Transforming the Whole of Government through the Balanced Scorecard

Transcription

1 White Paper Transforming the Whole of Government through the Balanced Scorecard James Creelman & Abdullah Alnabhan, Palladium With many stakeholders to serve that oftentimes have conflicting demands, managing government is by nature messy. Complex trade-offs and unaligned entity-level strategic priorities often lead to resource inefficiency and failure to deliver on well thought-out strategies. This paper describes how the Balanced Scorecard strategy management system can bring together disparate government entities behind a shared whole of government vision. The Emirate of Abu Dhabi, United Arab Emirates (UAE) illustrated best practice in using a Whole of Government framework for successful multi-entity strategy execution.

2 Executing Strategy: An Ongoing Government Challenge In their Global Competitiveness Report, the World Economic Forum wrote, A critical determinant of successful government is the ability to make good decisions, and manage their implementation. Herein lies a major challenge. Translating good decisions into tangible deliverables at the front line is a perennial stumbling block for most organisations, be they government or commercial. For more than 30 years various research studies have found that between 70 and 90% of strategies, however welldesigned, fail to deliver expected results. Government agencies, with their complex stakeholder systems, face particularly formidable bulwarks on the road to their strategic goals. Getting all reporting entities to move in the same direction is perhaps the most daunting roadblock of all. Performance Management Framework SEF Internal Capabilities for Execution The Whole of Government Strategy Execution Framework Palladium has worked to implement the Balanced Scorecard at a multitude of government agencies over the last 20-plus years, including at the city level (such as the City of Charlotte in the US), at dedicated agencies (such as the US Army), at ministries (such as Spain s Ministry of Interior), and at the national level (such as the government of Botswana). This work has provided powerful insights and learnings into how to overcome challenges in a government setting. These proven best practices have been codified into Palladium s Whole of Government (WGov) Strategy Execution Framework, which comprises four components: (1) a performance management system; (2) internal capabilities for execution; (3) governance, monitoring and reporting; and (4) tools and training (Figure 1). The framework has been successfully applied at city, regional and national levels. Note that although implementing this framework should begin with the performance management framework, from which the other components flows, the other three are not necessarily sequential and would typically be implemented concurrently, as interaction between the three is required to deliver optimal results. Tools & Trainings Governance, Monitoring & Reporting 2 Transforming the Whole of Government through the Balanced Scorecard Figure 1: Palladium s Whole of Government Strategy Execution Framework

3 Component One: Performance Management Framework Component one is where the government translates its mission and vision and the strategic plans of its reporting entities into a unified performance management framework. The first step is to create the WGov Strategy Map and scorecard. Typically, we then see theme-based scorecards built to trigger cross-entity collaboration and singularity of focus. Individual entity-level maps and scorecards are also created as part of the cascade. These capture critical theme contributions as well other strategically vital, but more localised, performance dimensions. Component Two: Internal Capabilities for Execution Here the government develops the internal skills and the organisation structure to manage the execution process. A critical intervention is to institutionalise a WGov Office of Strategy Management (OSM), responsible for facilitating the unified strategy management process, analysis and reporting, sharing best practices and being the centre of expertise for the Balanced Scorecard methodology, amongst other duties. A centralised WGov OSM might be supported by satellite OSMs, or at least by strategy execution champions in each entity. Theme committees with senior representatives from the entities should oversee the progress of any theme scorecards with responsibilities such as reviewing performance and making appropriate performance improvement interventions. Component Three: Governance, Monitoring and Reporting The WGov OSM and theme teams play critical roles in component three, where the focus is making strategy execution a continuous process and aligning all stakeholders through structured governance, monitoring and reporting. In this component, they review and update the strategy, align sector and entity plans, align the budgeting process and evaluate entity and theme performance to report up to WGov at the enterprise level. Component Four: Tools and Training Component four focuses on establishing the tools and training for strategy execution among the stakeholders and entities. Some of the most important areas for training are understanding Strategy Maps and the Balanced Scorecard, improving strategic communication and learning to properly conduct strategy review meetings. Also key is deploying appropriate performance management reporting software and, increasingly important, advanced analytical tools. Transforming the Whole of Government through the Balanced Scorecard 3 Copyright 2015 Palladium

4 Abu Dhabi Case Example Abu Dhabi, the largest of the seven United Arab Emirates and the federation s capital, has spent the last ten years creating an overarching WGov Balanced Scorecard System and cascading it to individual entities. Accounting for more than 50% of the UAE s total GDP and with a population of about 2.6 million, Abu Dhabi is run by an 18-member Executive Council headed by Crown Prince Sheikh Mohammed bin Zayed Al Nahyan. A World-Class Government In 2006, the Executive Council set its sights on becoming a world-class government. The council introduced a comprehensive strategy encompassing and coordinating the activities of its 34 government entities, from healthcare and utilities to environmental management. But the obstacles to implementing the strategy were formidable. Each entity employed hundreds of people and had its own budget, constituents and systems. Employees were wary of what they saw as yet another attempt at strategic planning. Moreover, managers lacked the expertise to align people throughout the sprawling organisation and translate strategy into action. The new strategy floundered. Then, in 2008, the Executive Council took a new tack, articulating an ambitious Abu Dhabi Economic Vision 2030 that focused on creating a more globally competitive economy and becoming a leading government. It also crafted a 17-point policy agenda with such goals as A caring society that provides equal opportunities, Readily accessible world-class information and communication technologies (ICT) infrastructure, and World-class government administration and services. This vision involved devising a program of short- and medium-term actions and initiatives. The Executive Council turned to the Balanced Scorecard to make it possible. Adopting the Whole of Government Approach The Abu Dhabi General Secretariat of the Executive Council (ADGSEC), an administrative body reporting to the Executive Council, was tasked with creating an operational framework for the vision. Using the Balanced Scorecard methodology, the ADGSEC translated the strategy into a Whole of Government Strategy Map (Figure 2). Then ADGSEC produced individual entity (i.e., agency or departmental) maps to link and align objectives and initiatives to the WGov plan (see the Abu Dhabi Education Council example below). To reinforce alignment between entities, ADGSEC organised Strategy Maps drawing on four strategic themes: Social Sustainability, Environmental Sustainability, Knowledge-Based Economy, and Human Capital, along with two enablers Infrastructure and Government Excellence. It also appointed champion entities, such as utilities and finance, that provide services to external or internal customers. These champions identified specific WGov outcomes for which they were responsible and also developed outcome definition cards mini-scorecards with key measures that help the ADGSEC quickly see whether outcomes are being achieved. The Government Performance Management Division (GPMD), which reports to the ADGSEC, serves as the ADGSEC s Office of Strategy Management (OSM), with a mission of enabling and driving the delivery of policy, strategy, and initiatives execution to create public value. Staff members drive or coordinate most elements of key strategy management processes, from strategy development to strategy review. Perhaps the OSM s most im- 4 Transforming the Whole of Government through the Balanced Scorecard

5 Continue to create a confident, secure society and build a sustainable, open and globally competitive economy Social Sustainability Environmental Sustainability Balanced social and regional economic development Maintain a safe and secure society Healthy population able to contribute effectively to society A caring society that provides equal opportunities Maintain Abu Dhabi s culture, values and heritage A clean, safe and sustainable environment Knowledge-Based Economy Human Capital A growing, diverse and high-productivity knowledge-based economy A globally competitive business environment and the leader in the Gulf region Fair, ethical and safe labour conditions with Nationals employed to their fullest potential A world-leading educated population, able to lead the society and economy of Abu Dhabi Infrastructure Readily accessible world-class ICT infrastructure used across the Emirate Sustainable transport systems to support development Sustainable utility services that support development Distinctive Abu Dhabi cities and towns that are great places to live, work and visit Government Excellence Promote the rule of law and ensure a just society World-class government administration and services Significant contribution to the Federation, and strong international relationships Figure 2: Abu Dhabi s Whole of Government Strategy Map Transforming the Whole of Government through the Balanced Scorecard 5 Copyright 2015 Palladium

6 pressive role is managing initiatives a formidable task, given the number initiatives at the entity level (some 1,700 in 2009). The office ensures that the initiatives support the strategy and pinpoints areas of overlap and gaps; it then oversees and monitors their progress. The GPMD also ensures that initiatives are linked to specific budget categories operating expenditures (OpEx), capital expenditures (CapEx), and strategic expenditures (StratEx) and takes steps to detect any misallocation of resources. As part of the yearly budgeting process, the GPMD and Department of Finance calculate the total budget allocated to each strategic goal and identify relevant initiatives, as well as the entities driving those initiatives. In the first three years, the Abu Dhabi government realised impressive results. From 2007 to 2009, the percent of Emirati women in the workforce increased from 20% to 27%. Automation of services grew from less than 30% to 53%. Customer satisfaction (i.e., citizens, residents, businesses) rose from 52% to 69%. Also during this period, GDP value increased by 35%, and import value as a percentage of GDP increased by 84%. Coordination among entities, once non-existent, became the norm. And the internal culture was transformed into one focused on strategy and execution. Initiatives often affect multiple outcomes or themes. Those aimed at developing human capital through education might also, for instance, affect social sustainability, because that theme encompasses education and healthcare quality. To ensure fund allocations are balanced, each initiative is analysed to determine its impact on the WGov outcomes and entity-level priorities, as well as on service delivery. 6 Transforming the Whole of Government through the Balanced Scorecard

7 Abu Dhabi Education Council The Abu Dhabi Education Council (ADEC) is one of the many entities transformed through their participation in the WGov Balanced Scorecard framework. ADEC is charged with regulating and operating all public schools and regulating all private education entities within the emirate. Since its formation in 2005, ADEC has been working toward ensuring that education is fit to enable an innovation-based, knowledge-producing society. By 2013 ADEC had about 620 employees, located within four strategic business units (pre-primary to year 12; private schools; higher education; and support services). Together these units comprise 29 divisions. Developing these business units was one outcome of a comprehensive strategic evaluation and planning exercise that was conducted in Facilitated by the Office of Planning and Strategic Affairs (ADEC s version of an Office of Strategy Management), the senior management team identified several challenges that ADEC had to overcome if an education system was to be developed that would enable ADEC to make its crucial contribution to delivering on Abu Dhabi s Whole of Government objectives. Challenges included the poor quality of course curricula, teacher qualifications, the conditions of school buildings, and the lack of an overarching governance model for education. Given that ADEC assumes a regulatory role for higher education and private schools while also regulating and operating public schools, different value propositions were developed for each sector. ADEC s executive leadership team, chaired by His Highness General Sheikh Mohamed Bin Zayed Al Nahyan, did not believe that overall corporate and stakeholder value would be achieved through just the governance of these three sectors. Rather, benefits would be realised by aligning the sectors behind a common corporate vision, to be recognised as a world-class education system that supports learners in achieving their full potential to compete in the global market. During 2010, ADEC developed a suite of Strategy Maps and Balanced Scorecards, starting at the corporate level (Figure 3) and cascading to the three education sectors and 29 divisions. To ensure a common focus, the three-sector strategic plans were distilled into two strategic themes on the Strategy Map: schools and higher education. As a public entity, ADEC has settled on three, as opposed to the more conventional four, scorecard perspectives, with enablers at the base, service delivery at the top, and internal processes in the middle. Importantly the service delivery perspective captures seven outcomes required by the ADGSEC, to which ADEC reports. In turn, ADGSEC s outcomes (such as an education system that supports student-centred learning and delivers excellent student outcomes ) are drawn from its own performance management framework that supports the high-level government goals that are described in Abu Dhabi s WGov Strategy Map. Transforming the Whole of Government through the Balanced Scorecard 7 Copyright 2015 Palladium

8 To deliver a high-quality education system that enables all learners to reach their full potential and support Abu Dhabi s growth and prosperity Service Delivery Preserve and enrich national identity, local culture and traditions Create a knowledge base to drive and sustain Abu Dhabi s social and economic growth Elevate quality of Abu Dhabi s Educational System to International Standards Schools Higher Education Internal Processes Implement a studentcentred educational model to improve Teaching and Learning Set a solid regulatory framework for the Education System Improve access to all levels of the Education System Promote excellence in schools operations Ensure Health, Safety & Wellbeing of Students Align Higher Education with socioeconomic needs of Abu Dhabi Provide students with affordable options of highquality education Enhance internal & external Stakeholder Engagement Build and maintain a Research Ecosystem to drive an Innovation-Based Economy Monitor and improve quality of Education in Abu Dhabi Enablers Develop ADEC s Human Capital Develop and sustain a future-ready Information and Communication Technology environment Enhance Organisational Capabilities Figure 3: ADEC s Corporate Strategy Map 8 Transforming the Whole of Government through the Balanced Scorecard

9 In line with the WGov OSM, ADEC recognises the pivotal role that well-managed strategic initiatives play in strategy execution. A robust initiative prioritisation process is in place that assesses candidate initiatives according to relevance, impact on strategic objectives, and urgency criteria. Many initiatives within ADEC are complex and interdependent, so a robust selection and management process is essential. Initiative selection includes a 10-stage project-planning form that includes ownership, milestones, budget and risk. The aggregate budget from all approved initiatives constitutes the corporate strategic budget. Initiatives are discussed during the quarterly senior management review of the corporate and cascaded scorecards. A version of the quarterly strategic review is submitted to the office of the Crown Prince, detailing performance to the corporate scorecard, trend analysis, and the progress of major initiatives, thus strengthening the link between the work of ADEC and the aspirations within the Abu Dhabi WGov framework. Conclusion With governments across the world under ever-increasing pressure to deliver greater value to stakeholders without increasing costs, the Whole of Government framework is proving a powerful approach to delivering this more with less agenda, as well as managing the inherent complexities of public administration. As a snapshot of success, from , Students in Band 1 and Band 2 EMSA (External Measure of Student Achievement) increased from 24% to 61%, parent satisfaction rose from 74.6% to 82.7%, the number of teachers educated to Master degree level increased from 437 to 1435 and schools with state-of-the-art ICT infrastructure rose from 0% to 100%. Transforming the Whole of Government through the Balanced Scorecard 9 Copyright 2015 Palladium

10 About the Authors James Creelman is head of Research and Intellectual Property at Palladium. Based in Dubai, James is an experienced consultant, trainer and author in the field of strategy execution (primarily the Balanced Scorecard) and related fields, including enterprise risk management and enterprise performance management. He has provided expert advice to organisations in the Middle East, Europe, North America and Asia-Pacific. An experienced management author, James is the co-author of the book Doing More with Less: Measuring, analysing and improving performance in the government and not-for-profit sectors (2014). He has also authored or co-authored a further 23 books and reports, including Risk-Based Performance Management: Integrating strategy and risk management (2013) and Creating a Balanced Scorecard for a Financial Services Organisation (2011). Abdullah Alnabhan has an impressive trajectory in implementations in strategic planning and excellence across the world and specifically in GCC countries, including the development of one of the largest frameworks for performance management in the world. Several of the entities that Abdullah has worked with in his tenure at Palladium have achieved local and international recognitions as a result of successful framework deployments. Abdullah holds an MA from York St. John Univeristy, UK and a Bachelors (Honors) Degree from Carleton University in Ottawa, Canada. 10 Transforming the Whole of Government through the Balanced Scorecard

11 Palladium believes in the impact economy, an ecosystem of commercial, government and social interests that fundamentally re-define sustainable value. With our worldclass intellectual property, purposeful innovation and proven, time-tested know-how, clients in more than 90 countries have dramatically improved stakeholder engagement to create enduring positive outcomes, both financial and social. Our clients success in the impact economy is supported by one or more of the following four pillars: International Development with an emphasis on increasing the performance and outcomes in health, economic development, education, governance and the environment; Strategy Execution Consulting to enable order-of-magnitude improvements in both private and public sectors through a framework that translates strategy into action; Research, Professional Development and Training to encourage boundary-breaking thought leadership buttressed by a powerful knowledge transfer engine that equips clients and partners with necessary skills; and Impact Investing to re-imagine innovative ways to finance impact economy initiatives for optimum financial and social results. With our collective expertise and abiding commitment to exceeding clients objectives, Palladium transforms lives, businesses, governments and societies around the world.