howard rohm vice-president, the balanced scorecard institute

“Performance Counts…”™ © 2003 by Howard Rohm. All rights reserved.

The Balanced ScorecardInstitute

Howard RohmVice-President, the Balanced Scorecard InstituteDirector, U.S. Foundation for Performance Measurement

Internet: www.balancedscorecard.org e-mail: [email protected] Phone: (919) 859-0084

Improve Public Sector Results With A Balanced Scorecard: Nine Steps To Success



Seminar Objectives

Describe a framework for building and implementing public-sector balanced scorecard performance systems

Understand how a scorecard system can help align organization effort with agency mission and strategy

Share best practices and lessons learned



Basic Design Of A Balanced ScorecardPerformance System

VisionVision&&

StrategyStrategy

Customers/CitizensMeasure Target InitiativeObjective Customers

Measure Target InitiativeObjectiveLearning & GrowthLearning

&Growth

Objective Measure Target InitiativeBudget

Financial

Measure Target InitiativeInternal Business Process

ObjectiveInternal BusinessProcesses

Source: Kaplan & Norton



Public-Sector Balanced Scorecard

MissionMission

Customers/CitizensMeasure Target InitiativeObjective Customers & Stakeholders

Measure Target InitiativeInternal Business Process

ObjectiveInternal BusinessProcesses

Measure Target InitiativeObjectiveLearning & GrowthOrganization

CapacityObjective MeasureTarget

Budget

Financial/Budget Strategy



Balanced Scorecard (BSC) System Components



Balanced Scorecard Logic

Phase II: Strategy

CustomerCustomerRequirementsRequirements

Phase I: Strategic Foundations

Phase III: Performance Measures

Phase IV: New Initiatives

• BudgetBudget• ActivitiesActivities



Building & Implementing A Balanced Scorecard




• Customer ValuesCustomer Values• Organization PainOrganization Pain• Organization ValuesOrganization Values• Vision & MissionVision & Mission




• ThemesThemes• Strategic ResultsStrategic Results• StrategiesStrategies




• Strategy ElementsStrategy Elements




• Performance DriversPerformance Drivers• EnablersEnablers• Causal LinksCausal Links




• Performance MeasuresPerformance Measures• TargetsTargets• BaselinesBaselines




• New ProjectsNew Projects




• SoftwareSoftware• Performance Performance Reporting Reporting• Knowledge Knowledge SharingSharing




• AlignmentAlignment• Business & Business & Support Support Unit Unit ScorecardsScorecards




• Performance ResultsPerformance Results• Revised StrategiesRevised Strategies




• Customer ValuesCustomer Values• Organization PainOrganization Pain• Organization ValuesOrganization Values• Vision & MissionVision & Mission

• Performance ResultsPerformance Results• Revised StrategiesRevised Strategies

• SoftwareSoftware• Performance Performance Reporting Reporting• Knowledge Knowledge SharingSharing

• New ProjectsNew Projects• Performance MeasuresPerformance Measures• TargetsTargets• BaselinesBaselines

• Performance DriversPerformance Drivers• EnablersEnablers• Causal LinksCausal Links

• Strategy ElementsStrategy Elements

• ThemesThemes• Strategic ResultsStrategic Results• StrategiesStrategies

• AlignmentAlignment• Business & Business & Support Support Unit Unit ScorecardsScorecards



StrategyStrategy MappingPerformance MeasuresImplementation



““People and their managers are People and their managers are

working so hard to be sure working so hard to be sure things are things are

done rightdone right, that they hardly have time , that they hardly have time

to decide if they are to decide if they are doing the right doing the right

thingsthings.”.” Stephen R. CoveyStephen R. Covey



Focus On Organization Strategy

ContinuousLeadership

DevelopStrategy To

Support Mission

Manage ForPerformance

Make StrategyActionable

Align Work With Mission

Budget ForPerformance

Strategy =Our Approach To Accomplishing

Our Mission



Mission: Provide information services to citizens

Strategic Themes: Build the information infrastructure Improve operational efficiency and effectiveness

Vision: Enable Internet access to all available information

Strategies: Develop an on-line, 24/7capability to access information services

Build knowledge and skills, to cross-sell new banking products

Call Center Strategies:Provide caller support on an exceptions basisProvide critical customer intelligence to Web site designers

Define StrategiesStep Two



Strategy Translates What Customers Want Into What We Must Deliver

BusinessStrategy

Support Units

Operations

Business UnitsBusiness Units


Mission

Vision

Values

OrganizationResults

Teams&

Individuals



Strategy Translates What Customers Want Into What We Must Deliver

BusinessStrategy

Support Units

Operations

Business UnitsBusiness Units


Mission

Vision

Values

OrganizationResults

Teams&

Individuals

BestBestPracticesPractices



Strategy Is A Hypothesis About What Drives Organization Success

Service Quality

Customer Confidence

ProgramEffectiveness

Customer Satisfaction

Training

InformationTechnology

Identify the key performance drivers that lead to successful strategy execution

Adapted From: John Krieger, Paramount Consulting

Leadership



Reduce Costs

Citizens

Budget

Internal Business Process

OrganizationCapacity

Public Sector Strategy Map

IncreaseSatisfaction

IncreaseNetworkCapacity

ImproveSkills

ReduceProcurement

Steps

LowerWait Time

Step Four

LowerCycle Time



Reduce Costs

Citizens

Budget

Internal Business Process


Public Sector Strategy Map

IncreaseSatisfaction

IncreaseNetworkCapacity

ImproveSkills

ReduceProcurement

Steps

LowerWait Time

Step Four

LowerCycle Time




Performance Measures Should Help Us Decide:

Input: Resources, including cost and workforce Process: Activities, efforts, workflow Output: Products and services produced Outcome: Results, accomplishments, impacts

Are We Doing The Right Things?(What?)

Are We Doing Things Right?(How?)

Step FivePerformance Measures

OutputOutputInputInput ProcessProcess OutcomeOutcome



Performance Measures Should Help Us Decide:

Input: Resources, including cost and workforce Process: Activities, efforts, workflow Output: Products and services produced Outcome: Results, accomplishments, impacts

Are We Doing The Right Things?(What?)

Are We Doing Things Right?(How?)

Step FivePerformance Measures

OutputOutputInputInput ProcessProcess OutcomeOutcomeOutputOutputInputInput ProcessProcess OutcomeOutcome

Performance Measures



Develop Performance Measures

Inputs Process/System Output Intermediate

OutcomesEnd

Outcome

Program Logic Model

Source: Gardner Shaw & Howard Rohm




DesiredOutcome

Causal Analysis


OutcomesEnd

Outcome

Program Logic Model





DesiredOutcome

Causal AnalysisProcess Flow

ResultsOf

Testing

Not AcceptableAcceptable

PrototypeProduct

Back to LaboratoryTo Market


OutcomesEnd

Outcome

Program Logic Model




Balanced Scorecard Performance Measures

Customer/Stakeholder

Internal Business

Processes

Financial / Budget


Results

Process Activities(Quality, Quantity, Timeliness, Efficiency)

ResultsOr

Inputs

What We Want To MeasureWhat We Want To Measure

Behavior ChangesKnowledge, Skills, & AbilitiesEfficiency





Internal Business

Processes

Financial / Budget


Achievement of Strategic ResultsBusiness Impacts

Changes in Process Efficiency

Changes in Employee Knowledge, Skills, Attitudes, Behavior, and Abilities

Service Efficiency/Effectiveness Measures

Infrastructure Capacity Gain Measures

Return on Investment (Program/Service Effectiveness) OrInput Measures (Resource Adequacy)

Measurement Categories





Internal Business

Processes

Financial / Budget


Achievement of Strategic ResultsBusiness Impacts

Changes in Process Efficiency

Changes in Employee Knowledge, Skills, Attitudes, Behavior, and Abilities

Service Efficiency/Effectiveness Measures

Infrastructure Capacity Gain Measures

Return on Investment (Program/Service Effectiveness) OrInput Measures (Resource Adequacy)

Measurement Categories BestBestPracticesPractices



The Finished BSC Tells Our Story

Infrastructure PerspectiveProcess Perspective

Financial Perspective

Objectives MeasuresCustomer Perspective

Initiatives

Strategy:Our Approach To Accomplishing

Our Mission



Putting It All Together – Federal Government Logistics Center

World-class, Customer Driven; Providing Quality Services Worldwide

Provide Logistics Support and Products to Assure Safety for the Flying Public

S1: Become more customer-drivenS2: Increase business opportunities

S1-01: Assure timely delivery (Customer)S1-02: Raise quality level (Customer)S1-03: Reduce cycle time (Internal)

S1-O1-M1: % on-time deliveryS1-O2-M1: % defective productS1-02-M2: % defective shipments

S1 S2

O1 O2 O3

M1

M1

M2

Objectives

S1-O1-M1-T1: 100% in 2002S1-02-M1-T1: Zero in 2002S1-02-M2-T1: Zero in 2002

T1

T1

InitiativesS1-I1: Re-engineer delivery

processS1-I2: Six Sigma training

T1

I1

I2

Mission

Vision

Strategy

Measures

Targets



Putting It All Together – Local Government

Be the Best Local Government Service Provider

Serve County Residents by Helping ImproveTheir Lives and Community

S1: Increase value by providing more cost-effective servicesS2: Reduce violence, harm & injury through

community partnershipsS1-01: Optimize organization (Internal)S1-02: Identify service & resource gaps (Employee)S1-03: Survey citizens (Customer)

S1-O1-M1: Skills match indexS1-O2-M1: Cost per unit serviceS1-03-M1: Citizen satisfaction rating

S1 S2

O1 O2 O3

M1

M1

M1

Objectives

S1-O1-M1-T1: Skills index = 80% in 2002S1-02-M1-T1: 7% improvement above baselineS1-03-M1-T1: 95% in 2002

T1

T1

Initiatives S1-I1: New outreach programS1-I2: Communications plan

T1

I1

I2

Mission

Vision

Measures

Targets

Citizen Needs & Desired Outcomes

Strategy

MARINE CORPS SYSTEMS COMMMANDCOMMAND BALANCED SCORECARD – DESIRED OUTCOMES VIEWOPS EFFICIENCYGOAL: Improve operating efficiency through streamlined and innovative business systems

LIFE CYCLE MANAGEMENTGOAL: Deliver highly effective systems and equipment using Life Cycle Management

QUALITY SYSTEMSGOAL: Improve quality of systems and equipment provided to operating forces

HI-PERFORMANCE ORGGOAL: Become a proud, high-performance, team-based learning organization in a professional environment

WARFIGHTER/STAKEHOLDER

(BETTER)

FINANCIAL

(VALUE)

WORK SYSTEM

(FASTER)

HUMAN SYSTEM

(SMARTER)

Acquire Best-Value

ProductsImprove Delivery

TimeImproveExternal

Communications

Increase Internal Process Efficiency

Improve Command Planning & Resource

Allocation Improve Systems

Integration

Understand and Meet Explicit & Implicit

Customer Requirements

Increase CollaborativePartnerships

Improve LCMFocus

Identify & Meet Future Skills

Requirements

Improve Infrastructure

SupportImprove InternalCommunications

Improve WorkforceSatisfaction &Commitment

Improve WorkforceKnowledge, Skills

& Abilities

Improve Team-based Workforce Competency

Equip the Warfighter to Win

Se m p e r Fi id l seS em p e r F i id l se

OptimizeOperating

Budget

Increase FinancialEfficiency



SAS Institute

iDashes

pbVIEWS



Automation

EnterpriseRequirements

Time and Cost to Implement

• Few measures• Basic tracking• Small office

Step Seven

COTS Data Base

Software Solution Space



Automation




• Numerous measures• Visualization & charting• Multiple locations• Web input & publishing• Commentary

Step Seven

COTS Data Base

PMIS




Automation




• Numerous measures• Composite measures• Visualization & charting• Multiple locations• Web input & publishing• Commentary

• Links to legacy systems• Composite measures• Many data/reporting locations• Integrate with enterprise systems• Advanced executive reporting• Web input & publishing• Advanced analysis

Step Seven

COTS Data Base

PMIS

Data Warehouse


Data Warehouse Features: Strategic Performance Management

Collect and transform data from virtually any data source and manage the process

Fully automated solution Communicate on strategy, provide early indicators Collaborate on knowledge and share best practices enterprise-wide Integrate with any performance framework Robust analytics, including predictive analysis, cost analysis,

correlation/impact analysis, trend analysis, and data mining Dynamic, customizable strategy maps Ability to integrate with other enterprise solutions One consistent Intelligence Architecture across the enterprise



Align The Enterprise View With Business And Support Units

Strategy

Agency

Department

Team/Individual

Measures Objectives

Vision: Be The Best Local Government Service Provider

Step Eight



Goal: Performance-Based Budget

RecipientsRecipients

Suppliers

Contractors

CitizensMEASURES

Program 3

BudgetBudget

Program 5

Program 4

$ xx M

$ xx M

$ xx M

$ xx M

$ xx M

$ xx M

$ xx M

$ xx MProgram 1

Program 2 $ xx M

$ xx M

InfrastructureOther Indirects

$ xx MProgram 6

BalancedBalancedScorecardScorecard

StrategicStrategicGoalsGoals

Goal 1

Goal 2

Goal 3

Goal 4Goal 5

Goal 6

Goal 7Goal 8

Goal 9



Summary



Typical Timeline – Building The Corporate Scorecard

GettingStarted

Set Strategic Context

Develop Strategy & Objectives

Define Performance Measures

Develop New Initiatives

Design Performance Reporting

Adapt Management Review Process

Executive Sessions

1 2 3 4 5 6 7 8 9 10-16

Week



Balanced Scorecard Implementation 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 budget development separately from strategy development

• Measures set independently of a performance framework, or measures with no ownership

• Loosing momentum

• No performance targets, or targets set too high or too low

• Little or no strategic feedback

• Lack of meaningful employee involvement



The Balanced Scorecard Is (Is Not)

A performance measurement tool

An EIS for executives only

A project

Easy

“Business as Usual”Putting your existing metrics into 4 bins

Tighter individual controlA TQM, Six Sigma, or reengineering project

IS: IS NOT:

A strategy-based management systemA communications tool for the whole organization

A journey

Hard workA change initiativeBalancing non-financial, efficiency, infrastructure, & financial views of performance

Increased accountability

Aligning vision with operations



““Mr. Rohm:Mr. Rohm:

I am new to BSC. Could you I am new to BSC. Could you

email me a list of measures for email me a list of measures for

each of the four perspectives?”each of the four perspectives?”

(Name withheld to protect the poor man!)(Name withheld to protect the poor man!)

Getting Quick Results



“It’s about management and change first; measurement

and technology are second ”Howard Rohm

Internet: www.balancedscorecard.orge-mail: [email protected]

Phone: (919) 859-0084



References

A Balancing Act: Developing and Using Balanced Scorecard Performance Systems, Howard

Rohm, Perform, June 2002

Building & Implementing A Balanced Scorecard: Nine Steps to SuccessTM, Howard Rohm, U.S.

Foundation for Performance Measurement

Performance Scorecard ToolkitTM, Howard Rohm, U.S. Foundation for Performance Measurement

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 Measurement: 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


The Balanced ScorecardInstitute Information Clearing House

Balanced Scorecard Training, Coaching & Consulting (GSA Schedule)

Performance Measurement Development and Training (GSA Schedule)

The Balanced Scorecard Institute

Upcoming Events:

Web: www.balancedscorecard.orgE-Mail: [email protected]

Phone: (919) 859-0084

Balanced Scorecard Workshop: March 2003; Brussels, BelgiumBalanced Scorecard Workshop: April 2003; Washington, DC

Performance Measures Workshop: May 2003; Washington, DCBalanced Scorecard Workshop: Summer 2003; Minn.-St. Paul, MN

Balanced Scorecard Workshop: Fall 2003; Washington, DC

howard rohm vice-president, the balanced scorecard institute

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