Creating a Balanced Scorecard for a Financial Services Organization
Published on 26. July 2011
Book
Hardback
256 pages
978-0-470-83030-7 (ISBN)
Description
How to tap the power of Balanced Scorecard for financial services organizations
This book explains how financial services organizations can build and implement a Balanced Scorecard (a strategy management framework) that can deliver accountability, transparency, and risk management. With plentiful case study examples supported by the latest theoretical thinking, this book provides a step-by-step guide to designing the Balanced Scorecard framework (that includes both financial and non-financial performance perspectives) and how to align the whole organization behind the strategic goals of the enterprise.
This book explains how financial services organizations can build and implement a Balanced Scorecard (a strategy management framework) that can deliver accountability, transparency, and risk management. With plentiful case study examples supported by the latest theoretical thinking, this book provides a step-by-step guide to designing the Balanced Scorecard framework (that includes both financial and non-financial performance perspectives) and how to align the whole organization behind the strategic goals of the enterprise.
More details
Series
Edition
1. Auflage
Language
English
Place of publication
Chichester
United Kingdom
Publishing group
John Wiley and Sons Ltd
Target group
Professional and scholarly
Dimensions
Height: 23.9 cm
Width: 16.2 cm
Thickness: 2 cm
Weight
500 gr
ISBN-13
978-0-470-83030-7 (9780470830307)
Schweitzer Classification
Other editions
Additional editions
Naresh Makhijani | James Creelman
Creating a Balanced Scorecard for a Financial Services Organization
E-Book
07/2011
Wiley
€58.99
Available for download
Naresh Makhijani | James Creelman
Creating a Balanced Scorecard for a Financial Services Organization
E-Book
07/2011
Wiley
€58.99
Available for download
Persons
Naresh Makhijani is an influential management consultant specializing in strategy management, execution and aligned techologies, based in Jakarta. He is coauthor of the books Balanced Scorecard in Asia and Aligning People to Strategic Goals.
In 1995, Naresh was the first consultant in Asia to implement Balanced Scorecard with Management Cockpit following in 1999. Since then he has implemented over 100 Balanced Scorecards in over 20 industries across 10 countries on three continents.
He has implemented Balanced Scorecard for over 18 organizations in financial services in Asia including government ministries, deposit insurance agencies, development banks, private and state banks, insurance companies, finance companies and stock clearing agencies.
He has been educated in Asia, Europe and USA.
James Creelman is a management author, educator and practitioner specializing in the Balanced Scorecard and related Enterprise Performance Management disciplines. He had written 22 books or reports including More with Less: Maximizing Value in the Public Sector, which he coauthored with Bernard Marr; and Mastering Business in Asia: Succeeding with the Balanced Scorecard, which he coauthored with Naresh Makhijani.
James leads Balanced Scoredcard-related workshops and seminars throughout the world. He is presently working within the office of strategy management at the Ministry of Works, Bahrain.
In 1995, Naresh was the first consultant in Asia to implement Balanced Scorecard with Management Cockpit following in 1999. Since then he has implemented over 100 Balanced Scorecards in over 20 industries across 10 countries on three continents.
He has implemented Balanced Scorecard for over 18 organizations in financial services in Asia including government ministries, deposit insurance agencies, development banks, private and state banks, insurance companies, finance companies and stock clearing agencies.
He has been educated in Asia, Europe and USA.
James Creelman is a management author, educator and practitioner specializing in the Balanced Scorecard and related Enterprise Performance Management disciplines. He had written 22 books or reports including More with Less: Maximizing Value in the Public Sector, which he coauthored with Bernard Marr; and Mastering Business in Asia: Succeeding with the Balanced Scorecard, which he coauthored with Naresh Makhijani.
James leads Balanced Scoredcard-related workshops and seminars throughout the world. He is presently working within the office of strategy management at the Ministry of Works, Bahrain.
Content
Introduction xiii
CHAPTER 1: THE CURSE OF LIVING IN "INTERESTING TIMES," THE CREDIT CRUNCH, AND OTHER CHALLENGES 1
Executive Summary 1
Introduction 2
The Impact of the Credit Crunch 2
Deregulation, Globalization, and Technology 6
The Collapse of Customer Loyalty 6
Scorecard Pioneers 9
Other Scorecard-Using Financial Services Companies 10
Conclusion 11
CHAPTER 2: DESCRIBING THE BALANCED SCORECARD 13
Executive Summary 13
Introduction 14
The Scorecard's Origins 14
A Balanced Measurement System 15
The Emergence of the Strategy Map 15
The Strategy-Focused Organization 19
Enterprisewide Alignment 25
Creating a Board Scorecard System 27
The Office of Strategy Management 31
The Execution Premium Model 38
Conclusion 41
CHAPTER 3: THE BALANCED SCORECARD AND RISK MANAGEMENT 43
Executive Summary 43
Introduction 43
Linking Strategy Management with Risk Management: A History 44
Strategic Risk Management: The New Core Competency 48
Risk-Based Performance 53
A Risk Balanced Scorecard 55
The Five Principles of SRM 60
Conclusion 64
CHAPTER 4: BUILDING A STRATEGY MAP 67
Executive Summary 67
Introduction 67
Start with the Strategy 68
SeniorManagement Must Own the Strategy Map 72
Strategy Clarification 73
The Use of External Facilitation 73
Creating Objectives 78
Strategic Themes 80
Risk-Balanced Scorecard 85
Value Creation Map 88
Risk Map 91
Conclusion 92
CHAPTER 5: SELECTING METRICS AND TARGETS 95
Executive Summary 95
Introduction 95
The Critical Few Measures 96
Key Performance Questions 97
KPIs 101
Common Definitions 108
Key Risk Indicators 111
A Risk Scorecard 117
Selecting Targets 118
Comparative Performance Goals 121
Conclusion 123
CHAPTER 6: SELECTING INITIATIVES 127
Executive Summary 127
Introduction 127
Organizational Awareness of the Importance of Initiatives 128
The Challenges of Selecting Initiatives 128
Linkage to the Strategy Map 129
Stratex 129
Initiative Prioritization 130
Conclusion 135
CHAPTER 7: CASCADING THE BALANCED SCORECARD: THE STRUCTURAL CHALLENGES 137
Executive Summary 137
Introduction 138
Strategic Line-of-Sight 138
Mandated Objectives and Measures 139
An Ideal Scorecard Cascade 139
Scorecard Pilots 140
A Hybrid IT Strategy Map: The Case of the Bank of England 146
To Cascade or Not to Cascade? 150
Conclusion 156
CHAPTER 8: CASCADING THE BALANCED SCORECARD: THE CULTURAL CHALLENGES 159
Executive Summary 159
Introduction 160
Transparency and Accountability 160
Fear ofMeasurement 161
A Major Change Effort 163
Senior Management Behavior 167
Local Champions 170
Communications 170
Conclusion 172
CHAPTER 9: INDIVIDUAL PERFORMANCE APPRAISAL AND INCENTIVE COMPENSATION 175
Executive Summary 175
Introduction 176
Personal Scorecards 176
Arguments Against the Personal Scorecard 177
Truncated Personal Scorecards 178
Competency Development 178
Personal Scorecards for the Senior Team 179
Linking Performance to Pay 179
The Arguments AgainstMaking the Link 184
Making the Choice 185
Conclusion 185
CHAPTER 10: GETTING THE BEST FROM SOFTWARE 189
Executive Summary 189
Introduction 189
The Benefits of Automation 190
What Software Cannot Do 193
Certified Vendors 194
Criteria for Choosing Software 195
Advanced Performance Institute Software Selection Criteria 196
Developing an IT Strategy 199
Strategy and Risk Management 201
Conclusion 202
CHAPTER 11: ALIGNING BUDGETING AND PLANNING WITH STRATEGY THROUGH THE BALANCED SCORECARD 205
Executive Summary 205
Introduction 206
The Shortcomings of the Budget 206
Out of Step with Strategy 207
The Scorecard Driving the Budget 208
Devolved Responsibility 210
Alternatives to Conventional Budgeting 210
Reporting Risk 219
Stratex 220
Conclusion 221
CHAPTER 12: CONCLUSION AND ACTION ROADMAP 225
Executive Summary 225
Part One: The Future of the Balanced Scorecard Within Financial Services Organizations 226
Part Two: Action-Oriented Roadmap 228
Parting Remarks 233
Index 235
CHAPTER 1: THE CURSE OF LIVING IN "INTERESTING TIMES," THE CREDIT CRUNCH, AND OTHER CHALLENGES 1
Executive Summary 1
Introduction 2
The Impact of the Credit Crunch 2
Deregulation, Globalization, and Technology 6
The Collapse of Customer Loyalty 6
Scorecard Pioneers 9
Other Scorecard-Using Financial Services Companies 10
Conclusion 11
CHAPTER 2: DESCRIBING THE BALANCED SCORECARD 13
Executive Summary 13
Introduction 14
The Scorecard's Origins 14
A Balanced Measurement System 15
The Emergence of the Strategy Map 15
The Strategy-Focused Organization 19
Enterprisewide Alignment 25
Creating a Board Scorecard System 27
The Office of Strategy Management 31
The Execution Premium Model 38
Conclusion 41
CHAPTER 3: THE BALANCED SCORECARD AND RISK MANAGEMENT 43
Executive Summary 43
Introduction 43
Linking Strategy Management with Risk Management: A History 44
Strategic Risk Management: The New Core Competency 48
Risk-Based Performance 53
A Risk Balanced Scorecard 55
The Five Principles of SRM 60
Conclusion 64
CHAPTER 4: BUILDING A STRATEGY MAP 67
Executive Summary 67
Introduction 67
Start with the Strategy 68
SeniorManagement Must Own the Strategy Map 72
Strategy Clarification 73
The Use of External Facilitation 73
Creating Objectives 78
Strategic Themes 80
Risk-Balanced Scorecard 85
Value Creation Map 88
Risk Map 91
Conclusion 92
CHAPTER 5: SELECTING METRICS AND TARGETS 95
Executive Summary 95
Introduction 95
The Critical Few Measures 96
Key Performance Questions 97
KPIs 101
Common Definitions 108
Key Risk Indicators 111
A Risk Scorecard 117
Selecting Targets 118
Comparative Performance Goals 121
Conclusion 123
CHAPTER 6: SELECTING INITIATIVES 127
Executive Summary 127
Introduction 127
Organizational Awareness of the Importance of Initiatives 128
The Challenges of Selecting Initiatives 128
Linkage to the Strategy Map 129
Stratex 129
Initiative Prioritization 130
Conclusion 135
CHAPTER 7: CASCADING THE BALANCED SCORECARD: THE STRUCTURAL CHALLENGES 137
Executive Summary 137
Introduction 138
Strategic Line-of-Sight 138
Mandated Objectives and Measures 139
An Ideal Scorecard Cascade 139
Scorecard Pilots 140
A Hybrid IT Strategy Map: The Case of the Bank of England 146
To Cascade or Not to Cascade? 150
Conclusion 156
CHAPTER 8: CASCADING THE BALANCED SCORECARD: THE CULTURAL CHALLENGES 159
Executive Summary 159
Introduction 160
Transparency and Accountability 160
Fear ofMeasurement 161
A Major Change Effort 163
Senior Management Behavior 167
Local Champions 170
Communications 170
Conclusion 172
CHAPTER 9: INDIVIDUAL PERFORMANCE APPRAISAL AND INCENTIVE COMPENSATION 175
Executive Summary 175
Introduction 176
Personal Scorecards 176
Arguments Against the Personal Scorecard 177
Truncated Personal Scorecards 178
Competency Development 178
Personal Scorecards for the Senior Team 179
Linking Performance to Pay 179
The Arguments AgainstMaking the Link 184
Making the Choice 185
Conclusion 185
CHAPTER 10: GETTING THE BEST FROM SOFTWARE 189
Executive Summary 189
Introduction 189
The Benefits of Automation 190
What Software Cannot Do 193
Certified Vendors 194
Criteria for Choosing Software 195
Advanced Performance Institute Software Selection Criteria 196
Developing an IT Strategy 199
Strategy and Risk Management 201
Conclusion 202
CHAPTER 11: ALIGNING BUDGETING AND PLANNING WITH STRATEGY THROUGH THE BALANCED SCORECARD 205
Executive Summary 205
Introduction 206
The Shortcomings of the Budget 206
Out of Step with Strategy 207
The Scorecard Driving the Budget 208
Devolved Responsibility 210
Alternatives to Conventional Budgeting 210
Reporting Risk 219
Stratex 220
Conclusion 221
CHAPTER 12: CONCLUSION AND ACTION ROADMAP 225
Executive Summary 225
Part One: The Future of the Balanced Scorecard Within Financial Services Organizations 226
Part Two: Action-Oriented Roadmap 228
Parting Remarks 233
Index 235