1 Business Performance Measurement Ign Teodore Teddy Saputra MBA Chapter / Week XIReference
2 Pertemuan ke :MateriBahan1Dasar-dasar Manajemen StrategiBuku 3: 1 dan 22Evolusi Manajemen StrategiBuku 1: 13Lingkungan EkternalBuku 2: 24Presentasi Lingkunan Ekternal5Lingkungan InternalBuku 2: 36Presentasi Lingkungan Internal7Review dan Kuis8UTS9Business Level strategy dan Corporate Level StrategyBuku 2: 4 dan 610Identifikasi Key Success FactorBuku 1: 411Perancangan Pengukuran Performance of Business Process untuk tumbuh secara berkelanjutanBuku 1: 8 dan 9Buku 2:12Buku 3: 9 dan 61213Kuis14Management Strategi dan EntrepreneurshipBuku 2: 1315Management Strategi dan Family BusinessBuku 1:316UAS +kumpul paper
3 When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind. William Thompson (Lord Kelvin),
6 Customer Needs Who is your customer? What age, gender, group does our product appeal to?What services or products do they expect from you?Do we provide personal services, do your products serve as advertised?How do you listen to and learn from your customers?Do we provide feedback calls or s?How do you retain and acquire new customers?Do we use new advertisement and how do we advertise?How do you meet customers’ needs?Do we provide help lines and how can we provide help to customers?How do you measure customer satisfaction and dis-satisfaction?Do we use surveys to find out how customers feel about us?
7 Customer ConcernsThere are four major categories that managers need to address when concerning their customers.QualityAre there often recalls or problems with defects with our products.TimeDo we save time by limiting defects and do we provide fast on time delivery.Performance and serviceDo we perform up to customers standards and do we provide fast and adequate services.CostDo we try to minimize cost when dealing with ordering, scheduling delivery, and paying for materials in order to lower cost of our products to our consumers.
8 Customer PerspectiveWith customer perspective managers and companies have to be careful and make sure they are setting up their balance scorecard to help customers.Examples of things that don’t concern customers are profit per customer, revenue per customer, and improve profit per customer.These objectives don’t necessarily protean to the customer perspective but rather the companies perspective of the customer.Managers need to take a step back and look at how customers perceive your company and what they want to get out of your company.
9 Examples of Customers Perspective Two main questions that a company should ask itself to protean to their customers are:How should we appear to our customersDo we show a promising futureDo we show a strong sense of concernWhat is our differentiating value proposition to our targeted customersHow are we different from our competitorsWhat makes us better than our competitors
10 Perspectives of Kaplan and Norton There are four broad categories that Kaplan and Norton base the customer perspective around.Best buyCompanies that supply services and products at low prices and fast service.Product leadership and innovationCompanies that focus on customer that buy the newest and most advanced cutting edge technology.Customer complete solutionsCompanies that try to sell things like computers where customers customize them to their liking.Lock inCompanies that will make a product then to buy accessories for that product you have to buy the same brand name because other brands out work with that product.
11 Successful balanced Scorecards When using critical thinking of strategy, objectives, and measures companies can get a feel for who their customers are and what they can offer them.Strategy gurus, like Michael Porter stress the fact that it is more important to accomplish more with less.Don’t try to please everyone when setting up your balanced scorecard because you can’t.
12 Internal ProcessesInternal business process objectives address the question of which processes are the most critical for satisfying customers and shareholdersA firm must concentrate its efforts to excel in these areasMetrics based on this prospective allow the managers to know how well their business is running and whether its products and services conform to customer requirements
13 Internal Process Examples CostThroughputQualityObjectiveSpecific MeasureManufacturing excellenceCycle time, yieldIncrease design productivityEngineering efficiencyReduce product launch delaysActual launch date vs. plan
14 Internal ProcessesIn addition to the strategic management process two kinds of business processes may be identified, these include:Mission-oriented processes - special functions of government offices which often involve many unique problems in their processesSupport processes - more repetitive in nature.
15 Financial Performance The financial performance perspective of the balanced scorecard addresses the question of how shareholders view the firm and which financial goals are desired from the shareholder’s perspective.These financial goals are dependent on the company’s stage in the business life cycle.
16 Financial Performance: Business Life Cycle There are three main stages to this cycle which include:Growth stage -goal of the company is growthAn example of a growth goal would be revenue growth.Sustain stage - the goal of the firm is profitabilityMeasures in this stage may include ROE, ROCE, and EVA.Harvest stage - the goal of the firm is cash flow and reduction in capital requirements.
17 Financial Performance The table below outlines possible financial performance objectives and their metrics.ObjectiveSpecific MeasureGrowthRevenue GrowthProfitabilityReturn on equityCost LeadershipUnit Cost
22 A learning & growth example: Objective: increase internal promotionsMeasure: bigger % of in house promotionsTarget: +10% in 2 yearsAdditional classes and training
23 “A balanced scorecard system provides a basis for executing good strategy well and managing change.” -Howard Rohm
24 Learning & growth must focus on measurable outcomes to move the company forward.
25 Scorecard allows for actionable terms derived from company strategy.
26 Makes it easier for management to carry out strategy. Balanced ScorecardMakes it easier for management to carry out strategy.
27 4 step process Define measurement architecture Specify strategic objectivesChoose strategic measuresDevelop implementation plan
28 Potential Benefits Translation of strategy into measurable parameters Communication of strategyAlignment of individual goals with strategic objectivesFeedback of implementation results
29 Potential Disadvantages Lack of a well defined strategyUse of only lagging measuresUse of generic metrics
30 ConclusionBalanced scorecard is a performance management system that can be used in any size organization.Allows management to measure financial and customer results, operations, and organization potential.
31 The challenge strategic leaders face is to verify that their firm is emphasizing financial and strategic controls so that firm performance improves. The Balanced Scorecard is atool that helps strategic leaders assess the effectiveness of the controls.
32 Fokus keuangan memiliki keterbatasan yaitu: Tidak revelan Awalnya pengukuran kinerja adalah pengukuran kinerja keuangan (financial)Pendekatan klasikBalance Scorecard, manajemen kinerja dengan siklus PDCA, Performance PrismFokus keuangan memiliki keterbatasan yaitu:Tidak revelanOrientasi masa laluTidak fleksibelTidak dapat memicu perbaikanBiaya menjadi rancuPendekatan modernPendekatan modern:Mengukur financial dan non financialNon Financial memberikan jawaban atas hasil dari pengukuran financialEvaluasi non financial mendorong perubahan organisasi ke arah yang lebih baikPDCA: Plan Do Check Action
33 Konsep Balance Scorecard Balanced Scorecard merupakan management tool yang digunakan untuk meningkatkan kemampuan organisasi dalam melipatgandakan kinerja keuangan.Balanced Scorecard mengukur performa financial maupun nonfinancialBalanced Scorecard sangat cocok dipergunakan di Business level strategy walau tidak menutup kemungkinan dipergunakan untuk korporasi.The Balanced Scorecard menjabarkan strategi ke dalam sistim yg tergintegrasi yg mencakup:Outcomes (lag indicators) and Performance drivers (lead indicators)Internal and External PerspectivesQualitative and Quantitative InformationLimited number of indicators
34 BSC Overview Balanced Scorecard BSC ConceptBSC OverviewScorecard (kartu skor) adalah kartu yang digunakan untuk mencatat skor performance seseorang. Kartu skor juga dapat digunakan untuk merencanakan skor yang hendak diwujudkan oleh seseorang di masa depan.Balanced ScorecardKata balanced (berimbang) berarti adanya keseimbangan antara performance keuangan dan non-keuangan, antara performance jangka pendek dan performance jangka panjang, dan antara performance yang bersifat intern dan performance yang bersifat ektern.
37 Divided KSF into 4 Perspective How To Create BSCVision-MissionStrategyKSFDivided KSF into 4 PerspectiveKPI
38 Perspektif FinansialUkuran kinerja finansial memberikan petunjuk apakah strategi perusahaan, implementasi, dan pelaksanaannya memberikan kontribusi atau tidak kepada peningkatan laba perusahaan.Tujuan finansial biasanya berhubungan dengan profitabilitas melalui pengukuran laba operasi, return on capital employed (ROCE) atau economic value added.Tujuan finansial lainnya mungkin berupa pertumbuhan penjualan yang cepat atau terciptanya arus kas.
39 Perspektif PelangganPerspektif pelanggan mengukur kepuasan pelanggan, retensi pelanggan, akuisisi pelanggan baru, profitabilitas pelanggan, dan pangsa pasar di segmen sasaran.Perspektif pelanggan juga mencakup berbagai ukuran tertentu yang menjelaskan tentang proposisi nilai yang akan diberikan perusahaan kepada pelanggan segmen pasar tertentu merupakan faktor yang penting, yang dapat mempengaruhi keputusan pelanggan untuk berpindah atau tetap loyal kepada pemasoknya.
40 Perspektif PelangganSebagai contoh, pelanggan mungkin menghargai kecepatan (lead time) dan ketepatan waktu pengiriman atau produk dan jasa inovatif.Perspektif pelanggan memungkinkan para manajer unit bisnis untuk mengartikulasikan strategi yang berorientasi kepada pelanggan dan pasar yang akan memberikan keuntungan finansial masadepan yang lebih besar.
41 Perspektif Proses Bisnis Internal Perspektif proses bisnis internal mengidentifikasi berbagai proses internal penting yang harus dikuasai dengan baik oleh perusahaan.
44 Strategic Objectives & Measures CU“Trusted, friendly, convenient and affordable” Friendly and welcoming staffAvailable and knowledgeable staffProfessional service & complaint handlingEasy parkingDelivery within 24 hrsFast credit approvalQuality furnitureAffordable financingPopular Models OnlyCustomer Staff Friendlyness Rating (%)Customer Staff Availabity Rating (%)Customer Staff Knowledge Index (%)Customer Service Level Index (%)Customer Parking Availability Index (%)Customer Delivery Rating (%)Customer Credit Approval Rating (%)Customer Furniture Quality Rating (%)Customer Financing Rating (%)Customer Selection Rating (%)
45 Strategic Objectives & Measures IPSufficient staff in shop at all timesHandle all complaints on the spotAlways a free parking spotDeliver the right products to the rightaddress within 18 hrsHandle credit requests in 10 minutesKeep quality complaints at minimumNo item in selection at over 250$ a month financing4 week selection turn-over max.Reduce no of un-pop. of items in selectionStaff in Shop (#.)Complaint Handled on the spot (%)Hours with no parking spot available (hours)No. of products deliver more than 18 hrs (#)Credit Request Handled in 10 minutes (%)Quality complaint per 100 purchases (#)Items with more than $250 per month financing (#)No. of items above 4 week turn-over limit (#)No. of un-pop items in selections (#)
46 Strategic Objectives & Measures LGAll staff members through Basic Sales TrainingAll staff members through Selection TrainingReduce number of admin employeesUsing Technology to improve process effectivenessAll staff members through SWA Operating TrainingPercentage of employees with Basic Sales Training Certificate (%)Percentage of employees with current Selection Certificate (%)Number of Admin Employees (#)Percentage of Overhead Cost Reduction (%)Cost Effectiveness (%)Percentage of employees with SWA CertificateNote: SWA = Store Workflow Automation
47 Key BSC terminology Strategy Map: Diagram of the cause-and-effect relationshipsbetween strategic objectivesStrategic Theme: Operating EfficiencyObjectivesFast ground turnaroundStatement of what strategy must achieve and what’s critical to its successMeasurementOn Ground TimeOn-Time DepartureHow success in achieving the strategy will be measured and trackedTarget30 Minutes90%The level of performance or rate of improvement neededCycle time optimizationKey action programs required to achieve objectivesInitiativeFinancialProfitabilityFewer planesMorecustomersCustomerFlightIs on timeLowestpricesInternalFast groundturnaroundLearningGround crewalignment
48 Strategic Theme: Operating Efficiency Balanced Scorecard ExampleStrategic Theme: Operating EfficiencyObjectivesMeasurementTargetInitiativeFinancialProfitabilityProfitabilityMore CustomersFewer planesMarket ValueSeat RevenuePlane Lease Cost30% CAGR20% CAGR5% CAGRFewer PlanesMoreCustomersCustomerFlight is on -timeLowest pricesFAA On Time Arrival RatingCustomer Ranking (Market Survey)#1Quality managementCustomer loyalty programFlightIs on TimeLowestPricesInternalFast ground turnaroundOn Ground TimeOn-Time Departure30 Minutes90%Cycle time optimization programFast GroundTurnaroundGround crew alignment% Ground crew trained% Ground crew stockholdersyr % yr % yr %ESOPGround crew trainingLearningGround CrewAlignment
50 Balanced Scorecard XXX Strategic MapSasaran StrategisLag IndicatorLead IndicatorTargetInitiative StrategikProgramsFinancialCustomerInternalLearningLagging indicator– outcomes yang dijadikan tujuanLeading indicator– cara untuk mencapai laggingnya
51 Performance Prism Muncul pada 2002 Konsep yang dibawa: Framework 3 dimensi yang membentuk segitiga prism dengan lima segi yang masing-masing mewakilli:Stakeholder satisfactionStakeholder contributionStrategiProsesKapabilitas
55 The Performance Prism What do our various stakeholders want and need? SWANsWhat do our various stakeholders want and need?StrategiesWhat strategies are we pursuing to satisfy these wants and needs?ProcessesWhat processes do we need to put in place to enable us to achieve these strategies?CapabilitiesWhat capabilities do we require if we are to operate these processes?OWANsWhat do we want and need from our stakeholders to enable all of this to happen?Neely, A.D., Adams, C. and Kennerley, M. (2002) “The Performance Prism: The Scorecard for Measuring and Managing Stakeholder Relationships”, Financial Times/Prentice Hall, London.
56 Reflections on CSR and disclosure Don’t start with what should we measure.Instead start with what questions do we want to be able to answer.The questions that matter for different organisations are context dependent.So do not look for standardised sets of measures that can be used for CSR.We can, however, look for standardised frameworks – such as the Performance Prism – to help structure our thinking.Finally… remember Einstein…
57 Starting with Kelvin, finishing with Einstein “Not everything that counts can be measured. Not everything that can be measured counts”.Albert Einstein,