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Implementation Of The Balanced Scorecard

Explore the historical perspective, future thinking, and practical steps to implement the Balanced Scorecard in CPA firms effectively. Understand the barriers to success and learn how to break them down for sustainable growth and improved performance. Discover the key components of the Balanced Scorecard framework, from financial and client development to internal operations and learning and growth. Evaluate performance measurements, objectives, and critical success factors to align your business strategy and drive success. Learn how to overcome common challenges and create a strategic plan that everyone in your firm can support and execute successfully.

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Implementation Of The Balanced Scorecard

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  1. Implementation Of The Balanced Scorecard

  2. 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

  3. Today’s Agenda • Historical Perspective • Future Thinking • Implementation • Your Plan

  4. Historical perspective

  5. Historical Perspective • Partner Compensation drove the plan • Charge Hours • Performance What? • Once a Year… at the most

  6. Why Change? • Staff is changing…. • You are changing… • Business model is changing…. • Process must change….

  7. Future thinking

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

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

  10. 4 Characteristics • Top Dow Reflection of the Firm • Forward-Looking • External and Internal Measures • Helps you stay focused!

  11. Myth -or- Possibility Balanced Scorecard for CPA Firms

  12. Outcomes 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

  13. Facts of Life • Fact #1:Most organizations do not successfully execute their strategy • Fact #2To successfully execute your strategy, YOU MUST HAVE ONE!

  14. Question #2 • Do You Have A Written Strategic Plan That Everyone In The Firm Knows About? • Yes • No

  15. Steps to Success • Step 1 - Clearly Defined BUSINESS Strategy • Written • Communicated • Supported by IT Plan

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

  17. Barriers to Success

  18. #1 - The Vision Barrier • Most employees don’t understand the business strategy • Employees represent the key asset in a knowledge based business • Communicating and understanding is a key to success

  19. #2 - The People Barrier • Is compensation linked to performance? • Is performance measured in the “right” way? • Does compensation reinforce achieving strategic objectives?

  20. #3 - The Resource Barrier • How are budgets related to strategy? • Long term vs. Short term • Measures and evaluation

  21. #4 - The Management Barrier • Where is management attention? • What is being measured? • Financial results, and BEYOND!

  22. 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

  23. Breaking Down the Barriers

  24. 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.

  25. 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.

  26. Balanced Scorecard 101

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

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

  29. Internal Operations • Revenue per FTE • Days in WIP & AR • Turn around time • Maintain quality

  30. Learning & Growth • Define core competencies • Define standards, policies & procedures • Develop a training curriculum • Develop a personal training plan • Mentoring • Cross training

  31. 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!

  32. No more than FOUR performance measurements in each category!

  33. Measure – How?

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

  35. Objectives and Measures

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

  37. Indicators

  38. implementation

  39. 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

  40. 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

  41. 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

  42. Critical Success Factors/MeasurementsLearning/Growth • 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

  43. Cascading Scorecards Translate Firm Goals, Objectives, and Measures to Individual Performance

  44. What’s Next • Decide whether this approach has value for your firm • Additional learning and research • Decide to implement, and take action

  45. Your plan

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