AO (TR)s major job is to issue bill.
  Now it is difficult to quantify this parameter in
  these very terms i.e. Issue bills. So we divide
  this activity into different parts i.e.
• Bill data processing
• Bill Printing
• Post printing processing
• Bill delivery
• Bill collection
• Post collection activities as statement
  preparation, Customer grievance redressal
• Now we can quantify some of these sub-activities
  based on quality, cost and time. For example
• a) of bills issued in time (time)
• b) reduction in total billing cost or per bill
  cost (Cost)
• c) Reduction in no. of EMC complaints (Quality)
• RELATE TO COMPANYS SCORE CARD

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Deciding the Performance parameters

• The performance parameters chosen for SBUs and
  individuals should be
• Linked with strategic objectives and vision of
  organization
• (At any instance the officer should be able to
  identify the direct or indirect link between his
  performance parameters and one or more of the
  performance parameter in companys scorecard)
• Measurable and are not subjective
• (e.g. enhance employee skills??, Instead no. of
  staff trained)
• Oriented towards driving desired behavior /
  performance
• E.g. for JTO improve fault rate vis-à-vis
  rehabilitate pillar
• Capable of being benchmarked/ properly reported
• E.g. reduction in cost of team
• Unambiguous and easy to understand
• CCR within the circle

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Financial Perspective Parameters

• Financial measures tell the results of actions
  already taken. It is a lag parameter
• All other perspectives namely Customer, Internal
  process and learning and growth leads to this
  perspective
• The EFFECT should be ultimately be felt in this
  parameter. Financial performance measures
  Indicate whether the company's strategy,
  implementation, and execution are contributing to
  bottom-line improvement.

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Financial Perspective Parameters

• Some of the financial parameters that can be used
  are
• Return on investment
• Operating ratio
• cash flow,
• quarterly revenue growth,
• operating income by division
• Total outstanding revenues
• Expenditure per route Km
• Total operating cost of the team
• Reduction in idle inventory
• Revenues generated through USO

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Customer Perspective Parameters

• Customers' concerns tend to fall into four
  categories
• Lead times (time required for the company to meet
  its customers' needs)
• For existing products- from order receipt to
  service delivery
• For new products from conception to
  commissioning
• Costs,
• Quality,
• Performance and service (product features).
• This leads to Market Share
• Customer Acquisition,
• Customer retention,
• Customer satisfaction and
• Customer value creation)

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Customer Perspective Parameters

• Therefore some of the customer perspective
  parameters can be
• Increase in customer numbers (GSM, basic, WLL
  etc.)
• Tariff or costs per minute of usage
• No of minutes of usage per customer per month
• Customer segmentation parameters like No of
  corporate customers added
• Average performance score of internal customers

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Internal Process Perspective Parameters

• measures of what the company must do internally
  to meet its customers' expectations.
• Some of the internal process parameters can be
• cycle time (Post sales service) mean fault
  clearance time, mean time for providing new
  services to existing customers like ISD
• Defect rate fault rate
• Quality Average downtime for leased circuits,
  of defective bills
• Efficiency Call completion rate, Collection
  efficiency

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Learning Growth Perspective Parameters

• A company's ability to innovate, improve, and
  learn It is the foundation on which other
  perspective rest
• employee learning (Revenue per Employee, No of
  staff trained),
• Productivity - (Employees per 1000 lines, staff
  to customer ratio)
• Employee motivation alignment (Suggestions per
  employee, Implemented suggestion per employee,
  Retention, Satisfaction survey can be thought in
  long run)
• Empowering Employee to serve customer better (Use
  of IT)
• launch new products and packages

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Deciding the performance parameters

• Create cross functional / down the line linkages,
  wherever applicable. (The internal customer
  concept - recognition of fact that the
  performance of one unit / individual is dependent
  on other)
• TD circle and territorial circles
• E.g. Commercial Officer and SDOs
• DGM (Planning) CAO
• GM (Development) SSAs
• Prefer to choose parameters that are currently
  being measured or can be measured without major
  change of procedures
• E.g. Avoid benchmarking against customer
  satisfaction until process to measure the same is
  in place

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Deciding the performance parameters

• Prioritize Try and restrict the no. of
  parameters in a scorecard to ten or so. This
  increases focus.
• Setup middle-level integrated management
  teams/committees esp. for internal process and
  customer perspectives parameters

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TYPE OF PARAMETERS
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Type of performance parameters

• This is derived from the cause effect
  relationship
• Positive
• A positive performance parameter is one where an
  increase is desirable (for e.g. number of
  customers, market share etc.)
• Negative
• A negative performance parameter is one where a
  decrease is desirable (for e.g. fault rate,
  staff-per-thousand lines, etc.)

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ASSIGNING WEIGHTS
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Assigning weights

• Weights decide the balance of four perspective.
  In general the weights have been kept as follows
• Down the line the emphasis on Customer
  perspective and Internal process should be more
• Critical parameters should have more weights
• E.g. No. GSM connections provided 16

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Assigning weights

• Different units may like to differentiate on
  emphasis that is to be given to different
  parameters
• E.g. In some units fault rate target may already
  be achieved and may want to emphasize on CCR
• Those parameters that find direct mention in
  Company or circle scorecard should have more
  weight
• E.g. For DGM (WLL) more weight on no. of WLL
  customers added

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FINALIZING TARGETS
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Finalizing the targets

• Targets should be challenging at the same time
  realistic
• Last three years achievements should be taken
  into consideration if possible (for this year)
• A better approach is to keep increase and
  decrease over last year as targets and parameters
  should be defined accordingly
• Targets for different units for the same
  parameter may be different depending on the
  current status of achieved values
• E.g. CCR, fault rate

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Finalizing the targets

• While fixing targets one should try to benchmark
  with his past achievements, other units/officers
  achievements and the telecom industrys best
  practice achievements
• E.g. Airtels norms for fault rectification are 4
  hours and 2 hours
• Change in targets should be an exception rather
  than a rule

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REPORTING ACHIEVEMENTS
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Reporting Achievements

• While finalizing the performance indicators it
  should also be kept in mind how the achievements
  will be reported.
• Reporting of achievements should be on monthly
  basis, review can be monthly or quarterly. At CO
  we have fixed quarterly review
• During the course one should ensure that such
  processes and methods are put in place that helps
  in true and timely reporting of achievements.
• BBS should drive the use of Information
  Technology in the company. IT should aim at
  monitoring and measuring the key performance
  parameters. (e.g. financial parameters)

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CALCULATING SCORES
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Calculating scores

• Calculate Proportionate Achievement (B) for each
  parameter
• B A/T if Type of performance parameter P
  Positive or
• B T/A if Type of performance parameter P
  Negative
• Where T is the target value and
• A is the achieved value
• Calculate the final Score for each parameter
• Score B W 100
• Where W is the weight assigned to particular
  parameter and
• B is calculated as above
• Calculate the total score as sum of all
  individual parameters scores

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Add column on responsibility and Initiatives
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Responsibility centres and Initiatives

• Parameters can be achieved only if group of
  individual work as team to achieve them
• Responsibility centers is team of officers
  related to particular parameter chaired by GM/DGM
  concerned for providing the targets
• E.g. ITC cards sold (Budget, Marketing, BB)
• They should jointly review achievements
  periodically
• Responsibility centers should have common
  parameters as far as possible
• E.g. Planning, MM IFA (for equipment
  procurement)
• Responsibility centre should suggest
  initiatives

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Responsibility centres and Initiatives

• Initiatives are suggested measures to achieve a
  particular parameter target
• Initiative
• Should not be a laundry list
• Should be separately documented for each
  individual parameters
• Initiative example For parameter Increase in
  ITC sale
• Increase product availability esp. in rural areas
• Make tariff more attractive
• Increase franchise commission
• Bundle with other products
• Decrease customers procurement time
• Initiatives serve as feedback to higher office

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Other important issues

• Consultative Participative approach to be
  adopted
• Different posts have different job definitions
  and therefore BBS can be different for same
  designations
• It is a change management exercise which requires
  effective and frequent communication down the
  line. Circles should have communication plan like
• DOs from CGMs/SBU heads
• Holding of Workshops/Seminars at RTTC level
• Discussions/postings on Intranet
• Frequent review meetings / feedback reports on
  implementation

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Thank You
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Suggested Management Readings
1. Balanced Business Scorecard by Robert Kaplan
and David P. Norton. 2. Strategy Maps by Robert
Kaplan and David P. Norton. 3. Good to Great by
Jim Collins. 4. Build to Last by Jim Collins and
Jerry I. Porras. 5. Trust in Balance Building
successful Organizations on Results,
Integrity and Concern by Robert Shaw. 6. Jack
Welch and the GE Way by Robert Slater.