Balanced Scorecard Briefing for NAPA BaSIG

Transcription

1 Balanced Scorecard Briefing for NAPA BaSIG Ed Kufeldt Director, Corporate Planning February 2004 Your Financial Work

2 Presentation Outline What is DFAS? DFAS approach to the BSC DFAS Results Lessons Learned Q&A Your Financial Work Page 2 of 27

3 The DFAS Mission and Vision Mission: Provide responsive, professional finance and accounting services for the people who defend America. Vision: Best value to our customers World-class provider of finance and accounting services Trusted, innovative financial partner One organization, one identity Employer of choice, providing a progressive and professional work environment Your Financial Work Page 3 of 27

4 The state of DFAS today -- magnitude of operations 5.9M military, civilians, retirees, annuitants paid 6.8M travel payments 12.3M invoices paid $416B in disbursements 121M accounting transactions $1.45T total liabilities $13B in foreign military sales $197.4B in military retirement and health benefits funds 279 active DoD appropriations World s Largest Finance and Accounting Operation Your Financial Work Page 4 of 27

5 Our BSC Development & Management Approach Approach 1. Strategy first then BSC involve leadership in making the connection 2. Build BSC quickly with a cross-functional team rapid success & rapid failure 3. Set up a governance structure to manage & administer the BSC no such thing as auto pilot 4. Cascade BSC from corporate structure to individual level use it to make the strategy real 5. Manage by the BSC Critical Success Factors Engage and involve top leadership Establish clear processes to review measures early Focus on management discipline & progress vs. the color Communicate, communicate, communicate!!! Your Financial Work Page 5 of 27

6 Strategy Development Model 1 Current State Where we are SWOT Assessment What do our customers/people/ others say about us? 2 Where do we want to be in 3-5 years? How will we be known? 3 Vision Case for Change 4 Strategy What steps are we going to take to achieve our vision given where we are? 5 ENVIRONMENTAL ANALYSIS Balanced Scorecard DFAS BSC What is the burning platform? How much change is required? What are our objectives in the shorter-term? How will we measure our strategic success? What initiatives will we pursue to make sure we achieve our targets? 6 Learn & Adjust What refinements do we need to make? Your Financial Work Page 6 of 27

7 Step 1: Strategy first then BSC VISION Best Value to our customers World-class provider of finance and accounting services Trusted, innovative financial partner One Organization, One Identity Employer of choice, providing a progressive and professional work environment GOALS Fully satisfy customer requirements and aggressively resolve problems to deliver best value services Use performance metrics to drive best business practices and achieve high quality results Optimize the mix of our military, civilian, and contractor workforce Establish consultative relationships with leaders Deliver business intelligence to enable better decisions Ensure everyone is working towards the same vision and can connect what they re doing to make the vision a reality Embrace continuous learning for our workforce to ensure critical, high quality skill sets Develop the next generation of DFAS leadership OBJECTIVES CUSTOMER Improve Client/ Customer Satisfaction FINANCIAL Reduce cost to the client/ customer Deliver Cost Effective System Solutions INTERNAL Deliver Competitive Services Develop a Quality Focused Culture GROWTH & LEARNING Enhance Employee Competence Increase Employee Satisfaction Develop a Climate for Action Enhance Ability to Retain & Recruit DFAS Talent Client/Customer Satisfaction On-Time Delivery Call Center Satisfaction Total Cost Unit Cost MEASURES Specific Billing Rates Cost to Revenue Ratio System Operating & Capital Costs System Milestones Met Commencement of Scheduled BCAs Accurate Delivery of Service Innovative Business Practices Lean6 Deployment Employees in Developmental Assignments Employee Satisfaction OAS Index # of Civilian Employees with licenses/certifications # of Civilian Employees w/ degrees Climate for Action OAS Index Your Financial Work Page 7 of 27

8 Step 2: Build first iteration of BSC quickly Depict cause and effect relationships in a strategy map Communicate, Learn & Adjust Best Value Customer Improve Improve satisfaction customer Client/Customer satisfaction Financial Implement Transformation Strategy Reduce cost to Reduce the client/ cost to the customer customer Internal Encourage innovation Improve and and leverage quality Deliver systems solutions Growth & Learning Develop a a climate for action Enhance Enhance corporate ability to recruit capability and retain and intellectual DFAS talent capital Increase employee satisfaction satisfaction Enhance Increase employee competence Your Financial Work Page 8 of 27

9 Step 3: Establish a Strategic Governance Structure Establish Strategic Plan Steering Group Consists of senior executives from business lines and support organizations Reviews and evaluates Agency progress in achieving strategic objectives through BSC Overseas alignment of budget to strategy actions Establish BSC Working Group Cross-organizational representation Develop definitions, monitor implementation, review data integrity Cascade the BSC to Sub-Orgs Business line and support service scorecards drive initiatives to lower levels Aggressive BSC reviews by business lines and support service leaders Provides an integrated view of strategic performance Your Financial Work Page 9 of 27

10 Step 3: Establish a Strategic Governance Structure Identify roles and responsibilities for BSC management Primary advocate for objective/measure (horizontal view) Ensures measure and target supports vision and strategic goals Customer Financial Internal Growth & Learning BL BL BL SS SS Measure Proponents Accountable for results in their organization (vertical view) Translates strategic intent of agency to organizational goals Create an environment that promotes organizational improvement and enhanced performance BL/SS/ Corp Execs Customer Financial Internal Growth & Learning BL BL BL SS SS Primary support for Measure Proponent (horizontal view) Performs detailed and root cause analysis on measures Ensures consistent reporting into single-source db Measure Expert BL BL BL SS SS Customer Financial Internal Growth & Learning Your Financial Work Page 10 of 27

11 Step 4: Cascade DFAS Corporate Goals to BL Goals CUSTOMER PERSPECTIVE - Corporate Measure: Commitments Met Performance Plan DFAS Corporate Measure Execution of Agency Performance Plan deliverables Target Successfully meet all 11 Agency Performance Plan deliverables Commercial Pay Business Line Measure Interest Penalty Payments Baseline FY $35.0M FY $32.6M Target Reduce FY 2001 Baseline by 40% Vendor Pay Product Line Baseline FY $24.8M FY $22.3M Target Reduce FY 2001 Baseline by 40% Rome Site Baseline FY $209K FY $368K Target Reduce FY 2001 Baseline by 40% Rome Target Contribute to interest penalty reduction goals by averaging contract type payments or miscellaneous type payments per day with a 99% accuracy rate Your Financial Work Page 11 of 27 Employee

12 Step 4: Cascade BSC to Individual Performance Goals Vision Tenet Employer of choice, providing a progressive and professional work environment Goal Embrace continuous learning for our workforce to ensure critical, high quality skill sets Objective Enhance employee competence Measure Developmental Assignments Target 3.0% Balanced Scorecard Individual Objective Initiatives Identify DA in IDP that meets organizational and individual goals Market Advantages of DAs to employees Highlight employee s impact on business through DA in All-Hands Your Financial Work Page 12 of 27

13 Step 5: Manage by the BSC M1 M2 Q1 M4 M5 Q2 LC SPSG SPSG SPSG SPSG SPSG QR SPSG LC QR Monthly: Measure Experts develop Memorandum for Record (MFR) for trouble spots SPSG conduct monthly sessions focused on Corporate BSC Emphasis on a particular perspective (Customer & Financial, Internal, G&L) Reactive & Preemptive Recommendations: Root cause analysis SPSG provide Executive Summary to LC Quarterly: Measure Proponents provide LC with detailed analysis Identify strategic course correction and strategic initiatives Your Financial Work Page 13 of 27

14 Does the BSC Produce Results? Absolutely!!! You get what you measure Your Financial Work Page 14 of 27

15 The state of DFAS today -- DFAS at a glance 21,000 20,000 19,000 18,000 17,000 16,000 15,000 14,000 80% 75% 20,269 18,773 Total Workforce 17,663 16,323 FY99 FY00 FY01 FY02 FY 03 Dec-03 15,362 15,136 OAS Overall Ratings Results 0.60% 0.55% 0.50% 0.45% 0.40% 0.35% 0.30% 0.25% 90% DFAS Percentage of DoD Budget 0.56% 0.53% 0.47% 0.45% 0.34% 0.30% FY99 FY00 FY01 FY02 FY03 FY04 Overall Customer Satisfaction % FY 2000 FY % 60% 55% 50% 85% 80% 75% 70% 45% 65% 40% 60% Rewards/Recognition Strategic Planning Innovation Fairness and Treatment Employee Involvement Use of Resources Training/ Career Develop Job Security / Commit. Leader & Quality Communication Performance Meas. Supervision Work Env./ Qual. W-Life Teamwork 35% 30% 25% 20% 55% 50% 45% FY2002 FY % Customer Orient. Work&Family/ Pers. Life Diversity Recovery Choice Access Knowledge Timeliness Tangibles Reliability Quality Courtesy Your Financial Work Page 15 of 27

16 DFAS Lessons Learned Establish a governance structure early Senior leadership involvement critical Implementation must be monitored on both a horizontal and vertical plane Communication/Change Management strategy critical Address strategy and scorecard early and often Maintain Cross-organizational representation Avoid focusing solely on color outcomes Positive trends as important as meeting targets Emphasize stretch goals Be prepared to align budget to strategy Be flexible DFAS: Customer-focused, Strategy-based, Metrics-driven Your Financial Work Page 16 of 27

17 Balanced Scorecard - Summary Excellent tool to operationalize a strategy Helps align strategic goals and objectives Measures performance Produces results Your Financial Work Page 17 of 27

18 DFAS Your Financial Work Page 27 of 27

19 Implementing the BSC has Achieved Measurable Results Customer Client Executive Contacts Measure drove customer oriented behavior and put us more in touch with our customers MyPay Customers have 24/7 real-time access and control of their pay Customer Satisfaction increased by average of 5 percentage points Collaborated with customers to sharpen focus of DFAS Performance Plan from 32 to 11 key measures focusing on quality, timeliness, and cost. Financial Received 3 rd consecutive clean audit opinion & assisted 2 customers in achieving similar results Came in under budget by $70M Completed 5 Business Case Analyses of our Product Lines Your Financial Work Page 19 of 27

20 Implementing the BSC has Achieved Measurable Results Internal epayroll Acknowledged as world-class provider of civilian payroll services and selected to be 1 of 4 federal government-wide providers Reduced amount of interest paid by 29%, while increasing invoice volume by 10% Earned over 5.1% return on Military Retirement Fund vs. market average return on competitive commercial funds of 3.1% Implemented Usability Lab as a best business practice Growth & Learning Employee satisfaction has increased an average of 9 percentage points since FY % of FY 2003 payroll dollars invested in employee training double the industry average eportal Implementation has allowed for increased accessibility to information, collaboration and development of communities of practice YOU GET WHAT YOU MEASURE Your Financial Work Page 20 of 27

21 References Books The Balanced Scorecard, by Robert S. Kaplan and David P. Norton The Strategy-Focused Organization by Robert S. Kaplan and David P. Norton Balanced Scorecard Step by Step: Maximizing Performance and Maintaining Results by Paul Niven BSC Collaborative ( Online Professional service firm that facilitates worldwide awareness, use, enhancement, and integrity of the Balanced Scorecard as a value-added management process. It provides Strategy-Focused Organization and Balanced Scorecard excellence through consulting, conferences, training, publishing, consortia, certification, partnerships, and online services that deliver know-how to global audiences. BSC Institute ( Your Financial Work Page 21 of 27