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Presentation on theme: "Www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 1 U.S."— Presentation transcript:

1 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 1 U.S. Foundation For Performance Measurement Balanced Scorecard Institute Paul Arveson and Howard Rohm Balanced Scorecard Institute www.balancedscorecard.org/ Rolling it All Together: A Balanced Scorecard Approach

2 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 2 U.S. Foundation For Performance Measurement Balanced Scorecard Institute 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 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 3 U.S. Foundation For Performance Measurement Balanced Scorecard Institute 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 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 4 U.S. Foundation For Performance Measurement Balanced Scorecard Institute Some Concepts in the Balanced Scorecard Multiple Perspectives Balance Feedback of measurements “Cascading” Scorecards Cause-Effect Framework Strategic Mapping

5 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 5 U.S. Foundation For Performance Measurement Balanced Scorecard Institute Source: Kaplan and Norton Customers/Citizens MeasureTargetInitiativeObjective Customers MeasureTargetInitiative Objective Internal Business Processes MeasureTargetInitiativeObjective Learning & Growth Objective MeasureTargetInitiative Budget Financial Four Perspectives of the Balanced Scorecard Strategy Strategy

6 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 6 U.S. Foundation For Performance Measurement Balanced Scorecard Institute Balances in the BSC Lagging IndicatorsLeading Indicators Diagnostic Measurements Strategic Measurements Cost & RiskBenefit & Value Low risk / low benefitHigh risk / high benefit

7 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 7 U.S. Foundation For Performance Measurement Balanced Scorecard Institute Operational and Strategic Feedback Mission Activities Strategic Initiatives Operational Budget Strategic Plan Operations Plan Strategic Budget Outputs Outcomes Metrics

8 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 8 U.S. Foundation For Performance Measurement Balanced Scorecard Institute “Cascading” Scorecards

9 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 9 U.S. Foundation For Performance Measurement Balanced Scorecard Institute Balanced Scorecard Cause-Effect Hypothesis Financial Customer Internal Process Learning & Growth 1. Knowledge & skills of employees is foundation for all innovation and improvements. 2. Skilled, empowered employees will improve The ways they work. 3. Improved work processes will lead to increased customer satisfaction. 4. Increased customer satisfaction will lead to better financial results.

10 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 10 U.S. Foundation For Performance Measurement Balanced Scorecard Institute Reduce Costs CitizensBudget Internal Business Process Internal Business Process Learning and Growth Learning and GrowthCitizensBudget Internal Business Process Internal Business Process Learning and Growth Learning and Growth Strategy Map Increase Satisfaction Increased Involvement Improve Cycle Time Increase Network Capability Improve Skills Reduce Procurement Steps Increase Safety Lower Wait Time Grow Tax Base

11 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 11 U.S. Foundation For Performance Measurement Balanced Scorecard Institute From Strategy to Budget Strategy MapMetricsTargets Strategic Initiatives % strategic skills available Each Strategic Initiative Plan contains: Sponsor Schedule Resources Budget Cycle time reduction Customer approval rating

12 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 12 U.S. Foundation For Performance Measurement Balanced Scorecard Institute Tying the BSC to Resource Decisions Corporate Results $ Mission Vision Strategic themes Perspectives Objectives Measures Targets Initiatives Capital plan Operating budget Special projects Analysis Feedback

13 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 13 U.S. Foundation For Performance Measurement Balanced Scorecard Institute 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 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 14 U.S. Foundation For Performance Measurement Balanced Scorecard Institute What is the difference between private-sector and public-sector balanced scorecards?

15 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 15 U.S. Foundation For Performance Measurement Balanced Scorecard Institute Comparing Private and Public Sector Organizations FeaturePrivate SectorPublic Sector General Strategic Goal CompetitivenessMission value, effectiveness Financial GoalsProfit; growth; market share Productivity; efficiency; value StakeholdersStockholders; buyers; managers Taxpayers; recipients; legislators Desired OutcomeCustomer satisfaction Customer * satisfaction

16 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 16 U.S. Foundation For Performance Measurement Balanced Scorecard Institute Public Sector Balanced Scorecard Internal Processes Learning: Skills, Knowledge, Data, People Learning: Skills, Knowledge, Data, People Value and Benefit Customers and Constituents Financial and Social Cost Mission Source: Washington State Auditors

17 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 17 U.S. Foundation For Performance Measurement Balanced Scorecard Institute Customer Supplier Products, Services Funds Commercial Customer Relationships Competitors

18 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 18 U.S. Foundation For Performance Measurement Balanced Scorecard Institute Citizens Representatives Agency Department Mission Activities Recipients Support Activities Suppliers Taxes Appropriations Budgets Costs Grants, Products, Services (No Competitors) Government Customer Relationships

19 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 19 U.S. Foundation For Performance Measurement Balanced Scorecard Institute 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 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 20 U.S. Foundation For Performance Measurement Balanced Scorecard Institute 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 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 21 U.S. Foundation For Performance Measurement Balanced Scorecard Institute 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 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 22 U.S. Foundation For Performance Measurement Balanced Scorecard Institute 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 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 23 U.S. Foundation For Performance Measurement Balanced Scorecard Institute BSC Benefits: 4. Stakeholders Raises visibility of government activities Facilitates feedback Supports accountability

24 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 24 U.S. Foundation For Performance Measurement Balanced Scorecard Institute Org. B Process Org. A Process BSC Benefits: 5. Benchmarking Benchmarking Project: 1.Identify Process 2.Establish Partnership 3.Site Visit 4.Data Analysis 5.Implementation Plan Performance measurement data collected for the BSC can also be used as a basis of comparison with data from other organizations.

25 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 25 U.S. Foundation For Performance Measurement Balanced Scorecard Institute 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 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 26 U.S. Foundation For Performance Measurement Balanced Scorecard Institute Balanced Scorecard - Managing For Results Government Roster Federal StatesCitiesCounties Defense VirginiaSan DiegoMonroe Energy IowaPortlandFairfax Commerce MarylandWorcesterPrince William Transportation Puerto RicoSeattleMontgomery Coast Guard TexasAustinSanta Clara IRS Minnesota…… Veterans Affairs Oregon … Florida Washington Utah Maine …

27 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 27 U.S. Foundation For Performance Measurement Balanced Scorecard Institute 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 “Nine Steps to Success” Framework being Implemented in a County:

28 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 28 U.S. Foundation For Performance Measurement Balanced Scorecard Institute What is our mission? What services and programs are required and need to be provided? To prudently manage public resources, how should we allocate funds and control costs? 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? How do we create value? What benefits do we need to provide? Mission Customers/Citizens MeasureTargetInitiativeObjective Customers & Stakeholders MeasureTargetInitiative Internal Business Process Objective Internal Business Processes MeasureTargetInitiativeObjective Learning & Growth Employees & Organization Capacity Objective MeasureTargetInitiative Budget Financial Strategy Strategy Key Questions

29 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 29 U.S. Foundation For Performance Measurement Balanced Scorecard Institute 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 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 30 U.S. Foundation For Performance Measurement Balanced Scorecard Institute 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 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 31 U.S. Foundation For Performance Measurement Balanced Scorecard Institute Example: Performance Views (top level)

32 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 32 U.S. Foundation For Performance Measurement Balanced Scorecard Institute Example: Performance Views (detail)

33 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 33 U.S. Foundation For Performance Measurement Balanced Scorecard Institute 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 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 34 U.S. Foundation For Performance Measurement Balanced Scorecard Institute 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 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 35 U.S. Foundation For Performance Measurement Balanced Scorecard Institute 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 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 36 U.S. Foundation For Performance Measurement Balanced Scorecard Institute 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 www.balanced scorecard.org © 2002 by the Balanced Scorecard Institute and the U.S. Foundation for Performance Measurement. All rights reserved. 37 U.S. Foundation For Performance Measurement Balanced Scorecard Institute Resources Balanced Scorecard Institute – www.balancedscorecard.org Foundation for Performance Measurement (US) - www.netmain.com/usfpm 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


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