1. Rolling it All Together: A Balanced Scorecard Approach
Step 9
Step 9
Rolling it All Together:
A Balanced Scorecard Approach
Paul Arveson and Howard Rohm
Balanced Scorecard Institute

2. Presentation Agenda What is the Government Balanced Scorecard?
What’s in it for Cities and Counties?
What does a Real BSC Look Like?
What are the Limitations of the BSC?
What is the Future of the BSC?
BSC Implementation Workshop tomorrow!

3. What is the Balanced Scorecard (BSC)?
The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action.
It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. 
When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise.

4. Some Concepts in the Balanced Scorecard
Multiple Perspectives
Balance
Feedback of measurements
“Cascading” Scorecards
Cause-Effect Framework
Strategic Mapping

5. Four Perspectives of the Balanced Scorecard
Objective
Measure
Target
Initiative
Budget
Financial
Strategy
Customers/Citizens
Measure
Target
Initiative
Objective
Customers
Measure
Target
Initiative
Objective
Internal Business
Processes
Measure
Target
Initiative
Objective
Learning & Growth
Source: Kaplan and Norton

6. Balances in the BSC Lagging Indicators Leading Indicators
Diagnostic Measurements
Strategic Measurements
Cost & Risk
Benefit & Value
Low risk / low benefit
High risk / high benefit

7. Operational and Strategic Feedback
Metrics
Strategic
Plan
Operations
Plan
Metrics
Mission
Activities
Operational
Budget
Outputs
Outcomes
Strategic
Budget
Strategic Initiatives

8. “Cascading” Scorecards

9. Balanced Scorecard Cause-Effect Hypothesis
4. Increased customer
satisfaction will lead to
better financial results.
Financial
3. Improved work processes
will lead to increased
customer satisfaction.
Customer
2. Skilled, empowered
employees will improve
The ways they work.
Internal Process
1. Knowledge & skills of
employees is foundation for all
innovation and improvements.
Learning & Growth

10. Strategy Map Citizens Budget Internal Business Process
Increased
Involvement
Increase
Safety
Increase
Satisfaction
Lower
Wait Time
Citizens
Budget
Internal Business Process
Learning and Growth
Reduce
Costs
Grow Tax
Base
Reduce
Procurement
Steps
Improve
Cycle Time
Improve
Skills
Increase
Network
Capability

11. From Strategy to Budget
Strategy Map
Metrics
Targets
Strategic Initiatives
Customer
approval
rating
Each Strategic Initiative
Plan contains:
Sponsor
Schedule
Resources
Budget
Cycle
time
reduction
% strategic
skills
available

12. Tying the BSC to Resource Decisions
Mission
Vision
Corporate
Strategic themes
Perspectives
Objectives
Measures
Feedback
Targets
Initiatives $
Capital plan
Operating budget
Special projects
Results
Analysis

13. Popular Management Programs
Strategic Management Systems
Balanced Scorecard
Quality Certification Programs
ISO 9001, Baldrige, EFQM, CMM
Quality Improvement Programs
Six Sigma, TQL, TQM, BPR, BPI
Financial Management Programs
ABC, ABB, ABM, EVM, ZBB

14. What is the difference between
private-sector and public-sector
balanced scorecards?

15. Comparing Private and Public Sector Organizations
Feature
Private Sector
Public Sector
General Strategic Goal
Competitiveness
Mission value, effectiveness
Financial Goals
Profit; growth; market share
Productivity; efficiency; value
Stakeholders
Stockholders; buyers; managers
Taxpayers; recipients; legislators
Desired Outcome
Customer satisfaction
Customer * satisfaction

16. Public Sector Balanced Scorecard
Mission
Financial and Social Cost
Value and Benefit
Customers and Constituents
Internal Processes
Learning:
Skills, Knowledge, Data, People
Source:
Washington State Auditors

17. Commercial Customer Relationships
Competitors
Products,
Services
Funds
Supplier

18. Government Customer Relationships
Citizens
(No Competitors)
Taxes
Representatives
Appropriations
Agency
Budgets
Department
Suppliers
Grants,
Products,
Services
Costs
Support
Activities
Mission Activities
Recipients

19. What are the BSC’s Benefits for Local Governments?
BSC Places the Whole Organization in a Learning Process
Enables More Rational Budget Decisions
Facilitates Performance Improvements
Improves Communication to Stakeholders
Provides Data for Benchmarking

20. BSC Benefits: 1. Learning
BSC Places the Whole Organization in a Learning Process
Aligns everyone to strategy in a single framework
BSC improves itself over time:
Selection of initiatives and resource allocation
Cause-effect hypotheses
Measurement process

21. BSC Benefits: 2. Planning
More rational budgeting in a world of rapid change
Resource allocations based on performance
Systematic, fact-based management displaces intuition and politics
Anticipate future outcomes
Leading indicators
Cause-effect predictions
Simulations made possible

22. BSC Benefits: 3. Facilitates Improvements
BSC Raises visibility of what’s going on
Identifies what most needs to be changed
Helps to identify best practices
BSC enables more opportunities for Innovation

23. BSC Benefits: 4. Stakeholders
Raises visibility of government activities
Facilitates feedback
Supports accountability

24. BSC Benefits: 5. Benchmarking
Benchmarking Project:
Identify Process
Establish Partnership
Site Visit
Data Analysis
Implementation Plan
Org. A
Process
Org. B
Process
Performance measurement data collected for the BSC can also be
used as a basis of comparison with data from other organizations.

25. Why use the Balanced Scorecard in Government?
“Why should you as a government leader try to achieve
a balanced set of performance measures? …
Because you need to know what your customer’s
expectations are and what your employee needs to
have to meet these expectations. Because you cannot
achieve your stated objectives without taking those
expectations into account. More importantly, because
it works, as can be seen from the success of our
partners.”
-- National Partnership for Reinventing Government, 1999

26. Balanced Scorecard - Managing For Results Government Roster
Federal States Cities Counties
Defense Virginia San Diego Monroe
Energy Iowa Portland Fairfax
Commerce Maryland Worcester Prince William
Transportation Puerto Rico Seattle Montgomery
Coast Guard Texas Austin Santa Clara
IRS Minnesota … …
Veterans Affairs Oregon
… Florida
Washington
Utah
Maine …

27. “Nine Steps to Success” Framework being Implemented in a County:
1. Conduct an organizational assessment
2. Define strategic themes or focus areas
3. Develop objectives
4. Draw strategy maps
5. Define performance measures
6. Develop initiatives
7. Visualize & communicate performance
8. Cascade to business units
9. Evaluate performance and adjust

28. Customers & Stakeholders Organization Capacity
Key Questions
Mission
What is our mission? What services and programs are required and need to be provided?
Customers/Citizens
Measure
Target
Initiative
Objective
Customers & Stakeholders
How do we create value? What benefits do we need to provide?
Strategy
Objective
Measure
Target
Initiative
Budget
Financial
Measure
Target
Initiative
Objective
Learning & Growth
Employees
&
Organization Capacity
To prudently manage public resources, how should we allocate funds and control costs?
Measure
Target
Initiative
Internal Business Process
Objective
Internal Business
Processes
How will we sustain our ability to change and improve?
To satisfy taxpayers, elected officials, regulators, and other stakeholders, at what business processes must we excel?

29. BSC Implementation: First Steps
Strategic Leadership Team training & workshops (Two workshops completed)
Corporate scorecard building (assessment, strategy development, objectives, and mapping – first draft completed)
Corporate scorecard development with Executive Conference participants (October 17-18)
Board of County Commissioners review (October 29)

30. BSC Implementation: Later Steps
Performance Measurement training (Early November)
BSC Implementation plan (Week of November 12)
Corporate scorecard complete (Week of November 26)
Performance reporting and communication plan (Week of December 10)
“Train the Trainer” training (November - December)
Automation requirements and recommendations (December)

31. Example: Performance Views
(top level)

32. Example: Performance Views (detail)

33. Common BSC Implementation Challenges
Mission, vision and strategies poorly defined or understood, and not actionable
Strategies and goals not linked to performance drivers, outcome measures, individual goals, and incentives
Budget and planning processes that are not linked
Treating performance measures as an “end”, rather than a “means”
Performance targets set too high or too low
Feedback that is tactical, rather than strategic
Lack of meaningful employee involvement

34. Limitations of Government BSC
Requires High Level of Organizational Commitment
Change management issues
“What’s in it for me?”
Takes sustained effort to implement fully
May create fear
Raises visibility and accountability
May lead to loss of data
Measurements don’t solve anything
Must be accompanied by initiatives
Govt. BSC Implementations are scarce
Few mature implementations
Limited data published
Lack of standardized metrics

35. Future of the Balanced Scorecard
Increased Specialization
Sector-based scorecards
E. g. Health Care BSC
Department-level scorecards
E. g. Human Resources BSC
Increased Sophistication of Tools
Linkage to Decision Support Systems
Performance Simulation Systems

36. Conclusions
BSC provides a framework needed for strategic alignment and org. learning.
Names may change, but some BSC features will continue:
Performance measurements
Results-based planning and management
Increased use of information technology
Increased sharing of data for benchmarking
BSC is not a “flavor of the month” but an evolving management concept.

37. Resources Balanced Scorecard Institute – www.balancedscorecard.org
Foundation for Performance Measurement (US) -
Building & Implementing A Balanced Scorecard: Nine Steps to Success, Howard Rohm, U.S. Foundation for Performance Measurement
Performance Drivers, Niles-Goram Olve, Jan Roy and Magnus Wetter, Wiley, 1999
The Strategy-Focused Organization, Robert Kaplan & David Norton, Harvard Business School Press, 2001
The Balanced Scorecard, Robert Kaplan & David Norton, Harvard Business School Press, 1996
Keeping Score, Mark Graham Brown, Quality Resources
How To Measure Performance: A Handbook of Techniques and Tools, Performance-Based Management Special Interest Group, U S Department of Energy
Benchmarking for Best Practices in the Public Sector, P. Keehley et al., Jossey-Bass, 1997.
Benchmarking Staff Performance, Jac Fitz-Enz, Jossey-Bass, 1993
Measuring, Managing, and Maximizing Performance, Will Kaydos, Productivity Press
Operational Performance Measurement: Increasing Total Productivity, Will Kaydos, Saint Lucie Press