improve public sector results with a - balanced scorecard institute

“Performance Counts…”™© 2002 by Howard Rohm. All rights reserved.

U.S. Foundationfor PerformanceMeasurement

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

Internet: www.balancedscorecard.org e-mail: [email protected] Phone: (202) 251-7676

Improve Public Sector Results With ABalanced Scorecard: Nine Steps To Success



“People and their managers are working so “People and their managers are working so

hard to be sure hard to be sure things are done rightthings are done right, that , that

they hardly have time to decide if they are they hardly have time to decide if they are

doing the right thingsdoing the right things.”.”Stephen R. CoveyStephen R. Covey


U.S. Foundationfor PerformanceMeasurement Seminar Objectives

Introduce a framework for building and implementing a public-sector balanced scorecard performance management systemLearn how to use a balanced scorecard in a managing-for-results environmentUnderstand how a scorecard system can help align organization effort with strategyLearn best practices, and how to overcome obstacles and challenges



DefinitionsMission: 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 componentsOutputs: 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)


U.S. Foundationfor PerformanceMeasurement Basic Design Of A Balanced Scorecard

Performance System

VisionVision&&

StrategyStrategy

Customers/CitizensCustomers/CitizensMeasureMeasure TargetTarget InitiativeInitiativeObjectiveObjectiveCustomersCustomers

MeasureMeasure TargetTarget InitiativeInitiativeObjectiveObjectiveLearning & GrowthLearning & GrowthInnovation

&Learning

Innovation&

Learning

ObjectiveObjective MeasureMeasure TargetTarget InitiativeInitiativeBudgetBudget

FinancialFinancial

MeasureMeasure TargetTarget InitiativeInitiativeInternal Business ProcessInternal Business Process

ObjectiveObjectiveInternal BusinessProcesses

Internal BusinessProcesses

Source: Kaplan & Norton


U.S. Foundationfor PerformanceMeasurement Public-Sector Balanced Scorecard

MissionMission

Customers/CitizensCustomers/CitizensMeasureMeasure TargetTarget InitiativeInitiativeObjectiveObjectiveCustomers & StakeholdersCustomers & Stakeholders

MeasureMeasure TargetTarget InitiativeInitiativeInternal Business ProcessInternal Business Process

ObjectiveObjectiveInternal BusinessProcesses

Internal BusinessProcesses

MeasureMeasure TargetTarget InitiativeInitiativeObjectiveObjectiveLearning & GrowthLearning & GrowthEmployees

&Organization Capacity

Employees&

Organization CapacityObjectiveObjective MeasureMeasure TargetTarget InitiativeInitiative

BudgetBudgetFinancialFinancial StrategyStrategy


U.S. Foundationfor PerformanceMeasurement Balanced Scorecard Logic

GoalsGoals

VisionCustomers

MeasuresMeasures

InitiativesInitiatives

Strategic MapStrategic Map

MissionMission

Core ValuesCore Values

TargetsTargets

Perspectives Focus AreasFocus AreasSTRATEGYSTRATEGY

ObjectivesObjectives


U.S. Foundationfor PerformanceMeasurement Committing to Performance-based

Management

From:Control and Compliance

Rules-governedLimited flexibleNon-preventive (rework based on feedback)Negative focusControl of individuals

Toward:PerformanceAccountability

Mission drivenCustomer drivenEmployee responsiveFlexiblePreventivePositive, team focus

Required … a significant cultural change!Required … a significant cultural change!Required … a significant cultural change!


U.S. Foundationfor PerformanceMeasurement Balanced Scorecard Methodology:

Nine Steps To Success


U.S. Foundationfor PerformanceMeasurement Organizational Assessment

Step One

SWOTSWOT

CapacityBuilding

Strategy

ValuesVision

MissionValuesValuesVisionVision

MissionMission

NeedsNeedsOutcomes

GoalsOutcomesOutcomes

GoalsGoals


U.S. Foundationfor PerformanceMeasurement Achieving Customer Satisfaction:

The Citizen Value Proposition

GoalSelf-sufficient residents with equal access to services Efficient, effective and inclusive services Safer and healthier community through high quality, cost-effective and accessible servicesVibrant and diverse economy, enhanced quality of life, and protected natural resources

Focus Areas1. Socio-economic Opportunity2. Good Government3. Community Health & Safety

4. Smart Growth

A: Develop Goals

Product (Service) Features Relationship Image++

Citizen Needs & WantsNecessary, 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

B: Determine Citizens’ Needs and Wants


U.S. Foundationfor PerformanceMeasurement Define Strategies

Mission: Manage the Nation’s space program in acost-effective and safe manner

Strategic Themes:1) Develop safe launch and reentry vehicles2) Maintain a ground infrastructure

Vision: Land on the moon and return safely to earth

Step Two

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



Reduce Costs

Customers

Budget

Internal Business Process

Learning and Growth

Strategic Objectives

IncreaseSatisfaction

IncreaseInvolvement

ImproveCycle Time

IncreaseNetworkCapacity

ImproveSkills

ReduceProcurement

Steps

IncreaseSafety

LowerWait Time

Grow TaxBase

Step Three



Reduce Costs

Citizens

Budget


Learning and Growth

Public Sector Strategic Map

IncreaseSatisfaction

IncreaseInvolvement

IncreaseNetworkCapacity

ImproveSkills

ReduceProcurement

Steps

IncreaseSafety

LowerWait Time

Grow TaxBase

Step Four

ImproveCycle Time



Performance Measures Should Help Us Decide:

Input: Resources, including cost and workforceProcess: Activities, efforts, workflowOutput: Products and services producedOutcome: Results, accomplishments, impacts

Are We Doing The Right Things?Strategic Planning (What?)

Are We Doing Things Right?Business Planning (How?)

Step FivePerformance Measures

OutputOutputInputInput ProcessProcess OutcomeOutcome

PerformanceMeasures



Candidate InitiativesOutreach programsCitizen surveysPartnershipsProcess improvementTraining coursesKnowledge buildingPolicy analysisR & D effortsCommunication planPerformance-based budget

Prioritized Funded Initiatives

1.

2.

3.

4.

5.

6.

FILTER

Selection Criteria

Resources required

Impact potential ranking on strategy

Multiple objectives covered

Time required/needed

InitiativesStep Six



Putting It All Together – Federal Government Logistics Center

World-class, Customer Driven; ProvidingQuality 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


U.S. Foundationfor PerformanceMeasurement Automation

EnterpriseRequirements

Time and Cost to Implement

• Few measures• Simple reports• Small office

• Numerous measures• Advanced charting• Multiple locations• Web publishing• Analysis & commentary

• Enterprise-wide data• Composite measures• Many data/reporting locations• Advanced executive reporting• Web publishing• Advanced analysis• Dynamic links to legacy

systems

Step Seven

COTS Data Base

PMIS

Data Warehouse

Software Solution Space


U.S. Foundationfor PerformanceMeasurement Cascaded Scorecards Support Strategy

Goal Measure Target InitiativeLearning and GrowthGoal Measure Target Initiative

Learning and Growth

Goal Measure Target InitiativeFinancialGoal Measure Target Initiative

FinancialGoal Measure Target InitiativeFinancial

Goal Measure Target InitiativeCustomerGoal Measure Target Initiative

CustomerGoal Measure Target InitiativeCustomer

MissionStrategyMissionMissionStrategyStrategy Goal Measure Target Initiative

Internal Business ProcessGoal Measure Target InitiativeInternal Business ProcessGoal Measure Target Initiative


Goal Measure Target InitiativeLearning and Growth

Corporate

Business UnitsSupport Units

Team/Individual

Step Eight

Adapted from: Kaplan & Norton


U.S. Foundationfor PerformanceMeasurement Communicating Corporate Strategy To

Business Units

Strategy

AgencyAgency

DepartmentDepartment

Team/IndividualTeam/Individual

MeasuresObjectives

Vision: Be The Best Local Government Service Provider



OutputOutputInputInput ProcessProcess

Programs & Operations

Evaluate & Change

Strategic Direction

Planning

Management

Adapted from: Balanced Scorecard Collaborative

Balanced Scorecard

Budget Formulation & Costing

OUTCOMES

Strategy ObjectivesPerspective

MeasuresStrategy Objectives

PerspectiveMeasures

Strategy ObjectivesPerspective

MeasuresStrategy Objectives

Perspective #1Measures

Step Nine


U.S. Foundationfor PerformanceMeasurement The BSC Is The Strategic “Front-End”

Of Managing-For-Results

Budget

Evaluation

Results AccountabilityAccountability

StrategicPlanning

Program/ServiceArea Planning

CorporateBSC

DepartmentBSC

PerformanceMeasures

MeasurePerformance


U.S. Foundationfor PerformanceMeasurement 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

StrategicGoals

StrategicStrategicGoalsGoals

Goal 1Goal 1

Goal 2Goal 2

Goal 3Goal 3

Goal 4Goal 4Goal 5Goal 5

Goal 6Goal 6

Goal 7Goal 7Goal 8Goal 8

Goal 9Goal 9



Summary



The Balanced Scorecard Is (Is Not)

A strategic performance management system for the whole organizationA communications tool to make strategy clear to everyoneA way to balance financial and non-financial views of organization performanceA journeyA system for increasing accountabilityA commitment to changeA way of aligning organization vision with human and capital resources, and with day-to-day operations

A performance measurement tool to control individual productivityA “flavor of the month” performance measurement systemAbout placing your existing performance measures into four categoriesA projectEasyThe status quoA TQM initiative

IS: IS NOT:


U.S. Foundationfor PerformanceMeasurement 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



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 watchman!

@ U.S. Foundation for Performance Measurement

Best Practices



Sir Josiah Stamp, 1880-1944, Head, Bank of England

"The government are very keen on "The government are very keen on amassing statistics. They collect them, amassing statistics. They collect them, add them, raise them to the Nadd them, raise them to the Nthth power, take power, take the cube root and prepare wonderful the cube root and prepare wonderful diagrams.diagrams.

But you must never forget that every one But you must never forget that every one of these figures comes in the first instance of these figures comes in the first instance from the village watchman, who just puts from the village watchman, who just puts down what he … pleases."down what he … pleases."

But, Beware The Watchman !!But, Beware The Watchman !!



Strategy = Doing the right thingsOperations = Doing things rightChange = Doing things differently

StrategyStrategy = Doing the right thingsOperations Operations = Doing things rightChangeChange = Doing things differently

BSC = Strategy + Operations + ChangeBSC = BSC = StrategyStrategy + + OperationsOperations + + ChangeChange



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

SUCCESS = SUCCESS = Effective, Well Executed Strategy Effective, Well Executed Strategy + + Efficient OperationsEfficient Operations+ + Meaningful ChangeMeaningful Change

BSC = Strategy + Operations + ChangeBSC = BSC = StrategyStrategy + + OperationsOperations + + ChangeChange


U.S. Foundationfor PerformanceMeasurement References

Building & Implementing A Balanced Scorecard: Nine Steps to Success

Howard Rohm, U.S. Foundation for Performance Measurement

Performance Scorecard Toolkit, 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



“It’s about management and change first; measurement

and technology are second ”

“It’s about management and change first; measurement

and technology are second ”Howard Rohm

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

Phone: (202) 251-7676

improve public sector results with a - balanced scorecard institute

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