The Balanced Scorecard

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The Balanced Scorecard
Presented To
Finance and Administrative Services Division
Presented By
John Sanders
The California State University Quality
Improvement Programs
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Seminar Outline
Introduction to the Balanced Scorecard What is
it? Why do it? Balanced Scorecard
Fundamentals The Four Perspectives Measures,
Targets and Initiatives Roles and
Responsibilities The CSUSM Finance
Administrative Services Strategy Map Using the
BSC as a Management System
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The Balanced Scorecard What is it?

• Definition
• The Balanced Scorecard is a management tool that
  provides stakeholders with a comprehensive
  measure of how the organization is progressing
  towards the achievement of its strategic goals.

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The Balanced Scorecard What is it?

• The Balanced Scorecard
• Balances financial and non-financial measures
• Balances short and long-term measures
• Balances performance drivers (leading indicators)
  with outcome measures (lagging indicators)
• Should contain just enough data to give a
  complete picture of organizational performance
  and no more!
• Leads to strategic focus and organizational
  alignment.

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The Balanced Scorecard Why do it?

• To achieve strategic objectives.
• To provide quality with fewer resources.
• To eliminate non-value added efforts.
• To align customer priorities and expectations
  with the customer.
• To track progress.
• To evaluate process changes.
• To continually improve.
• To increase accountability.

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The Balanced Scorecard Why do it?

• It works!
• In just 90 days, Sandia Labs was able to redirect
  190,000 in savings by dropping initiatives that
  didnt fit their overall strategy.
• The BSC has forced our management team to focus
  beyond financial measures too often in the past
  we would get sucked into short-term thinking.
• The BSC dramatically improved our data analysis
  we dont overreact nearly as much as we used to.

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The Balanced Scorecard and The CSU

• Campuses currently working on the BSC
• San Luis Obispo
• Pomona
• San Jose
• San Marcos
• Sonoma
• Fullerton
• Long Beach
• Chico
• Northridge
• San Bernardino
• Chancellor's Office

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The Strategy Focused Organization
Mission What we do Vision What we aspire
to be Strategies How we accomplish our
goals Measures Indicators of our progress
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Environmental Scan
Strengths Weaknesses
Opportunities Threats
A Model for Strategic Planning
Values
Mission Vision
Strategic Issues
Strategic Priorities
Objectives, Initiatives, and Evaluation
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The Strategy Focused Organization

• The Five Principles
• Translate the strategy to operational terms.
• Align the organization to the strategy.

Source The Strategy Focused Organization,
Norton Kaplan
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The Strategy Focused Organization

• The Five Principles (cont.)
• Make strategy everyones job.
• Make strategy a continual process.
• Mobilize change through executive leadership

Source The Strategy Focused Organization,
Norton Kaplan
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The Balanced Scorecard and The Big Picture

• Activity Based Costing
• Economic Value Added
• Forecasting
• Benchmarking
• Market Research
• Best Practices
• Six Sigma
• Statistical Process Control
• Reengineering
• ISO 9000
• Total Quality Management
• Empowerment
• Learning Organization
• Self-Directed Work Teams
• Change Management

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Strategic Direction Create Environment For Change
Strategic Performance Management System
Communicate Strategies Define Objectives Implement
BSC
Balanced Scorecard Measure Performance Improve
Processes
Evaluate and Adjust Continuous Improvement Redefin
e Initiatives
Linking it all together.
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THE BALANCED SCORECARD
FINANCIAL/REGULATORY To satisfy our
constituents, what financial regulatory
objectives must we accomplish?
CUSTOMER To achieve our vision, what customer
needs must we serve?
INTERNAL To satisfy our customers and
stakeholders, in which business processes must
we excel?
LEARNING GROWTH To achieve our goals, how
must we learn, communicate and grow?
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Customer Perspective
To achieve our vision, what customer needs must
we serve?
Possible Performance Measures

• Customer Satisfaction (Average)
• Satisfaction Gap Analysis (Satisfaction vs.
• Level of Importance)
• Satisfaction Distribution ( of each area scored)

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Financial / Regulatory Perspective
To satisfy our constituents, what financial and
regulatory objectives must we accomplish?
Possible Performance Measures

• Cost / Unit
• Unfunded Requirements or Projects
• Cost of Service
• Budget Projections and Targets

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Internal Perspective
To satisfy our customers, in which business
processes must we excel?
Possible Performance Measures

• Cycle Time
• Completion Rate
• Workload and Employee Utilization
• Transactions per employee
• Errors or Rework

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Learning and Growth
To achieve our goals and accomplish core
activities, how must we learn, communicate and
work together?
Possible Performance Measures

• Employee Satisfaction
• Retention and Turnover
• Training Hours and Resources
• Technology Investment

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Why Measure?

• To determine how effectively and efficiently the
  process or service satisfies the customer.
• To identify improvement opportunities.
• To make decisions based on FACT and DATA

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Measurements Should

• Translate customer expectations into goals.
• Evaluate the quality of processes.
• Track our improvement.
• Focus our efforts on our customers.
• Support our strategies.

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Targets

• If you dont know where youre going, youre
  probably not gonna get there.
• Forrest Gump

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Targets

• Targets need to be set for all measures
• Should have a solid basis
• Give personnel something for which to aim
• If achieved will transform the organization
• Careful not to develop measures/targets in
  
• a fragmented approach
• i.e. Asking people to increase customer
  satisfaction has to be backed up with the
  knowledge, tools, and means to achieve that
  target.

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Initiatives

• Once measures and targets are established, it is
  the responsibility of management to determine HOW
  the organization will achieve its goals.
• Measures are used to determine the effectiveness
  of strategic initiatives.

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The Leadership Team

• Develops the divisions vision, strategy and
  goals
• Develops organizational objectives and targets
• Provides leadership, endorsement and vision for
  the project
• Clears barriers to scorecard progress

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The Core Team

• Drafts the strategy map and scorecard
• Works with employees to develop measures
  supporting strategic objectives
• Works with the Leadership Team to plan and
  implement the Balanced Scorecard in the FAS
  Division

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Finance and Administrative Services Strategy Map
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Link it together.
DIVISION
CUSTOMER
 FINANCIAL
INTERNAL PROCESS
 LEARNING GROWTH
Hum. Rscrs.
Univ. Police
Facilities
DEPT.
Police
Parking
FUNCTION
Measure Satisfaction Index Current 3.0
Target 4.0
       
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The Balanced Scorecard as a Management System

• BSC reviewed regularly to enhance operational
  decision-making
• Success of initiatives assessed based on DATA
  not opinions
• Leading indicators evaluated to confirm accuracy
  of assumptions

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The Balanced Scorecard as a Management System

• The BSC is a Living Document that requires
  regular revision of objectives, measures and
  initiatives
• How are we doing?
• Are we measuring the right things?
• What initiatives do we need to get us where we
  want to go?
• Have our organizational goals changed?

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Advantages to this Approach

• Simple to Use and Understand
• Based on Vision and Strategy
• Multidimensional
• Quantitative and Qualitative Measures
• Current and Future
• Provides Measurement of and Method for
  Improving our Services
• Ties QI initiatives together
• Serves as a Communication Tool

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Suggested Readings
Kaplan, Robert and Norton, Edward. The Balanced
Scorecard. Harvard Business Publishing,
1998 Kaplan, Robert and Norton, Edward. The
Strategy-Focused Organization. Harvard Business
Publishing, 2001 Buckingham, Marcus and Coffman,
Curt. First, Break All the Rules The Gallup
Organization, 1999 Brown, Mark. Keeping Score.
Mark Graham Brown, 1996 http//www.afd.calpoly.e
du/afd/Strategic_plan/ http//cqi.csusb.edu/
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Thank You
John Sanders The California State
University [phone] jsanders_at_calstate.edu ww
w.calstate.edu/qi