Creating A Balanced Scorecard for a Financial Services Organization

How to tap the power of the balanced scorecard, for financial services organizations Designed to help financial services organizations build and implement the strategic management framework known as the balanced scorecard, Creating a Balanced Scorecard for a Financial Services Organization is the book you need to ensure accountability, transparency, and risk management in your enterprise. The financial crisis revealed the many shortcomings of the industry, but with this book in hand you can make the most of the mistakes of the past to build a better, stronger business that balances both short- and long-term goals. Rich in the latest theoretical thinking and incorporating case studies that show the balanced scorecard system in action, the book covers both financial and non-financial performance perspectives in one comprehensive volume. Written by two leading practitioners with years of real-life experience, the book is the definitive step-by-step guide to implementing the balanced scorecard throughout your organization, aligning your whole business with your strategic goals. * Includes everything you need to improve performance transparency, accountability, governance procedures, risk management, and more for financial services organizations of any kind * Packed with expert advice and case studies that show the ideas presented in action * Written by leading experts who have successfully implemented the balanced scorecard system in their own companies Accessible and in-depth, Creating a Balanced Scorecard for a Financial Services Organization is the book you need to improve your business.

Table of Contents:
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

About the Author :
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.