Presentation on theme: "Rolling it All Together: A Balanced Scorecard Approach"— Presentation transcript:
1 Rolling it All Together: A Balanced Scorecard Approach Step 9Step 9Rolling it All Together:A Balanced Scorecard ApproachPaul Arveson and Howard RohmBalanced 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 PerspectivesBalanceFeedback of measurements“Cascading” ScorecardsCause-Effect FrameworkStrategic Mapping
5 Four Perspectives of the Balanced Scorecard ObjectiveMeasureTargetInitiativeBudgetFinancialStrategyCustomers/CitizensMeasureTargetInitiativeObjectiveCustomersMeasureTargetInitiativeObjectiveInternal BusinessProcessesMeasureTargetInitiativeObjectiveLearning & GrowthSource: Kaplan and Norton
6 Balances in the BSC Lagging Indicators Leading Indicators Diagnostic MeasurementsStrategic MeasurementsCost & RiskBenefit & ValueLow risk / low benefitHigh risk / high benefit
7 Operational and Strategic Feedback MetricsStrategicPlanOperationsPlanMetricsMissionActivitiesOperationalBudgetOutputsOutcomesStrategicBudgetStrategic Initiatives
9 Balanced Scorecard Cause-Effect Hypothesis 4. Increased customersatisfaction will lead tobetter financial results.Financial3. Improved work processeswill lead to increasedcustomer satisfaction.Customer2. Skilled, empoweredemployees will improveThe ways they work.Internal Process1. Knowledge & skills ofemployees is foundation for allinnovation and improvements.Learning & Growth
10 Strategy Map Citizens Budget Internal Business Process IncreasedInvolvementIncreaseSafetyIncreaseSatisfactionLowerWait TimeCitizensBudgetInternal Business ProcessLearning and GrowthReduceCostsGrow TaxBaseReduceProcurementStepsImproveCycle TimeImproveSkillsIncreaseNetworkCapability
11 From Strategy to Budget Strategy MapMetricsTargetsStrategic InitiativesCustomerapprovalratingEach Strategic InitiativePlan contains:SponsorScheduleResourcesBudgetCycletimereduction% strategicskillsavailable
12 Tying the BSC to Resource Decisions MissionVisionCorporateStrategic themesPerspectivesObjectivesMeasuresFeedbackTargetsInitiatives$Capital planOperating budgetSpecial projectsResultsAnalysis
16 Public Sector Balanced Scorecard MissionFinancial and Social CostValue and BenefitCustomers and ConstituentsInternal ProcessesLearning:Skills, Knowledge, Data, PeopleSource:Washington State Auditors
18 Government Customer Relationships Citizens(No Competitors)TaxesRepresentativesAppropriationsAgencyBudgetsDepartmentSuppliersGrants,Products,ServicesCostsSupportActivitiesMission ActivitiesRecipients
19 What are the BSC’s Benefits for Local Governments? BSC Places the Whole Organization in a Learning ProcessEnables More Rational Budget DecisionsFacilitates Performance ImprovementsImproves Communication to StakeholdersProvides Data for Benchmarking
20 BSC Benefits: 1. Learning BSC Places the Whole Organization in a Learning ProcessAligns everyone to strategy in a single frameworkBSC improves itself over time:Selection of initiatives and resource allocationCause-effect hypothesesMeasurement process
21 BSC Benefits: 2. Planning More rational budgeting in a world of rapid changeResource allocations based on performanceSystematic, fact-based management displaces intuition and politicsAnticipate future outcomesLeading indicatorsCause-effect predictionsSimulations made possible
22 BSC Benefits: 3. Facilitates Improvements BSC Raises visibility of what’s going onIdentifies what most needs to be changedHelps to identify best practicesBSC enables more opportunities for Innovation
23 BSC Benefits: 4. Stakeholders Raises visibility of government activitiesFacilitates feedbackSupports accountability
24 BSC Benefits: 5. Benchmarking Benchmarking Project:Identify ProcessEstablish PartnershipSite VisitData AnalysisImplementation PlanOrg. AProcessOrg. BProcessPerformance measurement data collected for the BSC can also beused 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 achievea balanced set of performance measures? …Because you need to know what your customer’sexpectations are and what your employee needs tohave to meet these expectations. Because you cannotachieve your stated objectives without taking thoseexpectations into account. More importantly, becauseit works, as can be seen from the success of ourpartners.”-- National Partnership for Reinventing Government, 1999
26 Balanced Scorecard - Managing For Results Government Roster Federal States Cities CountiesDefense Virginia San Diego MonroeEnergy Iowa Portland FairfaxCommerce Maryland Worcester Prince WilliamTransportation Puerto Rico Seattle MontgomeryCoast Guard Texas Austin Santa ClaraIRS Minnesota … …Veterans Affairs Oregon… FloridaWashingtonUtahMaine…
27 “Nine Steps to Success” Framework being Implemented in a County: 1. Conduct an organizational assessment2. Define strategic themes or focus areas3. Develop objectives4. Draw strategy maps5. Define performance measures6. Develop initiatives7. Visualize & communicate performance8. Cascade to business units9. Evaluate performance and adjust
28 Customers & Stakeholders Organization Capacity Key QuestionsMissionWhat is our mission? What services and programs are required and need to be provided?Customers/CitizensMeasureTargetInitiativeObjectiveCustomers & StakeholdersHow do we create value? What benefits do we need to provide?StrategyObjectiveMeasureTargetInitiativeBudgetFinancialMeasureTargetInitiativeObjectiveLearning & GrowthEmployees&Organization CapacityTo prudently manage public resources, how should we allocate funds and control costs?MeasureTargetInitiativeInternal Business ProcessObjectiveInternal BusinessProcessesHow 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)
33 Common BSC Implementation Challenges Mission, vision and strategies poorly defined or understood, and not actionableStrategies and goals not linked to performance drivers, outcome measures, individual goals, and incentivesBudget and planning processes that are not linkedTreating performance measures as an “end”, rather than a “means”Performance targets set too high or too lowFeedback that is tactical, rather than strategicLack of meaningful employee involvement
34 Limitations of Government BSC Requires High Level of Organizational CommitmentChange management issues“What’s in it for me?”Takes sustained effort to implement fullyMay create fearRaises visibility and accountabilityMay lead to loss of dataMeasurements don’t solve anythingMust be accompanied by initiativesGovt. BSC Implementations are scarceFew mature implementationsLimited data publishedLack of standardized metrics
35 Future of the Balanced Scorecard Increased SpecializationSector-based scorecardsE. g. Health Care BSCDepartment-level scorecardsE. g. Human Resources BSCIncreased Sophistication of ToolsLinkage to Decision Support SystemsPerformance Simulation Systems
36 ConclusionsBSC provides a framework needed for strategic alignment and org. learning.Names may change, but some BSC features will continue:Performance measurementsResults-based planning and managementIncreased use of information technologyIncreased sharing of data for benchmarkingBSC 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 MeasurementPerformance Drivers, Niles-Goram Olve, Jan Roy and Magnus Wetter, Wiley, 1999The Strategy-Focused Organization, Robert Kaplan & David Norton, Harvard Business School Press, 2001The Balanced Scorecard, Robert Kaplan & David Norton, Harvard Business School Press, 1996Keeping Score, Mark Graham Brown, Quality ResourcesHow To Measure Performance: A Handbook of Techniques and Tools, Performance-Based Management Special Interest Group, U S Department of EnergyBenchmarking for Best Practices in the Public Sector, P. Keehley et al., Jossey-Bass, 1997.Benchmarking Staff Performance, Jac Fitz-Enz, Jossey-Bass, 1993Measuring, Managing, and Maximizing Performance, Will Kaydos, Productivity PressOperational Performance Measurement: Increasing Total Productivity, Will Kaydos, Saint Lucie Press