Indianapolis Life Insurance Company Balanced Scorecard Development Template

Indianapolis Life Insurance Company Balanced Scorecard Development Template

Indianapolis Life Insurance Company Balanced Scorecard Development Template Version 1.0 September 20th, 1999 e Developing a Scorecard A scorecard is typically developed in a 3-phased approach Conduct Interviews, Review Business Plans, etc. Develop Draft Scorecard Pre-Workshop Confirm Strategy Confirm Critical Success Factors Identify Performance Measures Workshop(s) Refine Measures & Establish Targets Facilitated Session with future Scorecard Owner and his/her direct reports or team Develop Implementation Plan Post-Workshop 2

Cascading & Aligning Scorecards Scorecards are cascaded and aligned through the critical success factors Enterprise Enterprise Strategies Enterprise Critical Success Factors (CSFs) Enterprise Measures Tier II Objectives Tier II Tier III Linkage Alignment 3 Tier II CSFs Tier II Measures Tier III Goals Tier III CSFs Tier III Measures Establishing Tier II Objectives Enterprise Critical Success Factor Product Market Portfolio Wealth Accumulation BPO Financial Protection

Customer Care Distribution Operations Shared Services Draft Financial Financial Quality Earnings Growth Consistent with Plan Quality ROE Consistent with Plan Capital & Risk Management Balanced Portfolio of Business Customer Expand Customer Base & Penetration of Existing Customers Develop Products that Deliver True Value to the Customer & Enterprise Provide Quality Service Meeting Customer Needs * * ** ** Enterprise critical success factors that are highly influencable become Tier II objectives additionally, there may be other objectives which are aligned with the enterprise scorecard Maintain Appropriate Rating Process Alignment of Products, Services & Delivery to Target Customer Segments Optimize Technology & Infrastructure Efficient & Effective Business Fundamentals Learning & Growth Employee Satisfaction Developing Current Leadership & Leadership of the Future Recruiting & Retention Education & Training Well-Aligned Incentives * New market development & increasing value to existing customers

** Customer refers to internal customers: operations & distribution High Level of Influence Lower Level of Influence Tier II Objectives: 1) Objectives adopted from enterprise critical success factors 2) Newly developed objectives Tier II Balanced Scorecard 4 Tier II Balanced Scorecard Identify Tier II critical success factors and key performance indicators for the objectives Tier II Objectives: 1) Enter Tier II Objectives Critical Success Factor Measure Financial Profitable growth Portfolio earnings & ROE Plan for and ensure adequate capital Capital plan in place ALM Indicator Customer Develop timely, innovative, flexible products Product approval to launch cycle time Maintain close relationship with Customer Care for new products and market opportunities Sales growth versus plan Keep existing products competitive Retention (FP), Lapse Rate (WA) Process Ensure alignment of technology (development to administration) Average software turnaround time (to be detemined) Efficient and effective business fundamentals

Average filing turnaround time Build products that meet expenses Allowables to expenses* Learning & Growth Employee satisfaction Employee satisfaction index Retention (To be determined) * or Budget vs. Actual Expense 5 Next Steps - Set Targets and Identify Tactics to Reach Targets Each measure should have a target (short term and long term) and an identified initiative/tactic to bridge the performance gap (current performance - target performance) Critical Success Factor Measure Financial Profitable growth Portfolio earnings & ROE Plan for and ensure adequate capital Capital plan in place ALM Indicator Customer Develop timely, innovative, flexible products Product approval to launch cycle time Maintain close relationship with Customer Care for new products and market opportunities Sales growth versus plan Keep existing products competitive Retention (FP), Lapse Rate (WA) Process Ensure alignment of technology (development to administration) Average software turnaround time (to be

detemined) Efficient and effective business fundamentals Average filing turnaround time Build products that meet expenses Allowables to expenses* Learning & Growth Employee satisfaction Employee satisfaction index Retention (To be determined) Initiative Alignment Measure: ROE Performance Gap: 5% Tactic/Inititiative: Rationalize Portfolio Owner TBD Tactic Steps: 1) Determine product profitability 2) Identify distribution implications of rationalization 3) Identify operational implications of rationalization 4) Develop phase out plan 5) Initiative phase out plan 6 Current Results Target Tier III Mapping Enterprise Tier II Tier III Tier II Critical Success Factor Term Whole Life Un. Life

VUL Enterprise Strategies Enterprise Critical Success Factors (CSFs) Portfolio & Process Objectives Enterprise Measures Portfolio & Process CSFs Portfolio & Process Measures Tier III Goals Tier III CSFs Annuity Financial Profitable growth Plan and ensure for adequate capital Ability to Influence Balanced portfolio Customer Develop timely, innovative products A similar process may be undertaken to develop Tier III objectives and scorecards aligned with Tier II Maintain close relationship with Customer Care for new products Process Optimize product-market selection Efficient and effective business fundamentals

Learning & Growth Employee satisfaction Tier III Objectives: 1) 2) 3) Tier III Balanced Scorecard 7 Tier III Measures Horizontal Alignment The same process may be used to identify objectives, critical success factors and performance indicators for the other Tier II areas. Additionally, the scorecards should be aligned horizontally to ensure internal requirements are met Sample Tier III requirements Distribution Cross-selling Vertical Alignment # of appointed reps (WA) Sales per appointed rep (WA) # of B/D selling agreements / distribution outlets (WA) Investments Risk/Reward profile, earned rate (WA) Shared Services Timeliness and accuracy of projects (WA) E-Commerce (WA) Enterprise Tier II Area 1 Tier II Area 2 Customer Care

Operations Horizontal Alignment 8 Distribution New Scorecard Area Responsibilities Summarization of key responsibilities for scorecard area Responsibilities Responsibility 9 Enterprise -- Tier II Mapping Tier II Goals Tier I Tier II Critical Success Factors Financial Quality Earnings Growth Consistent with Plan Quality ROE Consistent with Plan Enterprise Scorecard Measures Earnings Growth GAAP Return on Equity (ROE) Risk-Based Capital (RBC), Capital Plan Product & Distribution Mix Capital & Risk Management Balanced Portfolio of Business Customer Policies Under Administration, Insureds with Multiple Policies, Sales vs. Plan Expand Customer Base & Penetration of Existing Customers Develop Products that Deliver True Value to the Customer & Enterprise

Provide Quality Service Meeting Customer Needs Maintain Appropriate Rating Process Alignment of Products, Services & Delivery to Target Customer Segments Optimize Technology & Infrastructure Product Profitability Producer Retention , Customer Satisfaction Rating Growth in Target Market Segments Technology ROI, Productivity Ratios (proposed) Expense to Premium Ratios, Operating Expense Margin (proposed) Efficient & Effective Business Fundamentals Learning & Growth Employee Satisfaction Developing Current Leadership & Leadership of the Future Recruiting & Retention Employee Satisfaction Leadership Strength Index Personal Development Plans Employee Return on Investment (ROI) Incentive Alignment Education & Training Well-Aligned Incentives High Level of Influence Tier II Measures Lower Level of Influence 10

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