1. Balanced Scorecard Metrics Workshop UC Berkeley Business and Administrative Services March, 2001

2. Workshop Agenda Translating our mission into desired outcomes The role of the Balanced Scorecard How to build your Balanced Scorecard

3. Mission Why we exist Core Values What we believe in Vision What we want to be Strategy Our Game Plan Balanced Scorecard Implementation and focus Strategic Initiatives What we need to do Personal Objectives What I need to do STRATEGIC OUTCOMES Motivated and Prepared PEOPLE Well- Utilized RESOURCES Highly- Effective PROCESSES Delighted CUSTOMERS Adapted from Kaplan & Norton, The Stategy-Focused Organization TRANSLATING OUR MISSION INTO DESIRED OUTCOMES

4. The Balanced Scorecard is a framework for implementing strategy. It does that by Identifying critical goals Recognizing the real drivers of organizational performance Measuring progress toward our critical goals Communicating Ultimate aim: alignment of our organization with our strategy

5. A balanced scorecard should tell the story of your unit’s strategy: What are the critical goals that comprise your strategy? How will you measure your success in reaching these critical goals?

6. CRITICAL GOALS: what must happen in order to achieve our vision METRICS: how to assess progress in achieving our vision VISION Picture of future success PEOPLE RESOURCES SERVICE PROCESSES Building a Balanced Scorecard

7. What is the difference between a goal and a critical goal? Example: “Reduce the cost of roof repairs” is a worthy goal of our Physical Plant Department, and one that should always be pursued. But if there are competitors who can generally match or undercut our costs, the Department would be wise not to enVISION itself as the lowest-cost supplier of roofing repairs to the Campus. Instead, it might better pin its success on “quality of repairs”, or “24-hour availability”, or “thorough knowledge of the customers’ roofs”. One or more of these goals would be named in their strategy, and would be the critical goals. Answer: A critical goal is a goal that has to be achieved if the future (the VISION) is to be reached. So when creating metrics, identify the critical goals and track these with your metrics.

8. What are some of our critical goals? CRITICAL GOALOUR METRIC Excellent workplace climateThe Let’s Hear It! Staff Survey Skilled, knowledgable, learning-oriented staff Percent of employees fulfilling their Individual Learning Plans Safe and healthful working environmentI.I.P.P. Performance Ranking Healthy staffIllness & Injury Recordable Incident Rate Satisfied customersCustomer survey Knowledgable, collaborative customersCustomer education metric [varies with unit] Sound financial performance YTD Actual Expenditures minus Budgeted Expenditures [for a centrally-funded unit] YTD Revenue minus Expenditures [for a re- charge unit] High productivityMetrics vary with units & processes PEOPLE SERVICE RESOURCES

9. PROCESS PERSPECTIVERESOURCE PERSPECTIVE What will your unit’s Balanced Scorecard look like? SERVICE PERSPECTIVE GOAL – Promote organizational climate conducive to high performance MEASURE – Employee Survey results CRITICAL GOAL – Sound financial performance [re-charge unit] METRIC - YTD Revenue minus Expenditures Reported quarterly CRITICAL GOAL– Sound financial performance [centrally-funded unit] METRIC- YTD Actual Expenditures minus Budgeted Expenditures CRITICAL GOAL – High productivity Reported quarterly METRIC – GOAL – Promote organizational climate conducive to high performance MEASURE – Employee Survey results CRITICAL GOAL – METRIC – Reported quarterly CRITICAL GOAL – METRIC – CRITICAL GOAL – Reported quarterly METRIC – Reported quarterly GOAL – Promote organizational climate conducive to high performance MEASURE – Employee Survey results CRITICAL GOAL – Knowledgable, collaborative customers METRIC – CRITICAL GOAL – Satisfied customers METRIC – Customer Survey results Reported quarterly PEOPLE PERSPECTIVE * to be changed in 2 nd year to “% of employees who have fulfilled their Individual Learning Plan” CRITICAL GOAL – Excellent workplace climate METRIC – Let’s Hear It! survey results CRITICAL GOAL – Healthy staff METRIC – Illness/injury recordable incident rate CRITICAL GOAL – Safe and healthful working environment Reported annually METRIC – Illness/Injury Prevention Plan Performance Ranking Reported quarterly Reported annually CRITICAL GOAL – Skilled, knowledgable, learning-oriented staff METRIC– % of employees having Individual Learning Plan* Reported quarterly CRITICAL GOAL – METRIC – CRITICAL GOAL – METRIC – White = you fill in !!

10. How do we decide what the rest of our critical goals should be, so we can fill in those “white spaces”? Answer: Consider how these FOUR STRATEGIC THEMES can be implemented in your unit (NOTE: it is essential to do this in consultation with your boss !!) 1. EXPAND OUR VISION: 4. ENGAGE THE LARGER COMMUNITY: give to and learn from our wider base of “customers”: the citizens of California. 3. ACHIEVE OPERATIONAL EXCELLENCE: 2. INCREASE VALUE FOR OUR CUSTOMERS: new ways of doing business new services and products new markets new customer segments lower costs faster turnaround more accurate and effective service higher quality products better interpersonal relationships greater understanding of our customers’ needs improve productivity redesign processes

11.  Monitor progress toward critical goals  Motivate appropriate behavior  Communicate information (are understandable !!)  Identify opportunities for improvement The right metrics:

12. Scorecards need both outcome metrics and driver metrics: Outcome Metrics Reflect the results or outcomes of strategies Also called “lagging metrics” (show past performance) Examples: profitability, market share, customer satisfaction. Driver Metrics Reflect how the outcomes are to be achieved. Also called “leading metrics” (show early signs of strategy success) Examples: cycle time, defect rates, efficiency, performance versus plan

13.  When the information it provides to you is not critical to your unit’s success  When it does not drive the behavior you want  When the cost of collecting the data exceeds the benefits  When the metric cannot be directly affected by the work group being measured  When it is not a metric at all (clue: can it be expressed as a number?) When a Metric is NOT useful:

14. Having trouble creating a metric to track one of your critical goals? It is often possible to track a goal indirectly: CRITICAL GOAL: Better preventive maintenance of our emergency generators. POSSIBLE METRICDATA SOURCE Number of hours this quarter devoted to generator testing-and-maintenance Timekeeping / payroll system Percent of tasks on generator PM schedule actually accomplished this quarter Preventive maintenance database Number of generator parts ordered this quarter (because well-maintained generators require fewer replacement parts) Purchasing system Number of times this quarter when generators failed to start during failure of PG&E power Work order system Customer satisfaction rating of power reliability Survey of customers in buildings served by emergency generators

15. The End