doing the right things.

Transcription

1 U.S. Foundation Improve Public Sector Results With A Balanced Scorecard: Nine Steps To Success Howard Rohm Vice-President, the Balanced Scorecard Institute Director, U.S. Foundation Internet: usfpm@fpm.com Phone: (202)

2 People and their managers are working so hard to be sure things are done right,, that they hardly have time to decide if they are doing the right things. Stephen R. Covey

3 Seminar Objectives Introduce a framework for building and implementing a public-sector balanced scorecard performance management system Learn how to use a balanced scorecard in a managingfor-results environment Understand how a scorecard system can help align organization effort with strategy Learn best practices, and how to overcome obstacles and challenges

4 Definitions Mission: What we are about (e.g., Our mission is to provide ) Vision: What we want to be in the future (e.g., Our vision is to be the leading provider of ) Perspectives: Different views of our organization (e.g., customers/stakeholders, employee & capacity, financial, internal processes) Customers: Direct beneficiaries of our services or products (e.g., citizens) Stakeholders: The universe of people with an interest in our products and services (e.g., Board of County Commissioners, press, vendors, regulators) Outcomes: What results are desired; our planned accomplishments (e.g., Improve citizen satisfaction) Goals: What we want to achieve by a certain time (e.g., reduce no. of repeat offenders by 10% next year, increase participation by 25% over two years, reduce annual crime rate per 100,000 people by 10%) Strategies: How we intend to accomplish our vision and goals; our approach, or game plan (e.g., acquire additional parkland, develop new faith-community and business partnerships, reduce taxes) Objectives: Strategy components; action items that must be done (e.g., improve processing time, increase employee skills, develop a new claims process) Strategic Map: Cause-effect relationships among strategy components Outputs: What is produced (e.g., no. of vaccinations given, no. of claims accurately processed) Performance Measures (Lagging): Indicators of success (e.g., no. of citizens served last month) (Leading): Predictors (performance drivers) of future success (e.g., increase in employee knowledge) Target: Desired level of performance for a performance measure (e.g., customer satisfaction target = 95%) Initiatives: Action programs that will achieve our performance goals (e.g., license renewals via Internet)

5 Basic Design Of A Balanced Scorecard Performance System Objective Budget Financial Measure Target Initiative Customers/Citizens Customers Objective Measure Target Initiative Customers Vision & Strategy Internal Business Process Internal Business Processes Objective Internal MeasureBusiness Target Initiative Objective Innovation Target & Learning Learning & Growth Measure Initiative Source: Kaplan & Norton

6 Public-Sector Balanced Scorecard Mission Customers/Citizens Objective Measure Target Customers & Stakeholders Initiative Customers & Stakeholders Budget Financial Objective Measure Target Initiative Strategy Learning & Growth Employees & Organization Capacity Objective Measure Target Initiative Internal Business Process Internal Business Processes Objective Internal Measure Business Target Initiative

7 Balanced Scorecard Logic Customers Perspectives Mission Vision Core Values Goals STRATEGY Strategic Map Objectives Measures Targets Initiatives Focus Areas

8 Committing to Performance-based Management From: Control and Compliance Rules-governed Limited flexible Non-preventive (rework based on feedback) Negative focus Control of individuals Toward: Performance Accountability Mission driven Customer driven Employee responsive Flexible Preventive Positive, team focus Required a significant cultural change!

9 Balanced Scorecard Methodology: Nine Steps To Success

10 Step One Organizational Assessment SWOT Capacity Building Strategy Values Vision Mission Needs Outcomes Goals

11 Achieving Customer Satisfaction: The Citizen Value Proposition A: Develop Goals Focus Areas 1. Socio-economic Opportunity 2. Good Government 3. Community Health & Safety 4. Smart Growth Goal Self-sufficient residents with equal access to services Efficient, effective and inclusive services Safer and healthier community through high quality, cost-effective and accessible services Vibrant and diverse economy, enhanced quality of life, and protected natural resources B: Determine Citizens Needs and Wants Product (Service) Features + Relationship + Image Citizen Needs & Wants Necessary, efficient services; effective management; accountability to citizens; healthy community; safe community; clean air, water, and land; access to parks, open spaces, greenways, and recreation opportunities; affordable housing; education and literacy; diversity; self-sufficiency; safe, secure, economical energy availability

12 Step Two Define Strategies Mission: Manage the Nation s space program in a cost-effective and safe manner Vision: Land on the moon and return safely to earth Strategic Themes: 1) Develop safe launch and reentry vehicles 2) Maintain a ground infrastructure Strategies: Develop shuttle capable of sustaining multiple earth orbits and re-entries Develop materials capable of surviving multiple earth re-entries Develop reusable landing craft

13 Step Three Strategic Objectives Customers Increase Involvement Increase Safety Increase Satisfaction Lower Wait Time Budget Reduce Costs Grow Tax Base Internal Business Process Learning and Growth Improve Cycle Time Improve Skills Reduce Procurement Steps Increase Network Capacity

14 Step Four Public Sector Strategic Map Citizens Increase Involvement Increase Safety Increase Satisfaction Lower Wait Time Budget Reduce Costs Grow Tax Base Internal Business Process Improve Cycle Time Reduce Procurement Steps Learning and Growth Improve Skills Increase Network Capacity

15 Step Five Performance Measures Performance Measures Should Help Us Decide: Are We Doing Things Right? Business Planning (How?) Are We Doing The Right Things? Strategic Planning (What?) Input Process Output Outcome Input: Resources, including cost and workforce Process: Activities, efforts, workflow Output: Products and services produced Outcome: Results, accomplishments, impacts Performance Measures

16 Step Six Initiatives Candidate Initiatives Outreach programs Citizen surveys Partnerships Process improvement Training courses Knowledge building Policy analysis R & D efforts Communication plan Performance-based budget Selection Criteria Resources required Impact potential ranking on strategy Multiple objectives covered Time required/needed F I L T E R Prioritized Funded Initiatives

17 Putting It All Together Federal Government Logistics Center Mission Vision Provide Logistics Support and Products to Assure Safety for the Flying Public World-class, Customer Driven; Providing Quality Services Worldwide Objectives Strategy S1 O1 O2 O3 S2 S1: Become more customer-driven S2: Increase business opportunities S1-01: Assure timely delivery (Customer) S1-02: Raise quality level (Customer) S1-03: Reduce cycle time (Internal) Targets Measures M 1 M 1 M 2 T T T S1-O1-M1: % on-time delivery S1-O2-M1: % defective product S1-02-M2: % defective shipments S1-O1-M1-T1: 100% in 2002 S1-02-M1-T1: Zero in 2002 S1-02-M2-T1: Zero in 2002 Initiatives I 1 I 2 S1-I1: Re-engineer delivery process S1-I2: Six Sigma training

18 Putting It All Together Local Government Mission Serve County Residents by Helping Improve Their Lives and Community Citizen Needs & Desired Outcomes Objectives Strategy Vision S1 O1 O2 O3 S2 Be the Best Local Government Service Provider S1: Increase value by providing more cost-effective services S2: Reduce violence, harm & injury through community partnerships S1-01: Optimize organization (Internal) S1-02: Identify service & resource gaps (Employee) S1-03: Survey citizens (Customer) Targets Measures M 1 M 1 M 1 T T T S1-O1-M1: Skills match index S1-O2-M1: Cost per unit service S1-03-M1: Citizen satisfaction rating S1-O1-M1-T1: Skills index = 80% in 2002 S1-02-M1-T1: 7% improvement above baseline S1-03-M1-T1: 95% in 2002 Initiatives I 1 I 2 S1-I1: New outreach program S1-I2: Communications plan

19 Software Solution Space Enterprise Requirements Numerous measures Advanced charting Multiple locations Web publishing Analysis & commentary Step Seven Automation Enterprise-wide data Composite measures Many data/reporting locations Advanced executive reporting Web publishing Advanced analysis Dynamic links to legacy systems Data Warehouse Few measures Simple reports Small office COTS Data Base PMIS Time and Cost to Implement

20 Step Eight Cascaded Scorecards Support Strategy Corporate Financial Financial Goal Measure Financial Target Initiative Goal Measure Target Initiative Goal Measure Target Initiative Business Units Support Units Team/ Individual Customer Customer Goal Measure Target Initiative Goal Measure Customer Target Initiative Goal Measure Target Initiative Mission Strategy Internal Internal Business Business Process Process Goal Measure Target Initiative Goal Internal Measure Business TargetProcess Initiative Strategy Goal Measure Target Initiative Learning Learning and and Growth Growth Goal Measure Learning Target and Growth Initiative Goal Measure Target Initiative Goal Measure Target Initiative Adapted from: Kaplan & Norton

21 Communicating Corporate Strategy To Business Units Vision: Be The Best Local Government Service Provider Strategy Objectives Measures Agency Department Team/ Individual

22 Step Nine Evaluate & Change Strategic Direction Balanced Scorecard Perspective Perspective Perspective Strategy Objectives Measures Strategy Objectives Measures StrategyPerspective Objectives #1Measures Strategy Objectives Measures Planning Budget Formulation & Costing Input Adapted from: Balanced Scorecard Collaborative Process Programs & Operations Output O U T C O M E S Management

23 The BSC Is The Strategic Front-End Of Managing-For-Results Evaluation Corporate BSC Strategic Planning Department BSC Program/Service Area Planning Results Accountability Performance Measures Measure Performance Budget

24 Goal: Performance-Based Budget Strategic Goals Goal 1 Goal 2 Goal 3 Goal 4 Goal 5 Goal 6 Goal 7 Goal 8 Goal 9 Balanced Scorecard M E A S U R E S Program 4 Budget Infrastructure Other Indirects Program 1 Program 2 Program 3 Program 5 Program 6 $ xx M $ xx M $ xx M $ xx M $ xx M $ xx M $ xx M $ xx M $ xx M Recipients Citizens Contractors Suppliers $ xx M

25 Summary

26 The Balanced Scorecard Is (Is Not) IS: A strategic performance management system for the whole organization A communications tool to make strategy clear to everyone A way to balance financial and nonfinancial views of organization performance A journey A system for increasing accountability A commitment to change A way of aligning organization vision with human and capital resources, and with day-to-day operations IS NOT: A performance measurement tool to control individual productivity A flavor of the month performance measurement system About placing your existing performance measures into four categories A project Easy The status quo A TQM initiative

27 Performance Management System Challenges Fear of measurement and new systems Lack of common definitions and terms Inconsistent or weak buy-in, and lack of understanding Visions and strategies that are poorly defined and understood, not actionable, and not linked to individual actions Treating budgeting as separate from strategy development Measures that are set independently of the performance framework, or measures with no ownership No performance targets, or targets that are set too high or too low Little or no strategic feedback Lack of meaningful employee involvement

28 Best Practices Limit the number of measures Include measures for all perspectives and all strategies Seek balance among measures Develop solid baseline date Develop measures for past, present, and future Don t over-rely on output, process and input measures Set stretch targets Watch for unintended incentives Hold people accountable for results And always, beware the U.S. Foundation

29 But, Beware The Watchman!! "The government are very keen on amassing statistics. They collect them, add them, raise them to the N th power, take the cube root and prepare wonderful diagrams. But you must never forget that every one of these figures comes in the first instance from the village watchman, who just puts down what he pleases." Sir Josiah Stamp, , Head, Bank of England

30 BSC = Strategy + Operations + Change Strategy = Doing the right things Operations = Doing things right Change = Doing things differently

31 BSC = Strategy + Operations + Change SUCCESS = Effective, Well Executed Strategy + Efficient Operations + Meaningful Change

32 References Building & Implementing A Balanced Scorecard: Nine Steps to Success Howard Rohm, U.S. Foundation Performance Scorecard Toolkit, Howard Rohm, U.S. Foundation How To Measure Performance: A Handbook of Techniques and Tools, Performance-Based Management Special Interest Group, U.S. Department of Energy Keeping Score, Mark Graham Brown, Quality Resources Performance Drivers, Niles-Goram Olve, Jan Roy and Magnus Wetter, Wiley Operational Performance : Increasing Total Productivity, Will Kaydos, Saint Lucie Press The Balanced Scorecard, Robert Kaplan & David Norton, Harvard Business School Press The Strategy-Focused Organization, Robert Kaplan & David Norton, Harvard Business School Press

33 It s about management and change first; measurement and technology are second Howard Rohm Internet: usfpm@fpm.com Phone: (202)