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Indianapolis Life Insurance Company Balanced Scorecard Project Tier II Scorecards Draft Version 2.0 January 21st, 1999 e

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Page 1: Indianapolis Life Insurance Company Balanced Scorecard Project Tier II Scorecards Draft Version 2.0 January 21st, 1999 e

Indianapolis Life Insurance Company

Balanced Scorecard ProjectTier II Scorecards

Draft Version 2.0

January 21st, 1999

e

Page 2: Indianapolis Life Insurance Company Balanced Scorecard Project Tier II Scorecards Draft Version 2.0 January 21st, 1999 e

2

Product-Market Responsibilities

� Product-Market Portfolio Responsibilities– Portfolio profitability

– Oversight of the New Product Development process

– Prioritization of product lines under development

– Identifying new markets and oversight of portfolio market planning

� Product Manager Responsibilities– Product Profitability

– Market research (check on alignment with distribution)

– Product development

– Pricing

– Product filing

– Illustration software development & Re-proposal development

– Product promotion: (Compliance & marketing materials) (check on distribution alignment)

– Administration Systems Analysis (check on operations alignment)

BOP: Strategic alliance relationships: relationship management, contract negotiations, etc. Question on interface/overlap?

Summarization of key responsibilities for Product-Market Portfolio and Product Managers

Page 3: Indianapolis Life Insurance Company Balanced Scorecard Project Tier II Scorecards Draft Version 2.0 January 21st, 1999 e

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Cascading & Aligning Scorecards

EnterpriseStrategies

Enterprise Critical Success Factors (CSF’s)

EnterpriseMeasures

Portfolio & Process

Objectives

Portfolio & Process CSF’s

Linkage

Alignment

Enterprise

Tier II*

Tier IIa

Portfolio & Process

Measures

Tier IIaGoals

Tier IIa CSF’s

Tier IIaMeasures

Scorecards are cascaded and aligned through the critical success factors

*Tier II currently contains: Product-Market Portfolios (Financial Protection & Wealth Accumulation), Business Process Outsourcing, Customer Care (Operations and Distribution), Shared Services and Financial.Tier IIA currently encompasses products (Term UL, WL, VUL, Annuity)

Page 4: Indianapolis Life Insurance Company Balanced Scorecard Project Tier II Scorecards Draft Version 2.0 January 21st, 1999 e

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Enterprise -- Tier II Mapping

Enterprise Critical Success Factor Product Market Portfolio BPO Customer Care Shared Services

Wealth Accumulation Financial Protection Distribution Operations Financial

Financial

Quality Earnings Growth Consistent with Plan

Quality ROE Consistent with Plan

Capital & Risk Management

Balanced Portfolio of Business

CustomerExpand Customer Base & Penetration of Existing CustomersDevelop Products that Deliver True Value to the Customer & Enterprise

Provide Quality Service Meeting Customer Needs

Maintain Appropriate Rating

ProcessAlignment of Products, Services & Delivery to Target Customer Segments

Optimize Technology & Infrastructure

Efficient & Effective Business Fundamentals

Learning & Growth

Employee Satisfaction

Developing Current Leadership & Leadership of the Future

Recruiting & Retention

Education & Training

Well-Aligned Incentives

High Level of InfluenceLower Level of Influence

Draft

*

* New market development & increasing value to existing customers** Customer refers to internal customers: operations & distribution

Identify enterprise critical success factors that may be influenced at the Tier II level

*

** **

Page 5: Indianapolis Life Insurance Company Balanced Scorecard Project Tier II Scorecards Draft Version 2.0 January 21st, 1999 e

5

Establishing Tier II Objectives

Product-Market Portfolio Objectives:

1) Meet portfolio ROE and earnings growth goals 2) Ensure capital plans are in place for new products and that products are built with assumptions that the organization can support 3) Develop products that deliver value and are aligned to target customer segments 4) Identify and develop new markets and increase value to existing customers5) Win through people

Draft

Enterprise critical success factors that are “highly influencable” become “Tier II” objectives… additionally, there may be other objectives which are aligned with the enterprise scorecard

Product-Market Balanced Scorecard

Enterprise Critical Success Factor Product Market Portfolio BPO Customer Care Shared Services

Wealth Accumulation Financial Protection Distribution Operations Financial

Financial

Quality Earnings Growth Consistent with Plan

Quality ROE Consistent with Plan

Capital & Risk Management

Balanced Portfolio of Business

CustomerExpand Customer Base & Penetration of Existing CustomersDevelop Products that Deliver True Value to the Customer & Enterprise

Provide Quality Service Meeting Customer Needs

Maintain Appropriate Rating

ProcessAlignment of Products, Services & Delivery to Target Customer Segments

Optimize Technology & Infrastructure

Efficient & Effective Business Fundamentals

Learning & Growth

Employee Satisfaction

Developing Current Leadership & Leadership of the Future

Recruiting & Retention

Education & Training

Well-Aligned Incentives

High Level of InfluenceLower Level of Influence

*

* New market development & increasing value to existing customers** Customer refers to internal customers: operations & distribution

*

** **

Page 6: Indianapolis Life Insurance Company Balanced Scorecard Project Tier II Scorecards Draft Version 2.0 January 21st, 1999 e

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Product-Market Balanced Scorecard

DraftIdentify Tier II critical success factors and key performance indicators for the objectives

Product-Market Portfolio Objectives:

1) Meet portfolio ROE and earnings growth goals 2) Ensure capital plans are in place for new products and that products are built with assumptions that the organization can support 3) Develop products that deliver value and are aligned to target customer segments 4) Identify and develop new markets and increase value to existing customers5) Win through people

Critical Success Factor Measure

Financial

Profitable growth Portfolio earnings & ROE

Plan for and ensure adequate capital Capital plan in place

ALM Indicator

Customer

Develop timely, innovative, flexible products Product approval to launch cycle time

Maintain close relationship with Customer Care for new products and market opportunities

Sales growth versus plan

Keep existing products competitive Retention (FP), Lapse Rate (WA)

ProcessEnsure alignment of technology (development to administration)

Average software turnaround time (to be detemined)

Efficient and effective business fundamentals Average filing turnaround time

Build products that meet expenses Allowables to expenses*

Learning & Growth

Employee satisfaction Employee satisfaction index

Retention (To be determined)

* or Budget vs. Actual Expense

Page 7: Indianapolis Life Insurance Company Balanced Scorecard Project Tier II Scorecards Draft Version 2.0 January 21st, 1999 e

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Critical Success Factor Measure Current Results Target

Financial

Profitable growth Portfolio earnings & ROE

Plan for and ensure adequate capital Capital plan in place

ALM Indicator

Customer

Develop timely, innovative, flexible products Product approval to launch cycle time

Maintain close relationship with Customer Care for new products and market opportunities

Sales growth versus plan

Keep existing products competitive Retention (FP), Lapse Rate (WA)

ProcessEnsure alignment of technology (development to administration)

Average software turnaround time (to be detemined)

Efficient and effective business fundamentals Average filing turnaround time

Build products that meet expenses Allowables to expenses*

Learning & Growth

Employee satisfaction Employee satisfaction index

Retention (To be determined)

Next Steps - Set Targets and Identify Tactics to Reach Targets

Each measure should have a target (short term and long term) and an identified initiative/tactic to bridge the performance gap (current performance - target performance)

Initiative Alignment

Measure: ROEPerformance Gap: 5%Tactic/Inititiative: Rationalize Portfolio Owner TBDTactic Steps: 1) Determine product profitability 2) Identify distribution implications of rationalization 3) Identify operational implications of rationalization 4) Develop phase out plan 5) Initiative phase out plan

Page 8: Indianapolis Life Insurance Company Balanced Scorecard Project Tier II Scorecards Draft Version 2.0 January 21st, 1999 e

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Tier II Critical Success Factor Term Whole Life Un. Life VUL Annuity

Financial

Profitable growth

Plan and ensure for adequate capital

Balanced portfolio

Customer

Develop timely, innovative products

Maintain close relationship with Customer Care for new products

Process

Optimize product-market selection

Efficient and effective business fundamentals

Learning & Growth

Employee satisfaction

Portfolio -- Product Mapping

Ability to Influence

Product Manager Objectives:

1) 2)3)

Product Manager Balanced Scorecard

EnterpriseStrategies

EnterpriseCritical SuccessFactors (CSF’s)

EnterpriseMeasures

Portfolio &Process

Objectives

Portfolio &ProcessCSF’s

Enterprise

Tier II

Tier III

Portfolio &Process

Measures

Tier IIIGoals

Tier III CSF’s

Tier IIIMeasures

A similar process may be undertaken to develop Product manager objectives and scorecards aligned with the portfolio

Page 9: Indianapolis Life Insurance Company Balanced Scorecard Project Tier II Scorecards Draft Version 2.0 January 21st, 1999 e

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Horizontal Alignment

The same process may be used to identify objectives, critical success factors and performance indicators for the other Tier II areas. Additionally, the scorecards should be aligned “horizontally” to ensure internal requirements are met

� Distribution

– Cross-selling

– # of appointed reps (WA)

– Sales per appointed rep (WA)

– # of B/D selling agreements / distribution outlets (WA)

� Investments

– Risk/Reward profile, earned rate (WA)

� Shared Services

– Timeliness and accuracy of projects (WA)

– E-Commerce (WA)

Sample Product-Market “requirements”

Enterprise

Product-Market

Portfolios

Business Process

OutsourcingCustomer Care

Operations Distribution

Horizontal Alignment

Ver

tical

Alig

nmen

t

Page 10: Indianapolis Life Insurance Company Balanced Scorecard Project Tier II Scorecards Draft Version 2.0 January 21st, 1999 e

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Developing a Scorecard

Conduct Interviews,

Review Business Plans, etc.

Develop Draft

Scorecard

Confirm Strategy

IdentifyPerformance

Measures

Refine Measures &

EstablishTargets

DevelopImplementation

Plan

Pre-Workshop

Confirm Critical

Success Factors

Post-Workshop

Workshop(s)

A scorecard is typically developed in a 3-phased approach

Facilitated Session with future “Scorecard Owner” and his/her direct reports or team

Tier II Current State