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Balanced Scorecards, Competencies and Compensation November 3, 2011

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Financial Measures What are they? Problems with them? Knowledge workers

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Strategy CEO failures due to. PPoor strategy? PPoor execution/implementation of strategy? So, which one is it?

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Balanced Scorecard Overcomes Limitations of financial measures Need to account for knowledge workers Critical need to execute strategy

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Balanced Scorecard Overcomes Limitations of financial measures Need to account for knowledge workers Critical need to execute strategy

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Balanced Scorecard Starting point Organizations strategy Translate into objectives and measures

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Balanced Scorecard 4 perspectives Financial Customer Internal business process Learning and growth

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Balanced Scorecard 4 perspectives Financial Traditional component Measures Revenue growth Cost reduction Productivity improvement Asset utilization

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Balanced Scorecard 4 perspectives Customer How do they see you? What do they want from us? Measures Market share Customer acquisition Customer retention Customer satisfaction Customer profitability

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Balanced Scorecard 4 perspectives Internal business processes Core processes those that directly impact how we meet customer demands Netflix??? Measures Depends on what customers demand Low price? Variety?

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Balanced Scorecard 4 perspectives Learning and growth Types of capital Human capital Information capital Organizational capital Measures Employee satisfaction Employee retention Employee productivity Competencies to deliver required results

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Balanced Scorecard and Compensation Points to consider Purpose Overall purpose Specific behaviours (un)desired Impact on culture? Measures Are data available? Are the data accurate? How many?

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Balanced Scorecard and Compensation Points to consider Perspectives (related to measures) All? Equally weighted? Leading or lagging? TEXT: hours spent with customers by salespeople Long/short-term performance?

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Example

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Balanced Scorecard Pros Organizational alignment through shared vision Short-term and long-term balance Focuses the organization

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Balanced Scorecard Cons Complex!!! Communication is a must

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Balanced scorecard Chapters 4, 5, 6, 7, and 8

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Scorecards and Dashboards Basic dashboard Electronic dashboard

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KSA Job Requirements A B C D E

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Competencies Fit

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New Day for KSA Knowledge practical or theoretical understanding of a subject described in terms of mastery levels Skills Learned capacity Ability Natural capacity

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Competency Combo of K S A that can be observed, measured, evaluated Is a key factor in successful job performance Focus is behavior Competency

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KSA Observable behavior Job performance Competency

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Competency Models/Frameworks Definition More occupation than job Management, technical, knowledge Vary by job type Professional positions Clerical/administrative positions Managerial positions

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Competency Models/Frameworks Behaviors Customer Focus Builds/maintains customer satisfaction with products and services Focuses on the customer's business results, rather than own Seeks customer feedback and ensures needs have been fully met Delivers products and services when and where the customer needs them Explores options when unable to deliver a requested product or service, and pursues solutions until the customer is satisfied

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Competency Models/Frameworks Behaviors Business Alignment aligns the direction, products, services and performance of a business line with the rest of the organization Integrates executive direction into every decision and consultation Seeks to understand other programs in the department, including their services, deliverables, and measures Advocates for and positively represents other programs and services when working with customers and stakeholders

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Competency Models/Frameworks Behaviors Teamwork Anticipating potential conflicts and addressing them directly and effectively Treating others with courtesy, tact and respect Working effectively with others, regardless of organizational level, background, gender, race or ethnicity Working to resolve disagreements, attempting to persuade others and reach agreements Biding by and supporting group decisions Facilitating team interaction and maintaining focus on group goals

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Competency Models/Frameworks Compensation Matrix Combo of your level of competencies and position in pay range level of competencies Basket approach level just one of many factors

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Business Strategy Competency Framework Business Results

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Professional Associations

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Risk and Insurance Management Society

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Government

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Education

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Whats missing?

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Private Sector

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Competency Modeling http://www- 05.ibm.com/employment/hu/ibmhu/c areer.html http://www- 05.ibm.com/employment/hu/ibmhu/c areer.html

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But which competencies? Review strategy Identify competencies Competency Model/frame work Review strategy

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How to identify competencies? Think in terms of areas of knowledge and abilities Analyze job Watch stars perform What areas of knowledge do you see the employees using? What abilities are required? Interview stars superior performance is the norm!!!!

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Now and later use http://www.job-interview- site.com/examples-competency-based- interview-questions-list-of- competencies-skills.html http://www.job-interview- site.com/examples-competency-based- interview-questions-list-of- competencies-skills.html