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Commitment and a clear strategy are essential for implementing BSC
NUTS and OHRA are Dutch insurance companies that provide health insurance, property insurance, pensions and life insurance. R.J.P Dikhoff and M.A.J.M. Banken are project leaders BSC (Balanced ScoreCard) respectively with NUTS and OHRA. During their presentation, of which this article is an account, both project leaders paid mainly attention to the process of implementing a BSC.
Strategy
The need for a balanced scorecard was felt because Nuts and Ohra were missing adequate management information. Especially in the insurance business this is an important matter, because frequently new government rules and laws are introduced which cause a lot of uncertainties. Until recently, the information systems in use were not sufficient or to the point.
During the introduction of the BSC there was a clear need for organizational support. In order to get this, the Nolan Norton & Co (KPMG) consultancy firm was contracted. They started by translating the strategy into indicators. This was a phase with much communication and feedback between all those concerned. An intensive process which took six months and finally led to an outline of wishes and needs in the organization. Because of this, both project leaders think that a well-defined corporate strategy is at the core of a successful implementation of the BSC.
Definition of Indicators
After this, each department started to work out the results of phase 1. In this second phase, a lot of interviews with these departments took place. This resulted in an excess of indicators. The sheer overkill in indicators alone would severely hinder the use of the BSC. For example, one of the departments had a scorecard using 32 different indicators. In order to make consolidation possible, the decision was made that a maximum of 15 key indicators was allowed.
Rules and Commitment
Embedding the system in the organization calls for a clear set of rules. It has to become clear who is responsible for delivering the necessary data and in what form this is to take place. Besides, a policy is needed concerning authorization, definitions and alterations.
Finally, the system had to be integrated into the Planning and Control cycle. The outcome was a model consisting of 19 scorecards for general management and 18 departments. For each of these scorecards quick results had to be presented in a visually attractive format. Other conditions concerned logical structure, user friendliness, and multiple input and import possibilities (spread sheet, manual, and datawarehouses). Besides, reports printed on paper were wanted. Both speakers pointed to the great attention Bizzscore pays to all these needs.
An absolute condition for implementing the BSC is the commitment of everybody concerned. On the one hand, the indicators are to be supported by the board, on the other it is important that management is sufficiently involved in the whole process. They need to endorse the choice of indicators whole-heartedly.
Threats
Right from the start of the implementation, a phased introduction has to be taken into account because during the process of implementing the BSC, discussions about the reliability of indicators emerges. In the case of NUTS and OHRA for instance, financial indicators lagged one month compared to the other measurements. Timeliness of data is more important than comprehensiveness because the BSC must serve as a basis for change.
Another threat is posed when the BSC is considered a toy of the Controller. By no means this is allowed to happen, because first and foremost the BSC is meant as a management tool for line management.
Roll-Out
Both speakers expected the time it would take for embedding the BSC in the whole organization to be two years. In this time the BSC will cascade through the organization from strategic level to management to individuals.
The BSC is also aimed at managing actions by every individual in the organization. The great advantage of a BSC is that the flow of data to management and decision makers has become clear. At the end of the presentation, both Dickhoff and Banken recommended Bizzscore as a perfect tool for implementing and maintaining a BSC.
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