Implementation Of The Balanced Scorecard

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Implementation Of The Balanced Scorecard
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Question 1

• What is your experience level with the Balanced
  Scorecard in your firm?
• Beginner (We know very little about it)
• Intermediate (We have started but have stalled in
  our use of the BSC)
• Advanced (We are using the BSC successfully in
  our firm

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Todays Agenda

• Historical Perspective
• Future Thinking
• Implementation
• Your Plan

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Historical perspective
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Historical Perspective

• Partner Compensation drove the plan
• Charge Hours
• Performance What?
• Once a Year at the most

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Why Change?

• Staff is changing.
• You are changing
• Business model is changing.
• Process must change.

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Future thinking
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Balanced Scorecard

• What is it?
• Why are we interested?
• How do we use it?
• Where do we go from here?

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Background

• Harvard Business Review 1992R.S. Kaplan and
  D.P. Norton
• Organizational Performance Measurement
• Successful Strategy Implementation
• Widespread Acceptance

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4 Characteristics

1. Top Dow Reflection of the Firm
2. Forward-Looking
3. External and Internal Measures
4. Helps you stay focused!

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Balanced Scorecard for CPA Firms

• Myth -or- Possibility

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The Pay for Performance Theory
What we do to exist.
What we believe in.
What we want to be.
Our Game Plan
Behavior Motivation
What we need to do.
What I need to do.
Satisfied Partners
Happy Clients
Effective Processes
Motivated Employees
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Facts of Life

• Fact 1Most organizations do not successfully
  execute their strategy
• Fact 2To successfully execute your strategy,
  YOU MUST HAVE ONE!

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Question 2

• Do You Have A Written Strategic Plan That
  Everyone In The Firm Knows About?
• Yes
• No

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Steps to Success

• Step 1 - Clearly Defined BUSINESS Strategy
• Written
• Communicated
• Supported by IT Plan

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Steps to Success

• Step 2 - Find a way to
• Communicate Strategy
• Measure Success
• Motivate and Reward
• So you can successfully execute your strategy!

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Barriers to Success
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1 - The Vision Barrier

• Most employees dont understand the business
  strategy
• Employees represent the key asset in a knowledge
  based business
• Communicating and understanding is a key to
  success

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2 - The People Barrier

• Is compensation linked to performance?
• Is performance measured in the right way?
• Does compensation reinforce achieving strategic
  objectives?

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3 - The Resource Barrier

• How are budgets related to strategy?
• Long term vs. Short term
• Measures and evaluation

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4 - The Management Barrier

• Where is management attention?
• What is being measured?
• Financial results, and BEYOND!

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Question 3

• Which Barrier does your firm suffer from?
• Vision Barrier
• People Barrier
• Resource Barrier
• Management Barrier
• All of the Above
• None of the Above

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Breaking Down the Barriers
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Overcoming the Barriers to Success

• The Vision Barrier
• Translate Strategic Goals into tasks, performance
  standards, and desired outcomes.
• The People Barrier
• Cascade scoreboard down to individual level.
  Reward value creation.

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Overcoming the Barriers to Success

• The Resource Barrier
• Budgets keyed to strategic objectives.
  Priorities toward long term goals.
• The Management Barrier
• Lead towards the strategy. Check the right
  things. Balance among conflicting priorities.

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Balanced Scorecard 101
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Financial

• Increase firm profits
• Increase client profitability
• Increase leverage
• Personnel
• Technology
• Services
• Increase employee earnings

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Client Development

• Define client profiles
• Average revenue
• Cost to obtain
• Cost to retain
• Lifetime value
• Client surveys
• You are responsible for setting the rules

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Internal Operations

• Revenue per FTE
• Days in WIP AR
• Turn around time
• Maintain quality

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Learning Growth

• Define core competencies
• Define standards, policies procedures
• Develop a training curriculum
• Develop a personal training plan
• Mentoring
• Cross training

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IT Is An Internal Business Process

• Only Part of One Out of Four Perspectives
• Integrated With All Other Components
• Driven By Business Objectives
• Success Measured By Business Results
• Evaluate Your Own Priorities and Successes!

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• No more than
• FOUR
• performance measurements
• in each category!

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Measure How?
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Objectives and Measures

• Performance Objectives Establish WHAT to
  measure
• Performance Measures
• Establish HOW to measure
• Leading and Lagging

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Objectives and Measures
Objectives Measurements
Increase Revenue per FTE Revenue per Staff
Increase client satisfaction and loyalty Client surveys and visitations
Improve staff training Individual training plans, tasks accomplished
Streamline internal processes Number of processes reviewed and documented
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Cause and Effect

• Effect Client retention in excess of 95
• Causes
• Timeliness
• Customer Service
• Relationship Building
• If . . . . Then . . . (else)

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Indicators
Cause Effect
of proposals outstanding Net income
of sales calls Reduced WIP/AR
Defined/Improved Processes Market Share
Absenteeism Sales
Employee Satisfaction
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implementation
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Critical Success Factors/MeasurementsFinancial

• Revenue per FTE aligned with industry metrics
• Build New Revenue Source External Consulting
• Average rates per hour that are at market average

• Increase Revenue Per FTE to 120
• Increase Revenue in Consulting Division by 25
• Increase Rates Per Hour to an average of 80/hour

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Critical Success Factors/MeasurementsClients

• Increase the Net Promoter Client Survey score of
  5.8
• Increase time spent with top 20 of clients
• Increase service offerings to the top 20 of
  clients

• Improve Net Promoter Client Score to 7 in 2010
• Complete the DOS Conversation with top 20 of
  clients
• Cross sell one new service to 25 of firm's
  existing clients

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Critical Success Factors/MeasurementsInternal
Processes

• Consistent paperless processes implemented across
  the firm
• Owner/Manager Communication firm wide
  strengthened
• Increased ability to segment client market

• Develop written paperless process and decrease
  paper by 25
• Implement a consistent Owner/Manager monthly
  meeting
• Research and implement a CRM system for the firm
  by 6/30/2010

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Critical Success Factors/MeasurementsLearning/Gro
wth

• Each team member has a learning plan
• Consistent ongoing training for all staff
• Team members have peer interaction and coaching

• Develop a learning plan for each team member by
  4/30/2010
• Implement a monthly lunch and learn book club
• Assign a peer mentor for every staff member from
  a differing location

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Cascading Scorecards

• Translate Firm Goals, Objectives, and Measures to
  Individual Performance

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Sample Firm Balanced Scorecard Sample Firm Balanced Scorecard Sample Firm Balanced Scorecard Sample Firm Balanced Scorecard Sample Firm Balanced Scorecard
         
Perspective Objectives Weight Score 1-10 Value
Financial Increase Revenue Per FTE to 120 8.33   -
Financial Increase Revenue in Consulting Division by 25 8.33   -
Financial Increase Rates Per Hour to an average of 80/hour 8.33   -
        -
Client Improve Net Promoter Client Score to 7 in 2010 8.33   -
Client Complete the DOS Conversation with top 20 of clients 8.33   -
Client Cross sell one new service to 25 of firm's existing clients 8.33   -
        -
Internal Processes Develop written paperless process and decrease paper by 25 8.33   -
Internal Processes Implement a consistent Owner/Manager monthly meeting 8.33   -
Internal Processes Research and implement a CRM system for the firm by 6/30/2010 8.33   -
        -
  Develop a curriculum for each employee 8.33   -
Employee Hire a learning coordinator 8.33   -
Learning Growth Provide a training facility 8.33   -
        -
  Firm Totals 100.00   -
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Sample Partner Balanced Scorecard Sample Partner Balanced Scorecard Sample Partner Balanced Scorecard Sample Partner Balanced Scorecard Sample Partner Balanced Scorecard
         
Perspective Objectives Weight Score 1-10 Value
Financial Delegate 20 of managed book 8.33   -
Financial Manage head count to 120k per FTE 8.33   -
Financial Manage the increase of the consulting division for 25 growth 8.33   -
        -
Client Insure client surveys are completed quarterly 8.33   -
Client Complete DOS survey's with 20 of personal clients 8.33   -
Client Sell an additional service to 25 of current clients 8.33   -
        -
Internal Processes Learn the paperless office and lead by example 8.33   -
Internal Processes Lead the monthly manager meeting for stronger communications 8.33   -
Internal Processes Identify reports within the CRM system for firm sales opportunities 8.33   -
        -
  Attend 40 hours of internal training 8.33   -
Employee Lead the initiative of hiring and promoting a learning professional in the firm 8.33   -
Learning Growth Develop and teach a module for the managers leadership program 8.33   -
        -
  Firm Totals 99.96   -
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Sample Staff Balanced Scorecard Sample Staff Balanced Scorecard Sample Staff Balanced Scorecard Sample Staff Balanced Scorecard Sample Staff Balanced Scorecard
         
Perspective Objectives Weight Score 1-10 Value
Financial Increase productions to 175,000 8.33 - -
Financial Identify cross sales for 25 of current clients 8.33 - -
Financial Target 5 new clients of 5,000 or more 8.33 - -
        -
Client Complete satisfaction surveys on 5 clients 8.33 - -
Client Complete DOS Worksheets on top 5 clients 8.33 - -
Client Identify 1 community service to be involved with in a leadership position 8.33 - -
        -
Internal Processes Serve on paperless committee 8.33 - -
Internal Processes Attend the monthly owner/manager meetings 8.33 - -
Internal Processes Learn how to use CRM system and use the system as required 8.33 - -
        -
  Attend 40 hours of internal training 8.33 - -
Employee Complete Boomer P3 Management Training 8.33 - -
Learning Growth Complete individual learning plan 8.33 - -
        -
  Firm Totals 100.00   -
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Firm Name Firm Name Firm Name Firm Name Firm Name
Administrative Staff Administrative Staff Administrative Staff Administrative Staff Administrative Staff
Name_____________________Office_________________Date____________ Name_____________________Office_________________Date____________ Name_____________________Office_________________Date____________ Name_____________________Office_________________Date____________ Name_____________________Office_________________Date____________
Perspective Objectives Total Points Score Value
Financial Produce monthly reports and distribute to partners by 3rd of each month. 8.33   0.00
Financial Order office supplies and marketing materials - identifying ways to stay within the firms budget each month 8.33   0.00
Financial Send "welcome packets" to new clients within 24 hours of request 8.34   0.00
Client Satisfaction SUBTOTAL 25.00 - 0.00
Client Satisfaction Answer all phone calls within 2 rings 12.50   0.00
Client Satisfaction Complete the DOS worksheet on 5 clients per month 12.50   0.00
Internal Processes SUBTOTAL 25.00 - 0.00
Internal Processes Serve on the firms Tax Processing Committee - attending monthly meetings 8.33   0.00
Internal Processes Complete "back scanning" on clients identified by the partner level. 8.33   0.00
Internal Processes Insure compliance on firm's policies and procedures 8.34   0.00
  SUBTOTAL 25.00 - 0.00
Learning Training Attend internatl training on ProFX by 9/1/20XX 8.33   0.00
Learning Training Develop and deliver a training course on TB procedures by 8/15/20XX 8.33   0.00
Learning Training Attend a quarterly function at the local Chamber of Commerce 8.34   0.00
Learning Training SUBTOTAL 25.00 - 0.00
  TOTAL 100.00 - 0.00
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Whats Next

• Decide whether this approach has value for your
  firm
• Additional learning and research
• Decide to implement, and take action

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Your plan
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1. Start with your strategic plan
2. Dont start without the total commitment of the
   MP or CEO
3. Commitment is different than support
4. Use a facilitator
5. Start with the partner group
6. Use the positive focus and game plans to reduce
   time
7. Schedule quarterly meetings in advance
8. Insure performance funds
9. Focus on limited objectives
10. Use graphics for positive visuals around the
    office

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Resources
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Thank you!

• sandra.wiley_at_boomer.com
• www.boomer.com