Creating a Balanced Scorecard for a Financial Services Organization

by Naresh Makhijani, James Creelman

Overview

As a consequence of the credit crunch, the financial services industry, most notably banking, is undergoing tumultuous change--a period of transformation that is unprecedented in the sector's history and will likely not be experienced again for a lifetime, at least. Responding to intense public, government, regulatory and shareholder pressure, the sector is reorganizing itself so that performance is more transparent and accountable, risk management disciplines are more robust and that sustainable long-term financial return is seen as being as important as short-term profit.

This book by Naresh Makhijani and James Creelman describes how financial services organizations throughout Asia as well as other regions are tackling these and other challenges through the implementation of the Balanced Scorecard: the world's most popular strategy management framework that balances financial with non-financial performance and short-term requirements with long-term objectives, among many other benefits.

Based on in-depth case study material, Creating a Balanced Scorecard for a Financial Services Organization provides a detailed step-by-step practical template for Balanced Scorecard design and implementation, explaining how integrate risk management with strategy management through the Balanced Scorecard and how to link operational and strategy management. The book also clearly explains how to build a suite scorecards from corporate through business unit, function and even individual employee levels and how to make strategy "everyone's everyday job."

The financial services sector is on a journey of extraordinary change. Creating a Balanced Scorecard for a Financial Services Organization provides a roadmap for charting a course through what will be extraordinary times.

Product Details

ISBN-13:	9780470830338
Publisher:	Wiley
Publication date:	07/20/2011
Series:	Wiley Finance
Sold by:	JOHN WILEY & SONS
Format:	eBook
Pages:	314
File size:	3 MB

Table of Contents

CHAPTER 1: THE CURSE OF LIVING IN "INTERESTING TIMES", THE CREDIT CRUNCH, AND OTHER CHALLENGES.
Executive Summary.
Introduction.
The Impact of the Credit Crunch.
Deregulation, Globalization, and Technology.
The Collapse of Customer Loyalty.
Scorecard Pioneers.
Other Scorecard-Using Financial Services Companies.
Conclusion.

CHAPTER 2: DESCRIBING THE BALANCED SCORECARD.
Executive Summary.
Introduction.
The Scorecard's Origins.
A Balanced Measurement System.
The Emergence of the Strategy Map.
The Strategy-Focused Organization.
Enterprisewide Alignment.
Creating a Board Scorecard System.
The Office of Strategy Management.
The Execution Premium Model.
Conclusion.

CHAPTER 3: THE BALANCED SCORECARD AND RISK MANAGEMENT.
Executive Summary.
Introduction.
Linking Strategy Management with Risk Management: a History.
Strategic Risk Management: the New Core Competency.
Risk-Based Performance.
A Risk-Balanced Scorecard.
The Five Principles of SRM.
Conclusion.

CHAPTER 4: BUILDING A STRATEGY MAP.
Executive Summary.
Introduction.
Start with the Strategy.
Senior Management Must Own the Strategy Map.
Strategy Clarification.
The Use of External Facilitation.
Creating Objectives.
Strategic Themes.
Risk-Balanced Scorecard.
Value Creation Map.
Risk Map.
Conclusion.

CHAPTER 5: SELECTING METRICS AND TARGETS.
Executive Summary.
Introduction.
The Critical Few Measures.
Key Performance Questions.
KPIs.
Common Definitions.
Key Risk Indicators.
A Risk Scorecard.
Selecting Targets.
Comparative Performance Goals.
Conclusion.
Self-Assessment Checklist.

CHAPTER 6: SELECTING INITIATIVES.
Executive Summary.
Introduction.
Organizational Awareness of the Importance of Initiatives.
The Challenges of Selecting Initiatives.
Linkage to the Strategy Map.
Stratex.
Initiative Prioritization.
Conclusion.

CHAPTER 7: CASCADING THE BALANCED SCORECARD: THE STRUCTURAL CHALLENGES.
Executive Summary.
Introduction.
Strategic Line-of-Sight.
Mandated Objectives and Measures.
An Ideal Scorecard Cascade.
Scorecard Pilots.
A Hybrid IT Strategy Map: the Case of the Bank of England.
To Cascade or Not to Cascade?
Conclusion.

CHAPTER 8: CASCADING THE BALANCED SCORECARD: THE CULTURAL CHALLENGES.
Executive Summary.
Introduction.
Transparency and Accountability.
Fear of Measurement.
A Major Change Effort.
Senior Management Behavior.
Local Champions.
Communications.
Conclusion.

CHAPTER 9: INDIVIDUAL PERFORMANCE APPRAISAL AND INCENTIVE COMPENSATION.
Executive Summary.
Introduction.
Personal Scorecards.
Arguments Against the Personal Scorecard.
Truncated Personal Scorecards.
Competency Development.
Personal Scorecards for the Senior Team.
Linking Performance to Pay.
The Arguments Against Making the Link.
Making the Choice.
Conclusion.

CHAPTER 10: GETTING THE BEST FROM SOFTWARE.
Executive Summary.
Introduction.
The Benefits of Automation.
What Software Cannot Do.
Certified Vendors.
Criteria for Choosing Software.
Advanced Performance Institute Software Selection Criteria.
Developing an IT Strategy.
Strategy and Risk Management.
Conclusion.

CHAPTER 11: ALIGNING BUDGETING AND PLANNING WITH STRATEGY THROUGH THE BALANCED SCORECARD.
Executive Summary.
Introduction.
The Shortcomings of the Budget.
Out of Step With Strategy.
The Scorecard Driving the Budget.
Devolved Responsibility.
Alternatives to Conventional Budgeting.
Reporting Risk.
Stratex.
Conclusion.

CHAPTER 12: CONCLUSION AND ACTION ROADMAP.
Executive Summary.
Part One: The Future of the Balanced Scorecard Within Financial Services Organizations.
Introduction.
Learning from Past Mistakes: Balancing Strategic Goals with Risk Management.
Better Board Oversight in the Future.
Part Two: Action-Oriented Roadmap.
Parting Remarks.