Balanced Scorecards, Competencies and Compensation

November 3, 2011

Financial Measures

• What are they?• Problems with them?–Knowledge workers

Strategy

• CEO failures due to……….–Poor strategy?–Poor execution/implementation of

strategy?• So, which one is it?

Balanced Scorecard

• Overcomes– Limitations of financial measures–Need to account for knowledge workers–Critical need to execute strategy

Balanced Scorecard

• Overcomes– Limitations of financial measures–Need to account for knowledge workers–Critical need to execute strategy

Balanced Scorecard

• Starting point–Organization’s strategy– Translate into objectives and measures

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

Balanced Scorecard – 4 perspectives• Financial– Traditional component– Measures

• Revenue growth

• Cost reduction

• Productivity improvement

• Asset utilization

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

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?

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

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?

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?

Example

Balanced Scorecard

• Pro’s– Organizational alignment through shared vision– Short-term and long-term balance– Focuses the organization

Balanced Scorecard

• Con’s– Complex!!!– Communication is a must

• Balanced scorecard

• Chapters 4, 5, 6, 7, and 8

Scorecards and Dashboards

• Basic dashboard• Electronic dashboard

KSA

Job Requirements

•A•B•C•D•E

Competencies

“Fit”

New Day for KSA

• Knowledge –practical or theoretical understanding of a

subject–described in terms of mastery levels

• Skills– Learned capacity

• Ability–Natural capacity

Competency

• Combo of KSA that can be observed, measured, evaluated

• Is a key factor in successful job performance

• Focus is behavior

Competency

Competency

• KSA

• Observable behavior

• Job performance

Competency

Competency Models/Frameworks

• Definition–More “occupation” than “job”–Management, technical, knowledge–Vary by “job” type• Professional positions• Clerical/administrative positions• Managerial positions

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

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

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

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

BusinessStrategy

CompetencyFramework

BusinessResults

Professional Associations

Risk and Insurance Management Society

Government

Education

What’s missing?

Private Sector

Competency Modeling

• http://www-05.ibm.com/employment/hu/ibmhu/career.html

But which competencies?

Review strategy

Identify competencies

Competency Model/frame

work

Review strategy

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!!!!

Now and later use……

• http://www.job-interview-site.com/examples-competency-based-interview-questions-list-of-competencies-skills.html