Using Strategy Maps and the Balanced Scorecard Effectively

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Using Strategy Maps and the Balanced Scorecard Effectively: The Case of Manpower Australia: 

Using Strategy Maps and the Balanced Scorecard Effectively: The Case of Manpower Australia

Introduction: 

Introduction The 2004 financial performance was very encouraging for Varina Nissen, who was then in the second year of her role as Managing Director for Manpower Australia. The overall measure of performance, return on sales, had been improved. The corporate strategy developed by Varina and her team, and executed through the balanced-scorecard (BSC), had achieved the short-term financial objectives for the company and a turnaround in a relative short period of time.

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BSC was not being utilised as extensively as they envisaged in some parts of the business and, in some cases, was being totally ignored in managerial decision-making and there was a lack of consistent communication to teams on effective progress on performance. BSC needed to be improved if it was to focus the entire organisation on the critical leading indicators of success for the business

Manpower Global: 

Manpower Global Manpower Inc., established in 1948 in Milwaukee, Wisconsin, United States, is a world leader in the employment services industry, offering customers a continuum of services to meet their needs throughout the employment and business cycle. A Fortune 500 company, it specialised in permanent, temporary and contract recruitment; employee assessment; training; career transition and organisational consulting services. Manpower’s global network of 4300 offices in 74 countries and territories enabled the company to meet the needs of its 440,000 customers per year.

Manpower Global: Vision, Strategies and Values: 

Manpower Global: Vision, Strategies and Values Vision To be the best worldwide provider of higher-value staffing services and centre for quality employment opportunities. Strategies Revenue – Rigorously focus on industries, geographies and customers that have the strongest long-term growth opportunities for staffing services and solutions. Efficiency – Continuously improve profit margins and returns through disciplined internal processes and increased productivity. Acquisitions – Identify and pursue opportunities for strategic acquisitions that have the best potential to catalyse and enrich the core temporary staffing business Technology – Aggressively explore and implement the transformational opportunities of information technology and ecommerce to continuously develop defensible competitive advantage in all aspects of the company’s activities. Organisation and culture – Capitalize on our entrepreneurial corporate culture to make the most of our internal talent and develop meaningful career paths for employees, striving toward “best practices” in everything we do throughout the global organisation Values Manpower global core values are based on three principles pertaining to people, knowledge and innovation.

Manpower Australia: 

Manpower Australia Manpower has been operating in Australia and New Zealand as a human resources solution provider for over three decades. The company has four divisions – Recruitment & Staffing Solutions (RSS), Major Client Service (MCS), Corporate Services and Strategic Services. The core business of R&SS and MCS is the fulfillment of both temporary jobs (Temps) and permanent jobs (Perms).

The Strategy: 

The Strategy The company was facing a number of significant challenges: Manpower Australia had experienced flat growth for the past two years against Manpower global standard of year on year growth There had been little successful new product development The company had been underperforming against the Manpower global standard for the measure of Gross Profit / Total Salary Cost The company was challenged by competitor discounting Culture and processes did not support innovation nor had the capability of its rapid commercialization

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Corporate strategy based on the corporate vision, “ To be recognised as the Australasian Leader in delivering innovative people solutions”. Three strategic themes were identified: 1. Focus on clients and candidates 2. The expansion of service offerings to provide people solutions throughout the HR value chain 3. Supply capability to grow communities and sectors/industries

The Strategy Map and Balanced scorecard: 

The Strategy Map and Balanced scorecard BSC was selected by Manpower because: Manpower’s vision and strategy needed to be translated into actions, with a common language, particularly a common, fact-based approach to measurement Key changes were required in the measurement systems which would impact customer relationships, core competencies and organisational capabilities There was a need for a measurement and management framework that could link long-term financial success to current customers, internal processes, employees and systems performance BSC used measurements to inform employees about the drivers of current and future success With BSC it was easier to channel collective energy, enthusiasm, knowledge and abilities in the pursuit and achievement of long term common goals

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The management team decided to implement the BSC first in the R&SS division. It was envisaged that once successes were created, the program could then be rolled out efficiently and effectively to the entire organisation . The R&SS scorecard consisted of four perspectives, 7 strategic themes, 9 objectives, and 21 measures. The four perspectives of the BSC were: 1. Financial 2. Customer 3. Internal Processes 4. Learning & Growth

Financial Perspective: 

Financial Perspective ROS as the overall financial objective was driving the business towards operational efficiency. Thus debtor measures were incorporated to improve asset utilization through improvement in the cash cycle and the measures on the selling, general and administration expenses focused on cost reduction. The productivity focus highlighted the company’s strategy to deal with the highly competitive market conditions with squeezing margins, while the various growth metrics were aimed at capturing the performance of Manpower in expanding its scale of business, share of revenue and profit.

Customer Perspective: 

Customer Perspective This perspective usually includes identification of the customer and market segments, with common metrics comprising outcome measures and attributes of the specific value proposition offered that would drive the outcomes sought after by the business. Common outcome measures usually included customer satisfaction, customer retention, customer acquisition, customer profitability and market and account share in targeted segments. Measures of the value proposition typically focused upon product/service attributes, the customer relationship and/or brand image and reputation

Internal Business Process Perspective: 

Internal Business Process Perspective Internal processes accomplish two vital components of an organisation’s strategy: (1) they produce and deliver the value proposition for customers, and (2) they directly impact the productivity theme in the financial perspective. The organisation’s internal processes can be grouped into four clusters: operations management processes, innovation processes, customer management processes and regulatory and social processes. Manpower had focused mainly on three clusters of internal processes.

Learning and Growth Perspective: 

Learning and Growth Perspective This perspective focuses on the longer-term enablers of the business and its readiness to implement the chosen strategy Enablers are grouped into human capital readiness focused on employee skills and competencies (with common outcome measures comprising employee retention, productivity and satisfaction), information system capabilities, and overall cultural alignment and values. The main focus was on retaining key staff.

The Implementation Process: 

The Implementation Process A series of road shows and education workshops were held throughout Manpower and its branches to communicate the rationale for the BSC and how it was to be used BSC reporting and analysis was to be facilitated through technology and Manpower’s intranet. The BSC measures were also linked to compensation. Specifically, 85% of responses to an interview survey pointed out that the BSC had provided a better understanding of business, more focus on key issues and learning and development of management team.

Problems and Challenges: 

Problems and Challenges One problem was that there appeared to be a blockage in the business using the information embedded in the BSC to identify and better manage the critical lead indicators that would lead to success. The measures were limited to past performance, lagging, not relevant and at times inaccurate. Information from the BSC evaluation survey found low usage of the BSC, especially by teams working under the senior to middle management.

Business Challenges: 

Business Challenges The major issues and challenges related to clients were identified as comprising: Pressure for low price Required speedy service Lack of understanding of customer needs High level of service expectations Increasing customer bargaining power

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The major candidate issues were: Candidate shortage Decreasing candidate loyalty and stability Poor candidate care Manpower currently faced from this highly competitive market were: Offering low prices Growth of niche agencies Developing brands

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Key issues were identified as being: Lack of standardisation /consistency in branches and between teams Old and slow processes Inefficient candidate handling processes Too many applications and no End to End solution The current issues with the people side of the business were many but the most important were: Finding the right consultant Low staff retention Slow career growth