Title: Balanced Scorecard Workshop
1Balanced Scorecard Workshop Presented by Matt
H. Evans, CPA, CMA, CFM Public Sector Retreat
on Malcolm Baldrige Performance Excellence
2Purpose of the Workshop
- Introduce the Balanced Scorecard to the
Organization - Make sure everyone understands how the scorecard
works - Communicate how the Balanced Scorecard fits with
the Malcolm Baldrige Model of performance
excellence
3Table of Contents
- Balanced Scorecard Basics
- Creating the Strategy Map
- Good Performance Measurements
- The Final Scorecard Components
- Case Study Exercise
- Some Final Points
4Why the Balanced Scorecard?
- The Organization will become more strategically
focused over the next ten years given the recent
policy directive issued by BSP (Budget
Strategic Planning). - People at all levels have relied heavily on
tactical performance measurements, such as number
of maps submitted, number of land structures in
flow, and of supply vendor contracts in place.
- Need more balanced approach to looking at
performance, both tactical and strategic. - Only 5 of a workforce tends to understand their
companys strategy. - 86 of executive teams spend less than one hour
per month discussing strategy.
5A Major Driver is . . .
- The Organizations Information Resource Planning
System (IRPS) - Enterprise wide system for how we will evaluate
success division read outs, data turnarounds,
global partnerships, etc. - Must be integrated into all agency components
(such as region and global outlet offices) - Designed around the Balanced Scorecard framework
- The Balanced Scorecard will be the strategic
view of performance for the agency, balancing out
our current tactical view of performance which is
already in place.
6Government Performance Results Act
- Required to develop long-term Strategic Plans
("SP") - Specify general Goals and Objectives
- Develop Annual Performance Plans ("APP")
- Specify measurable performance goals
- Annual Performance Report ("APR")
- Demonstrate actual results
- APP goals should show the expected progress
toward meeting the long-term goals of the SP
7Public Sector Organizations More Strategic Focus
8Where it started . . .
- Introduced in 1992, by Robert Kaplan and David
Norton, the Balanced Scorecard is the most
commonly used framework for ensuring that
agencies execute their strategies. Today, about
70 of the Fortune 1,000 companies utilize the
Balanced Scorecard to help manage performance.
Balanced Scorecards are used as the roadmap for
creating the Strategic Management System or our
IRPS. And this will drive overall organizational
performance for our entire agency!
9Some Basic Principles
- Quantifies the Agency Strategy in measurable
terms - Strategy is summarized on a Strategy Map over
four views of performance (perspectives). - Must capture a cause-effect relationship between
strategic objectives over the four perspectives
on the Strategy Map. - Critical Components include
- - Measurements
- - Targets
- - Initiatives
- Everything must be linked Goals to Objectives,
Objectives to Measurements, Measurements to
Targets.
10Four Views of Performance
Strategic Objectives
- Strategy can be described as a series of cause
and effect relationships. - Provides a line of sight from strategic to
operational activity - working on the right things.
11The Importance of Alignment
12Alignment all the Way Through
Goal Improve environmental health
Performance Gap Less than Organization
watershed water quality
Initiative Data Mining
Resource
Investment
Management
Innovation
Justified Initiatives to
Improved "Cause
Business
Improve Water Quality
and Effect"
Processes
Knowledge
Investments Available to
Improved Environmental
Assessment Reports
be Allocated to Other
Critical Areas
Financial
Management
Environmental
Decreased Litigation
Health
Costs
Relationship
Improved Water Quality
Management
Enhanced Public
Confidence
Increased
Investment
Accountability
13In order to be successful, the Agencys IRPS
should . . .
- Be comprised of a balanced set of a limited vital
few measures - Produce timely and useful reports at a reasonable
cost - Display and make readily available information
that is shared, understood, and used by the
Agency and - Supports the organizations values and the
relationship the organization has with customers,
suppliers, and stakeholders.
14Before we can map your strategy . . .
- Get down to a set of quantifiable strategic
objectives -
- Too vague
-
- More precise
- Make sure your objectives have a direct
relationship to your goals and your goals have a
direct relationship to your mission and values.
Improve Customer Service
Reduce average customer wait times by 30 by year
end
15Table Of Contents
- Balanced Scorecard Basics
- Creating the Strategy Map
- Good Performance Measurements
- The Final Scorecard Components
- Case Study Exercise
- Some Final Points
16Strategy Map Capture a Cause Effect Relationship
from the Bottom Up
More rapid and accessible services
Improved Returns on Investments
Stakeholder
Reduce Re-Activities thru ABC/M
Economic Model Process
Establish Web Based Self Services
Internal Process
Expand Global Facility Reach
Leadership Development
Knowledge Management
Learning Growth
IT Infrastructure
Human Capital
Facilities and Fixed Assets
Investments
17Two Special Techniquesfor Building Strategy Maps
General Rule of Thumb to ensure strategy map is
developed both vertically and horizontally
Weak
Strong
The 4 to 5 Rule
Way of pulling out both drivers and outcomes that
match up against the core competencies of the
business model
Splitting the Perspective
Customer Perspective
Customer Growth
Customer Satisfaction
Retention Rate
Outcomes
Drivers
Timely Delivery
Pricing
Quality
Service
Reputation
18Key Benefits of Strategy Maps
- Articulates how the organization creates value
for its constituents and legitimizing authority - Displays key priorities and relationships between
outcomes (the "what") and performance enablers or
drivers (the "how") - Provides a clear view of "how I fit in" for
sub-organizations, teams, and individuals - "Cascading the scorecard throughout the
organization, and clearly mapping the various
units and functions back to the organization or
agency-wide map is critical to leveraging and
ensuring alignment"
19Strategy Maps A Better Way to Communicate
Strategy
Educate and Communicate Build awareness and
understanding of organization strategy across
the workforce.
Executive consensus and accountability
Building the map eliminates ambiguity and
clarifies responsibility.
Promote Transparency Communicate with and
educate constituents, partners, oversight
bodies, and the general public.
Ensure Alignment Each sub-unit and individual
link their objectives to the map.
Source "Using Balanced Scorecard Technology to
Create Strategy-Focused Public Sector
Organizations", Robert S. Kaplan, April 21, 2004,
pg. 20
20Multiple Choice Question Cause Effect on
Strategy Map
- The top perspective of the Balanced Scorecard is
the final end results or outcomes we want to
achieve. This perspective is called - a. Internal Processes
- b. Stakeholder / Customer
- c. Learning Growth
- d. Agency Investments
21Multiple Choice Question and the answer is . .
.
- b Stakeholder / Customer are those who we
ultimately serve and we must meet their needs and
requirements. This is our final end result within
the scorecard model.
Balanced Scorecards tell you the knowledge,
skills and systems that your employees will need
(learning and growth) to innovate and build the
right strategic capabilities and efficiencies
(internal processes) that deliver specific value
to the market (customer) which will eventually
lead to higher shareholder value (financial).
Having Trouble with Your Strategy? Then Map It
by Robert S. Kaplan and David P. Norton - Harvard
Business Review
22Aligning the Scorecards
Once you have completed your strategy map, make
sure it aligns with agencies or divisions you
report up to. This overall alignment of
scorecards throughout the entire Organization
forms the Strategic Management System within
IRPS.
23Extend the Map into Measurements, Targets and
Initiatives
Strategy Map
Detailed statement of what is critical to
successfully achieving the strategy
How success in achieving the strategy will be
measured and tracked
Key action programs required to achieve objectives
The level of performance or rate of improvement
needed
Stakeholder
Faster Service Access
Self Service Applications
Objective Description
Target
Initiative
Measure
Lean Processes
Internal Process
Lean / Six Sigma
Eliminate waste, reworks, and other errors in our
processes
2 per setup per month each Outlet Office
Number of Reworks
Process and Value Map Analysis
Web Enable Technologies
LG
Invest in IT
Investments
24Alignment of Scorecard Components
Make sure the components of your scorecard fit
together. We want to create a tight model for
driving execution of your strategy.
25Multiple Choice Question Create a Tight Model
- The Balanced Scorecard process captures a cause
and effect relationship based on having all parts
linked together. Strategic goals link down to
objectives, objectives link down to measurements,
and measurements link to - Mission
- Goals
- Budgets
- Targets
26Multiple Choice Question and the answer is . .
.
- d Measurements should be linked to targets. We
want a one-to-one relationship so that
measurements are actionable to the Agency.
27Table Of Contents
- Balanced Scorecard Basics
- Creating the Strategy Map
- Good Performance Measurements
- The Final Scorecard Components
- Case Study Exercise
- Some Final Points
28The Context of Measurement
Performance Measurement is a process by which an
agency / program / function / outlet office
objectively assesses and evaluates the extent to
which it is accomplishing a specific objective,
goal, or mission. Performance measurement alone
is incomplete. Performance Management is a
systemic link between company strategy,
Investments, and processes. Performance
Management is a comprehensive management process.
29Why Measure Performance?
- Enables decision making
- Manage by results
- Promote accountability
- Distinguish between program success and failure
- Allow for organizational learning and improvement
- Justify budget requests
- Optimize Investments
- Provide means of performance comparison
- Fulfill mandates
- Establish catalysts for change
- And so on
30Without Measuring, Decision Makers Have No Basis
For
- Knowing what is going on in their enterprise
- Effectively making and supporting decisions
regarding Investments, plans, policies,
schedules, and structure - Specifically communicating performance
expectations to subordinates - Identifying performance gaps that should be
analyzed and eliminated - Providing feedback that compares performance to a
standard - Identifying performance that should be rewarded
31Types of Measurements
Definition
Example
Measure Type
Intermediate outcomes that predicts or drive
bottom-line performance results
Leading
Employee turnover rate
Bottom-line performance results resulting from
actions taken
Lagging
Employee satisfaction rating
Amount of Investments, assets, equipment, labor
hours, or budget dollars used
Input
Number of cashiers
Units of a product or service rendered - a
measure of yield
Output
Number of Value Meal orders fulfilled
Resulting effect (benefit) of the use or
application of an output
Outcome
Customer satisfaction rating
Objective / Quantitative
Empirical indicators of performance
Wait time
Perceptions and evaluations of major customers
and stakeholders
Customer complaints received as a of total
customers served
Subjective / Qualitative
32Examples of Measurements by Perspective
Internal Processes
Stakeholder / Customer
- Current customer satisfaction level
- Improvement in customer satisfaction
- Customer retention rate
- Frequency of customer contact by customer service
- Average time to resolve a customer inquiry
- Number of customer complaints
- Number of unscheduled maintenance calls
- Production time lost because of maintenance
problems - Percentage of equipment maintained on schedule
- Average number of monthly unscheduled outages
- Mean time between failures
Learning and Growth
Investments
- of facility assets fully funded for upgrading
- of IT infrastructure investments approved
- of new hire positions authorized for filling
- of required contracts awarded and in place
- Percentage employee absenteeism
- Hours of absenteeism
- Job posting response rate
- Personnel turnover rate
- Ratio of acceptances to offers
- Time to fill vacancy
33Multiple Choice Question Appropriate
Measurement
- The measurement, of employees following a
supervisor approved competency model, would most
likely be placed in which perspective of the
Balanced Scorecard? -
- a. Stakeholder / Customer
- b. Learning and Growth
- c. Agency Investments
- d. Internal Processes
34Multiple Choice Question and the answer is . .
.
- b this measurement relates to helping grow the
workforce and this would most likely fit with the
Learning and Growth perspective of the Balanced
Scorecard.
35Some Basic Guidelines forGood Performance
Measures
- You should have at least one measurement for each
objective. - Measurements define or explain objectives in
quantifiable terms - Vague gt We will improve customer service
- Precise gt We will improve customer service by
reducing response times by 30 by year end. - Measurements should drive change and encourage
the right behavior. - Should be able to influence the outcome.
36Selection Criteria for Performance Measurements
- MEANINGFUL - related significantly and directly
to organizations mission and goal - VALUABLE measure the most important activities
of the organization - BALANCED inclusive of several types of measures
(i.e. quality, efficiency) - LINKED - matched to a unit responsible for
achieving the measure - PRACTICAL affordable price to retrieve and/or
capture data - COMPARABLE used to make comparisons with other
data over time - CREDIBLE - based on accurate and reliable data
- TIMELY - use and report data in a usable
timeframe - SIMPLE -- easy to calculate and understand
37Three Criteria Used for Agency Scorecard
- Relevant
- Addresses an operational or strategic performance
issue - Is results- or outcome-focused
- Provides useful information to enable decision
making - Measurable
- Quantifiable and Objective
- Facilitates Analysis
- Can be done in a timely manner with high accuracy
- Data are available and collectable
- Actionable
- Can be tracked to an appropriate person or team
responsible for the activity measured - Measure relates to process inputs that can be
controlled/adjusted to address concerns
38Scoring Measurements Against the Three Selection
Criteria
A 0 or 1 in any column indicates that you
need to revisit this measurement before
implementation.
0 Does not apply 1 Poor 2
Acceptable 3 Good
39Multiple Choice Question Match the Objective
to the Metric
- Assume the Agency Plan has an objective Improve
the productivity of docking services at all
stations. Which of the following measurements
would be most appropriate for this objective? -
- a. Number of reruns required to complete the
docking service - b. of vendor contracts executed in 90 days
- c. Number of people completing the off-shore
warranty training program - d. of supervisors who submitted budget action
plans within 60 days of close-outs
40Multiple Choice Question and the answer is . .
.
- a If we measure re-runs, this probably will
give us some benchmark by which we can measure
docking station efficiency and productivity.
41A Closer Look at How Things Link
Transportation Safety Example
42The Measurement Pyramid
Strategic/GPRA Goals End-Outcomes Longer-Term
Intermediate Outcomes Shorter-Term Intermediate
Outcomes Outputs Outputs Inputs
43Some Tools for Determining What to Measure
Program Logic Model
Process/ System
Intermediate Outcomes
End Outcome
Inputs
Output
Process Flow
Causal Analysis
Desired Outcome
44Top Ten Metrics in the Public Sector
- Outputs/Product
- Program Inputs
- Financial Indicators
- Work/Activities
- Timeliness of Services
- Internal Measures of Quality
- Operating Ratios
- Outcomes of Products or Services
- External Customer Service
- Equity of Services to Users
Source GAO-GGD-92-65 Agency Use of Performance
Measures
45Table Of Contents
- Balanced Scorecard Basics
- Creating the Strategy Map
- Good Performance Measurements
- The Final Scorecard Components
- Case Study Exercise
- Some Final Points
46How to Set Targets
- Past performance trends per historical data.
- Performance levels of similar organizational
units at a comparable level that facilitates
benchmarking. - Best practices across the agency, the public
sector or the private sector. Must be at a
pre-existing high level of performance before you
use this approach. - For newly launched services, may have to
establish a baseline per a prototype test and
extend out from this point forward. - For major strategic shifts, may have to set
directly per the plan itself without regard for
hard data.
47Checklist for Setting Targets
- Targets match up with measurements, one to one.
- Targets require improving current levels of
performance. - Targets are a stretch, but achievable they may
require improvements to existing processes. - Targets are quantifiable so that the target
communicates if the expected performance was met. - Long-term targets are established before
short-term targets. - Financial/Budget related targets are established
before non-financial targets.
48Examples of Targets
49Characteristics of Initiatives
- Leader Sponsored
- Requires Investments people, funding,
technology, etc. - Has designated owners
- Includes deliverables or milestones
- Usually has time deadlines
- May be difficult to launch not resourced
- Could encounter obstacles people are confused,
conflicts with other functions
50Initiatives should enable strategic execution
51Going from Output to Outcome
When you first launch your Initiative, you
probably want to use an Output Measurement. Once
the Initiative is up and running, change your
measurement to an Outcome to see if the
Initiative is really having strategic impact.
52Strategic Themes
- Describes an overall strategic direction
- Can improve the communication effectiveness of
the Strategy Map - Examples of themes
- Innovative Services
- Lean Processes
- Adaptive Organization
- Realign our Core Competencies
- Reach the Stakeholder
- Group common set of objectives around a theme
53Multiple Choice Question Sequence Of Steps
- The basic steps for creating a Balanced Scorecard
include - A Align your strategy map to other
organizational units - B Create your strategic plan including goals
and objectives - C Extend your strategy map into measurements
and targets - D Map your strategy over four perspectives
- The sequence or order of these steps is (left to
right) - Step 1 Step 2 Step 3
Step 4 - A C B D
- C A D B
- B D A C
- C B A D
54Multiple Choice Question and the answer is . .
.
- c Step 1 or B Start with your strategic plan
- Step 2 or D Map your strategic plan
- Step 3 or A Align your strategy map
- Step 4 or C Extend the strategy map into
measurements and targets
55TABLE OF CONTENTS
- Balanced Scorecard Basics
- Creating the Strategy Map
- Good Performance Measurements
- The Final Scorecard Components
- Case Study Exercise
- Some Final Points
56Case Study Instructions
- The following handout is an example strategic
plan for the Western Agency Region Office (WARO).
- Your team has been assigned the responsibility of
mapping the WARO Plan into a single strategy map. - Each team will be assigned to a breakout room
use post it notes on the large white template
sheets - Try to limit your objective boxes on the strategy
map to no more than 20 per our 4 to 5 Rule. - If you have time, you might want to consider
arranging or grouping certain objectives together
around themes. - Each team will provide a 10-minute brief.
- You have 90 minutes to complete the case study
exercise.
57TABLE OF CONTENTS
- Balanced Scorecard Basics
- Creating the Strategy Map
- Good Performance Measurements
- The Final Scorecard Components
- Case Study Exercise
- Some Final Points
58Making the connection to the Baldrige Criteria
Malcolm Baldrige
Balanced Scorecard
Leadership
Learning Growth Perspective
Human Resource Capital
Learning Growth Perspective
Business Results
Measurements and Targets
Process Management
Internal Process Perspective
Strategic Planning
Strategy Map
Customer Focus
Stakeholder / Customer Perspective
59Automated System Overview - IRPS
- IRPS is the Organizations Strategic Management
System for creating the Strategically Focused
Organization (SFO). - The Strategic Management System Module within
IRPS - Cascades scorecards down by folders
- Includes a web based training component
- Analytical tools include unit trends, service
costing comparisons, strategy map gap analysis,
alignment point scoring, and executive dashboard
views sent to PDAs. - IRPS Scorecard Module has the following features
- - Project / Initiative Tracking with milestones
- - Automated Email Data Collection
- - Automated Report Distribution
- - Linking Capability to Agency Databases (such
as SES, - G-PAC, and Shared Service Docking
Databases)
60Highlight Important Steps
- Cascade and align strategy down to the Outlet
level (and beyond personal scorecards) where
execution takes place. - Capture cause effect linkages as you cascade and
align down. This will ensure that all of the
Agency is moving in the same strategic direction. - Identify and commit to projects and initiatives
that will drive strategic execution. - Establish performance outcomes in the form of
measurements and targets. - Review results on a regular basis within the
Quarterly Leadership Briefings using the Balanced
Scorecard framework.
61Additional Information
- Training Slides (1)
- Performance Based Handbook (1)
- Performance Measurement Tool Kit (1)
- Formal Training
- Offered Quarterly at the Central and Western
Region Offices - Annual Leadership Conference 2 Hour Workshop
- Web Based Training
- IRPS SMS Option 6, self serve registration
- (1) Posted on the internet at www.exinfm.com/work
shop.html
Contact Information Matt Evans,
matt_at_exinfm.com,877-689-4097