The five cases used for Alignment & Cascading of Objectives and KPIs
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CASE #1: FULL KPI CASCADING & AGGREGATION ● All Business Units Objectives’ status is calculated based on the same set of KPIs (*) ● The Objectives Alignment is based on full KPI Cascading & Aggregation
Level 0
Level 1
Level 2
Business Unit A
OBJ (D) = f (D[1],D[2],D[3])
OBJ (A)
OBJ (E) = f (E[1],E[2],E[3]) OBJ (F) = f (F[1],F[2],F[3])
KPI A[1]
OBJ (G) = f (G[1],G[2],G[3])
KPI A[2]
OBJ (A) = f (A[1],A[2],A[3]) A[1] = SUM(B[1],C[1]) or A[1] = AVG*(B[1],C[1])
Full KPI * Aggregation
= Data Entry
OBJ (B)
KPI B[1] KPI B[2]
A[2] = SUM(B[2],C[2]) or A[2] = AVG*(B[2],C[2]) A[3] = SUM(B[3],C[3]) or A[3] = AVG*(B[3],C[3])
AVG* = Weighted Average
Business Unit B
KPI A[3]
Business Unit D
KPI B[3]
Full KPI * Aggregation B[1] = SUM(D[1],E[1]) or OBJ (B) = f (B[1],B[2],B[3]) B[1] = AVG*(D[1],E[1])
OBJ (D)
KPI D[1] KPI D[2]
B[2] = SUM(D[2],E[2]) or B[2] = AVG*(D[2],E[2])
KPI [3]
B[3] = SUM(D[3],E[3]) or B[3] = AVG*(D[3],E[3])
Business Unit E OBJ (E)
KPI E[1] KPI E[2] KPI E[2]
Business Unit C OBJ (C)
KPI C[1] KPI C[2] KPI C[3] OBJ (C) = f (C[1],C[2],C[3]) C[1] = SUM(F[1],G[1]) or C[1] = AVG(F[1],G[1]) C[2] = SUM(F[2],G[2]) or C[2] = AVG*(F[2],G[2]) C[3] = SUM(F[3],G[3]) or C[3] = AVG*(F[3],G[3])
(*) The Child Business Units Full KPIs’ Aggregation has the same impact on the Parent Business Unit’s objective status as the Child Business Units’ objectives’ status aggregation © 2015 – Strategic Systems Consulting. All rights reserved
Business Unit F Full KPI * Aggregation
OBJ (F)
KPI F[1] KPI F[2] KPI F[3]
Business Unit G OBJ(G)
KPI G[1] KPI G[2] KPI G[3]
CASE #2: UNAGGREGATED OBJECTIVES ALIGNMENT ● Each Business Units Objectives’ status is calculated based its own specific set of KPIs ● The Objectives Alignment is based on Child Business Units Contributive Analysis ● The Objectives Alignment does not use Child Business Units Objectives statuses’ or KPIs Aggregation
Level 0
Level 1
Level 2
Business Unit A
OBJ (D) = f (D[1],D[2],D[3])
OBJ (A)
OBJ (E) = f (E[1],E[2],E[3])
KPI A[1] KPI A[2] KPI A[3]
OBJ (F) = f (F[1],F[2],F[3])
Contributive Analysis
OBJ (G) = f (G[1],G[2],G[3]) = Data Entry
Business Unit B
OBJ (A) = f (A[1],A[2],A[3])
OBJ (B)
KPI B[1] KPI B[2]
KPI B[3]
Contributive Analysis
Business Unit D
OBJ (B) = f (B[1],B[2],B[3])
OBJ (D)
KPI D[1] KPI D[2] KPI [3]
Business Unit E OBJ (E)
KPI E[1] KPI E[2] KPI E[2]
Business Unit C OBJ (C)
KPI C[1] KPI C[2] KPI C[3] OBJ (C) = f (C[1],C[2],C[3])
Contributive Analysis
Business Unit F OBJ (F)
KPI F[1] KPI F[2] KPI F[3]
Business Unit G For more details, see “Alignment - Using the Balanced Scorecard to Create Corporate Synergies”, Robert Kaplan, David Norton - 2006
OBJ(G)
KPI G[1] KPI G[2]
© 2015 – Strategic Systems Consulting. All rights reserved
KPI G[3]
CASE #3: AGGREGATED OBJECTIVES ALIGNMENT (1)
● Parent Business Units Objectives’ status is calculated based on Child Business Units’ Objectives statuses ● Each Parent Business Unit lists all its Child Business Units’ KPIs ● The Objectives Alignment is based on Child Business Units Objectives statuses’ Aggregation
Level 0
Level 1
Level 2
Business Unit A
OBJ (D) = f (D[1],D[2],D[3])
OBJ (A)
OBJ (E) = f (E[1],E[2],E[3]) OBJ (F) = f (F[1],F[2],F[3])
KPI D[1]
OBJ (G) = f (G[1],G[2],G[3])
KPI D[2] KPI D[3]
Business Unit B
KPI E[1]
= Data Entry
OBJ (B)
KPI E[2]
KPI D[1]
KPI E[3]
KPI D[2]
KPI F[1]
KPI D[3]
KPI F[2]
KPI E[1]
KPI F[3]
KPI E[2]
KPI G[1]
KPI E[3]
KPI G[2] KPI G[3]
AVG* = Weighted Average
OBJ (B) = AVG*(OBJ(D),OBJ(E))
Business Unit D OBJ (D)
KPI D[1] KPI D[2] KPI [3]
Business Unit E
OBJ (A) = AVG*(OBJ(B),OBJ(C))
OBJ (E)
KPI E[1] KPI E[2]
Business Unit C
KPI E[2]
OBJ (C)
KPI F[1] KPI F[2] KPI F[3]
Business Unit F
KPI G[1] KPI G[2] KPI G[3]
OBJ (C) = AVG*(OBJ(F),OBJ(G))
OBJ (F)
KPI F[1] KPI F[2] KPI F[3]
Business Unit G OBJ(G)
KPI G[1] KPI G[2] © 2015 – Strategic Systems Consulting. All rights reserved
KPI G[3]
CASE #4: AGGREGATED OBJECTIVES ALIGNMENT (2)
● Parent Business Units Objectives’ status is calculated based on Child Business Units’ Objectives statuses ● Each Parent Business Unit lists a selection of its Child Business Units’ the most significant KPIs ● The Objectives Alignment is based on Child Business Units Objectives statuses’ Aggregation
Level 0
Level 1
Level 2
Business Unit A
OBJ (D) = f (D[1],D[2],D[3])
OBJ (A)
OBJ (E) = f (E[1],E[2],E[3]) OBJ (F) = f (F[1],F[2],F[3])
KPI D[1]
OBJ (G) = f (G[1],G[2],G[3])
KPI E[1] KPI F[1] KPI G[1]
OBJ (A) = AVG*(OBJ(B),OBJ(C))
Business Unit B
AVG* = Weighted Average = Data Entry
OBJ (B)
KPI D[1] KPI D[2]
KPI E[1] KPI E[2]
OBJ (B) = AVG*(OBJ(D),OBJ(E))
Business Unit D OBJ (D)
KPI D[1] KPI D[2] KPI [3]
Business Unit E OBJ (E)
KPI E[1] KPI E[2]
Business Unit C
KPI E[2]
OBJ (C)
KPI F[1] KPI F[2] KPI G[1]
KPI G[2]
OBJ (C) = AVG*(OBJ(F),OBJ(G))
Business Unit F OBJ (F)
KPI F[1] KPI F[2] KPI F[3]
Business Unit G OBJ(G)
KPI G[1] KPI G[2] © 2015 – Strategic Systems Consulting
KPI G[3]
CASE #5: MIXED ALIGNMENT & CASCADING (a) Business Units’ Objectives’ statuses calculated based either ❶ on the statuses of the Child Business Units’ objectives ❷ on the statuses of the Child Business Units’ objectives and on own KPIs (w/o Child Business Units’ KPIs pass-through) or ❸ on a combination of Child Business Units Aggregated KPIs and own KPIs
Level 0
Level 1
Level 2
Business Unit A ❶
OBJ(D) = f (D[1],D[2],D[3]) OBJ(E) = f (E[1],E[2],E[3])
OBJ (A)
OBJ(F) = f (F[1],F[2],F[3])
Objectives status Aggregation
KPI A[1]
OBJ(G) = f (G[1],G[2],G[3])
KPI A[2] KPI B[4] KPI C[3]
AVG* = Weighted Average
Business Unit B ❷
KPI B[3]
KPIs Aggregation
= Data Entry
OBJ (B)
Objectives status Aggregation
KPI B[1]
KPI C[4]
KPI B[2] OBJ(A) = f (OBJ(B),OBJ(C)) A[1] = SUM(B[1],C[1]) or A[1] = AVG*(B[1],C[1])
Business Unit D
KPI B[3] KPI B[4] KPI D[3]
A[2] = SUM(B[2],C[2]) or A[2] = AVG*(B[2],C[2])
KPIs Aggregation
KPI E[3]
OBJ (D)
KPI D[1] KPI D[2] KPI D[3]
OBJ (B) = f (AVG*(OBJ(D),OBJ(E)),B[1],B[2]) B[3] = SUM(D[1],E[1]) or B[3] = AVG*(D[1],E[1])
Business Unit E
B[4] = SUM(D[2],E[2]) or B[4] = AVG*(D[2],E[2])
OBJ (E)
KPI E[1] KPI E[2] KPI E[3]
Business Unit C ❸ OBJ (C)
Objectives status Aggregation
KPI C[1] KPI C[2] KPI C[3]
KPI C[4]
Full KPIs Aggregation
OBJ(C) = f (AVG*(OBJ(F),OBJ(G)),C[4]) C[1] = SUM(F[1],G[1]) or C[1] = AVG*(F[1],G[1]) C[2] = SUM(F[2],G[2]) or C[2] = AVG*(F[2],G[2]) C[3] = SUM(F[3],G[3]) or C[3] = AVG*(F[3],G[3])
Business Unit F OBJ (F)
KPI F[1] KPI F[2] KPI F[3]
Business Unit G OBJ(G)
KPI G[1] KPI G[2] © 2015 – Strategic Systems Consulting. All rights reserved
KPI G[3]
CASE #5: MIXED ALIGNMENT & CASCADING (b) Business Units’ Objectives’ statuses calculated based either ❶ on the Aggregated KPIs of the Child Business Units (*) or ❷ on the statuses of the Child Business Units’ objectives or ❸ on a combination of the statuses of the Child Business Units’ objectives and own KPIs
Level 0
Level 1
Level 2
Business Unit A ❷
OBJ(D) = f (D[1],D[2],D[3]) OBJ(E) = f (E[1],E[2],E[3])
OBJ (A)
KPI A[1] KPI A[2] KPI A[3] KPI C[4]
KPIs Aggregation
AVG* = Weighted Average
= Data Entry
OBJ (B)
Objectives status* Aggregation
KPI B[1]
A[1] = SUM(B[1],C[1]) or A[1] = AVG*(B[1],C[1])
A[3] = SUM(B[3],C[3]) or A[3] = AVG*(B[3],C[3])
OBJ(G) = f (G[1],G[2],G[3])
Business Unit B ❶
OBJ(A) = f (OBJ(B),OBJ(C))
A[2] = SUM(B[2],C[2]) or A[2] = AVG*(B[2],C[2])
OBJ(F) = f (F[1],F[2],F[3])
Objectives status Aggregation
KPI B[2]
Business Unit D
KPI B[3] OBJ (B) = f (B[1],B[2],B[3]) or * OBJ (B) = AVG*(OBJ(D),OBJ(E)) B[1] = SUM(D[1],E[1]) or B[1] = AVG*(D[1],E[1])
Full KPIs* Aggregation
OBJ (D)
KPI D[1] KPI D[2] KPI D[3]
B[2] = SUM(D[2],E[2]) or B[2] = AVG*(D[2],E[2])
Business Unit E
B[3] = SUM(D[3],E[3]) or B[3] = AVG*(D[3],E[3])
OBJ (E)
KPI E[1] KPI E[2] KPI E[3]
Business Unit C ❸ OBJ (C)
Objectives status Aggregation
KPI C[1] KPI C[2] KPI C[3]
KPI C[4]
KPIs Aggregation
KPI F[3] KPI G[3]
OBJ(C) = f (AVG*(OBJ(D),OBJ(E)),C[3],C[4]) C[1] = SUM(F[1],G[1]) or C[1] = AVG*(F[1],G[1]) C[2] = SUM(F[2],G[2]) or C[2] = AVG*(F[2],G[2]) (*) The Child Business Units Full KPIs’ Aggregation has the same impact on the Parent Business Unit’s objective status as the Child Business Units’ objectives’ status aggregation © 2015 – Strategic Systems Consulting. All rights reserved
Business Unit F OBJ (F)
KPI F[1] KPI F[2] KPI F[3]
Business Unit G OBJ(G)
KPI G[1] KPI G[2] KPI G[3]