Implementing The Balanced Scorecard in Your Organization

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Implementing The Balanced Scorecard in Your
Organization

• Holly Detzler
• CHOICE Regional Health Network

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Session Goals

• Introduce CHOICE
• Present a Case study
• Provide tools to implement

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A Little About CHOICE

• Nonprofit consortium of rural and urban providers
  dedicated to improving the health of our region.
• Through collective decision-making and action, we
  progress toward a future state of health care
  delivery characterized by
• Access to affordable services
• Improved service quality and coordination
• Good patient outcomes and service effectiveness
• Local delivery of quality services with a minimum
  of duplication and
• Accountability to standards of achievement

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Did You Know That . . .

• Sixty percent of all business fail in the first
  two years?

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Why . . .

• 45 of organizations do not have strategic plans
• Most do not have a good process for managing
  strategy
• Strategy not linked to team and individual goals
• Strategy not linked to resource allocation
• Vision and strategy not actionable

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As Oversight Increases

• Leaders that want to survive must make
  significant efforts to improve performance
• And . . .be able to prove it with verifiable
  measurements

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The Traditional Measurement

• Has always been financial data
• Financials are lagging indicators they show
  what happened in the past
• What is needed in most organizations is leading
  indicators . . .getting an idea of what may be
  ahead

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An Alternative

• The balanced scorecard provides alternatives to
  traditional financial indicator measurements.
• It describes and explains what has to be measured
  in order to assess the effectiveness of
  organizational strategies.

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Balanced Scorecard is a strategic
measurement-based system which provides a method
of aligning business activities to the strategy,
and monitoring performance of strategic goals
over time.
The Balanced Scorecard
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The Balanced Scorecard. . .

• Links strategy to operations
• Serves as a record of results achieved
• Indicates expected results
• Focuses on drivers of future performance

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BSC Its Continuous

• Vision is made explicit and shared
• Vision is communicated in terms of goals
• Goals are used to focus work, allocate resources
  and set targets
• Constant follow-up produces lessons learned
• Leads to re-examination of strategies

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Why Balanced Scorecard?

• Other partners had implemented
• Alignment of mission vision.
• Describe and explain what to be measured in order
  to assess the effectiveness of organizational
  strategies.
• Tied to business plan and strategic development
• Linked to ROI, quarterly reports and annual
  community value assessment.

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Building the Balanced Scorecard

• The Implementation Process

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Phased Implementation

• No organization has the resources to improve the
  entire organization at once
• Decide what to work on first and how to apply new
  methods for improvement
• Education and training are part of that
• Look for immediate benefits
• Apply lessons learned as you progress

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Step 1 Build Commitment Prep

• Build consensus with leadership team on why the
  scorecard is being developed
• Establish the sponsoring individual or team that
  will guide scorecard development
• Identify the strategic business units/
  organizational linkage
• Generate initial data through group process
  and/or individual interviews

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Step 2 - Implement

• Leadership team establishes the first draft
• Communicate scorecard to staff for input and
  information
• Finalize organizational scorecard
• Develop business unit scorecards - translate
  corporate strategy into unit scorecards
• Evaluate and eliminate non-strategic investments

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Step 3 - Maintenance

• Leadership team reviews business unit scorecards
  for alignment, effectiveness
• Refine the vision as appropriate
• Communicate scorecard to organization
• Establish individual performance objectives
• Conduct monthly, quarterly and annual reviews

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• Where Do Measures Come From?

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In reality, 80 to 90 of measures used as a
result of balanced scorecard will come from data
captured during the course of daily operations
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Questions to Consider

• What are you doing?
• How well are you doing it?
• How do you know how well you are doing it?
• How can you demonstrate to others how well you
  are doing it?

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Balance Scorecard at Work

• A Case Study

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What Value and Benefit do we bring?
VISION and MISSION
Financial To succeed financially, how should we
appear to our stakeholders?
Learning Growth To achieve our vision, how
will we sustain our ability to change and
improve?
Customer To achieve our vision, how should we
appear to our customer?
Internal Processes To satisfy our stakeholders
and customers, what business processes must we
excel at?
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CHOICEs Mission
CHOICE Regional Health Network is a nonprofit
consortium of rural and urban hospitals,
practitioners, public health, clinics, and other
health partners dedicated to improving the health
of our community. CHOICE meets its mission
through regional planning and action to develop a
coordinated system of patient care among multiple
owners of different types of health care
organizations who choose to collaborate in the
best interest of the communities we serve.
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CHOICEs Vision

• Through collaborative regional planning and
  coordinated action, we will progress toward a
  future state of health delivery characterized by
• Easier access to affordable services for people
  with limited incomes
• Improved service quality and coordination
• Good patient outcomes and service effectiveness
• Local delivery of quality services with a minimum
  of duplication
• Accountability to standards of achievement
  established internally, by consumers, and broader
  community partners and
• Collaboration between urban and rural health care
  providers.

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What Value and Benefit do we bring?
VISION and MISSION
Financial To succeed financially, how should we
appear to our stakeholders?
Learning Growth To achieve our vision, how
will we sustain our ability to change and
improve?
Customer To achieve our vision, how should we
appear to our customer?
Internal Processes To satisfy our stakeholders
and customers, what business processes must we
excel at?
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Value and Benefit Goals The highest level
benefit created by an organization. Relates to
the public purpose for which the organization was
created

• Performance Measures
• Large-scale behavior or environmental change.

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CHOICEs Value and Benefit Goals

• Provide customized service to clients, consumers,
  and communities to build and strengthen capacity
  for improved health and health services.
• Enhance service delivery, improve health status,
  and create innovative improvements.
• Use what we learn to advocate and model system
  change.
• Foster sustainable health system initiatives and
  direct resources into the region.
• Be a key community and regional resource for
  low-income consumers to navigate the human
  service system.
• Assist health providers to share the business
  opportunities for service challenges with the
  growing Hispanic population.

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Establishing the Operational Focus

• Objectives
• Measures
• Targets
• Initiatives

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What Value and Benefit do we bring?
VISION and MISSION
Financial To succeed financially, how should we
appear to our stakeholders?
Learning Growth To achieve our vision, how
will we sustain our ability to change and
improve?
Customer To achieve our vision, how should we
appear to our customer?
Internal Processes To satisfy our stakeholders
and customers, what business processes must we
excel at?
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To Succeed Financially, how should we appear to
our stakeholders?

• CHOICE Board fiscal plan supports multi-year
  activities consistent with CHOICE strategic
  initiatives.
• Fiscally responsible and continue to increase and
  diversify revenue among members through new
  sustaining projects that align with the Board and
  Council vision.
• Maintain membership dues level that sustaining
  members can afford over time which are
  distributed equitably and demonstrate a return on
  investment
• Recognize and financially support the regional
  infrastructure that allows open collaboration and
  with it the opportunity to increase funding
  sources

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• Foster sustainable health system initiatives and
  direct resources into the region.

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What Value and Benefit do we bring?
VISION and MISSION
Financial To succeed financially, how should we
appear to our stakeholders?
Learning Growth To achieve our vision, how
will we sustain our ability to change and
improve?
Customer To achieve our vision, how should we
appear to our customer?
Internal Core Processes To satisfy our
stakeholders and customers, what business
processes must we excel at?
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Learning and Growth Perspective

• Shows the capacity of the organization to learn
  on a sustained basis.

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Performance Measures

• Employee turnover
• Information technology
• Employee satisfaction
• Training and development programs
• Culture assessment

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How Will We Sustain Our Ability to Change and
Grow?

• Utilize and develop a full complement of talent
  through skills assessment and ongoing training.
• Develop a performance management system.
• Orientation system, lessons learned.
• Define a systems improvement process.
• Deliver an employee satisfaction survey.

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What Value and Benefit do we bring?
VISION and MISSION
Financial To succeed financially, how should we
appear to our stakeholders?
Learning Growth To achieve our vision, how
will we sustain our ability to change and
improve?
Customer To achieve our vision, how should we
appear to our customer?
Internal Core Processes To satisfy our
stakeholders and customers, what business
processes must we excel at?
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How Should We Appear to Our Customer?

• Critically think through problems and work with
  providers to provide cutting edge solutions and
  opportunities that will sustain them through the
  market re-calibration.
• Neutral and expert advocate to meet clients
  immediate needs to be connected to resources and
  navigate through a fragmented and changing
  system.
• Lead with integrity to champion ideas and
  strategies that result in a healthcare system
  that works for all in the CHOICE service area.
• Maintain credibility and trust by
• Responding quickly knowledgeably and
• Positive, personalized service.

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• Be a key community and regional resource for low-
• income consumers to navigate the human service
  system.

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What Value and Benefit do we bring?
VISION and MISSION
Financial To succeed financially, how should we
appear to our stakeholders?
Learning Growth To achieve our vision, how
will we sustain our ability to change and
improve?
Customer To achieve our vision, how should we
appear to our customer?
Internal Core Processes To satisfy our
stakeholders and customers, what business
processes must we excel at?
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Internal Core Process PerspectiveReflects the
performance of the organizations core processes.

• Performance Measures
• Get Service Inform and Promote
• Provide Service
• Getting Paid

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CHOICEs Core Business Processes
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Make it Real

• Tie to employee performance
• Implement regular data collection and monitoring
• Report back

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Some Tools . . .
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Quarterly Performance Reports Be Accountable

• Tied to balanced scorecard outcomes.
• Think big stretch goals.
• Analytical vs. descriptive
• Measure compared to targets
• Management tracking rolled up into summary
  performance objectives.
• Report consistently over time
• Meet in-person to review with members and their
  management teams

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Our ROI Analysis
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Community Value Analysis
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Culture is the Foundation of Sustained
Performance Improvement

• Balanced Scorecard or other changes in strategic
  initiatives require
• Common direction
• Commitment
• Accountability
• Learning capacity

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Updates to the Balanced Scorecard
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Reasons to Update

• Changing environmental issues/conditions
• Major accomplishments related to goals,
  strategies and/or objectives
• Measurement data indicates that strategies need
  to be refocused
• Transition of a senior leader
• Time (usually one year) has gone by

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Reference Books

• The Balance Scorecard by Robert Kaplan and
  David Norton Harvard business Scholl Press 1996
• The Fifth Discipline Fieldbook by Peter Senge
  - Double Day Press 1994
• Stop Managing Costs Designing Healthcare
  Organization Around Core Business Systems by
  James P. Mozena, Steven. Black Charles E
  Emerick 1998