Applying the Balanced Scorecard in a Not For Profit Setting

1
Applying the Balanced Scorecard in a Not For
Profit Setting

• Brian Hendrix,
• Vice President, Finance Administration
• United States Pharmacopeia

2
Balanced Scorecard (BSC)- Background

• BSC concept introduced in Harvard Business Review
  in 1992 by Dr. Robert Kaplan Dr. David Norton
  w/ book published in 1996. Also published The
  Strategy Focused Organization in 2000 (Visit
  bscol.com).
• Goal of BSC concept is to allow an organization
  to align resources to strategy. ALIGNMENT is key!
• Kaplan Norton report 50 usage of BSCs in
  Fortune 500 companies.

3
The BSC Focus Areas (per Kaplan Norton)

• Financial Perspective - the driver of shareholder
  value.
• Customer Perspective - the differentiating value
  proposition.
• Internal Perspective - how value is created and
  sustained.
• Learning Growth Perspective - role for people,
  systems, climate, culture.

4
A BSC is a tool which

• aligns the organization to its strategy.
• focuses the organization on strategic priorities
  and cause effect relationships within those
  priorities.
• ignites and/or fuels a transformation process
  within the organization.
• establishes inter-relationships between competing
  goals within an organization.

5
A BSC is not

• a substitute for a strategic planning process.
• reengineering.
• another measurement or metrics process.

6
USPs Background

• USP has four public health programs
• Reference Standards Publications
• Dietary Supplement Verification
• Patient Safety
• Healthcare Information
• USP sells products and services no membership
  dues, contributions, or endowments.

7
What lead USP to introduce the scorecard?

• Scorecard was introduced during Fiscal year 2003.
  
• Staff had grown dramatically 25 in just 3
  years.
• Major staffing and structural changes had taken
  place with many senior managers with lt3 years
  tenure.
• Lack of focus due to rapid changes and legacy of
  previous management team.

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The United States Pharmacopeia promotes the
public health and benefits practitioners and
patients by disseminating authoritative standards
and information developed by its volunteers for
medicines, other health care technologies, and
related practices used to maintain and improve
health and promote optimal health care delivery.
- Operating Revenue - Operating Expenses -
Operating Change in Net Assets
9
USPs Lessons Learned

• Unachievable targets are demoralizing even when
  they are theoretically correct.
• People really do pay attention to what is being
  measured.
• Some managers explain how staff members impact
  the metrics better than others.
• Metrics and achievements need to be reinforced in
  as many venues as possible.
• Public health outcomes may be difficult to
  quantify.

10
USPs Outcomes

• Scorecards produce other scorecards.
• Different departments communicate if they jointly
  own metrics.
• Metric orientation leads best managers to
  reevaluate business processes and can lead to
  continuous improvement.
• Scorecard led to collaboration awareness, not
  blame and shame. The key is positioning.
• ISO Certification benefits.

11
USPs next steps

• Eliminated demoralizing targets.
• Transferred ownership of scorecard to Corporate
  Planning to drive linkages and improve planning
  process.
• Developing Mission Management System using Oracle
  Daily Business Intelligence to provide real time
  data and drill down capability.
• And the changes will continue..