improve public sector results with bsc

5/27/2018 Improve Public Sector Results With BSC

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Performance ounts 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


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People and their managers are working soPeople and their managers are working so

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

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

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


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U.S. Foundationfor PerformanceMeasurement Seminar Objectives

Introduce a framework for building and implementing a

public-sector balanced scorecard performance

management system

Learn how to use a balanced scorecard in a managing-

for-results environment Understand how a scorecard system can help align

organization effort with strategy

Learn best practices, and how to overcome obstaclesand challenges


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Definitions

Mission: 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., acquireadditional 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 components

Outputs: 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)


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Basic Design Of A Balanced Scorecard

Performance System

VisionVision&&

StrategyStrategy

Customers/CitizensCustomers/CitizensMeasureMeasure TargetTarget InitiativeInitiativeObjectiveObjectiveCustomersCustomers

MeasureMeasure TargetTarget InitiativeInitiativeObjectiveObjective

Learning & GrowthLearning & GrowthInnovation

&Learning

Innovation

&Learning

ObjectiveObjective MeasureMeasure TargetTarget InitiativeInitiativeBudgetBudget

FinancialFinancial

MeasureMeasure TargetTarget InitiativeInitiativeInternal Business ProcessInternal Business Process

ObjectiveObjectiveInternal BusinessProcesses

Internal BusinessProcesses

Source: Kaplan & Norton


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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 Capacity

ObjectiveObjective MeasureMeasure TargetTarget InitiativeInitiative

BudgetBudget

FinancialFinancial StrategyStrategy


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Balanced Scorecard Logic

GoalsGoals

Vision

Customers

MeasuresMeasures

InitiativesInitiatives

Strategic MapStrategic Map

MissionMission

Core ValuesCore Values

TargetsTargets

Perspectives Focus AreasFocus AreasSTRATEGYSTRATEGY

ObjectivesObjectives


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U.S. Foundationfor PerformanceMeasurement Committing to Performance-based

Management

From:

Control andCompliance Rules-governed

Limited flexible

Non-preventive (rework

based on feedback) Negative focus

Control of individuals

Toward:

PerformanceAccountability Mission driven

Customer driven

Employee responsive

Flexible

Preventive

Positive, team focus

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


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Balanced Scorecard Methodology:

Nine Steps To Success


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U.S. Foundationfor PerformanceMeasurement Organizational Assessment

Step One

SWOTSWOT

CapacityBuilding

Strategy

ValuesVision

Mission

ValuesValuesVisionVision

MissionMission

NeedsNeedsOutcomes

GoalsOutcomesOutcomes

GoalsGoals


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U.S. Foundationfor PerformanceMeasurement Achieving Customer Satisfaction:

The Citizen Value Proposition

GoalSelf-sufficient residents with equal access to services

Efficient, effective and inclusive servicesSafer and healthier community through high quality, cost-effective and

accessible services

Vibrant and diverse economy, enhanced quality of life, and protected

natural resources

Focus Areas1. Socio-economic Opportunity

2. 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


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U.S. Foundationfor PerformanceMeasurement Define Strategies

Mission: Manage the Nations 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


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Reduce

Costs

Customers

Budget

Internal Business Process

Learning and Growth

Strategic Objectives

Increase

Satisfaction

Increase

Involvement

Improve

Cycle Time

IncreaseNetworkCapacity

ImproveSkills

ReduceProcurement

Steps

Increase

Safety

Lower

Wait Time

Grow Tax

Base

Step Three


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Reduce

Costs

Citizens

Budget

Internal Business Process

Learning and Growth

Public Sector Strategic Map

IncreaseSatisfaction

IncreaseInvolvement

IncreaseNetworkCapacity

ImproveSkills

ReduceProcurement

Steps

IncreaseSafety

LowerWait Time

Grow Tax

Base

Step Four

ImproveCycle Time


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Performance Measures Should Help Us Decide:

Input: Resources, including cost and workforceProcess: Activities, efforts, workflowOutput: Products and services produced

Outcome: Results, accomplishments, impacts

Are We Doing The Right Things?

Strategic Planning (What?)

Are We Doing Things Right?

Business Planning (How?)

Step Five

Performance Measures

OutputOutputInputInput ProcessProcess OutcomeOutcome

PerformanceMeasures


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Candidate Initiatives

Outreach programsCitizen surveys

Partnerships

Process improvement

Training coursesKnowledge building

Policy analysis

R & D efforts

Communication planPerformance-based budget

Prioritized

FundedInitiatives

1.

2.

3.

4.

5.

6.

F

I

L

T

E

R

Selection Criteria

Resources required

Impact potential

ranking on strategy

Multiple objectivescovered

Time

required/needed

InitiativesStep Six


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Putting It All Together Federal

Government Logistics Center

World-class, Customer Driven; ProvidingQuality Services Worldwide

Provide Logistics Support and Productsto Assure Safety for the Flying Public

S1: Become more customer-driven

S2: 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 delivery

S1-O2-M1: % defective product

S1-02-M2: % defective shipments

S1 S2

O1 O2 O3

M1

M1

M2

Objectives

S1-O1-M1-T1: 100% in 2002

S1-02-M1-T1: Zero in 2002

S1-02-M2-T1: Zero in 2002

T

1

T

1

InitiativesS1-I1: Re-engineer delivery

process

S1-I2: Six Sigma training

T

1

I1

I2

Mission

Vision

Strategy

Measures

Targets


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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 partnerships

S1-01: Optimize organization (Internal)

S1-02: Identify service & resource gaps (Employee)

S1-03: Survey citizens (Customer)S1-O1-M1: Skills match index

S1-O2-M1: Cost per unit service

S1-03-M1: Citizen satisfaction rating

S1 S2

O1 O2 O3

M1

M1

M1

Objectives

S1-O1-M1-T1: Skills index = 80% in 2002

S1-02-M1-T1: 7% improvement above baselinS1-03-M1-T1: 95% in 2002

T

1

T

1

InitiativesS1-I1: New outreach programS1-I2: Communications plan

T

1

I1

I2

Mission

Vision

Measures

Targets

Citizen Needs &Desired Outcomes

Strategy


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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


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U.S. Foundationfor PerformanceMeasurement Cascaded Scorecards Support Strategy

Goal Measure Target Initiative

Learning and GrowthGoal Measure Target InitiativeLearning and Growth


FinancialGoal Measure Target InitiativeFinancialGoal Measure Target Initiative

Financial


CustomerGoal Measure Target InitiativeCustomerGoal Measure Target Initiative

Customer

MissionStrategy

MissionMission

StrategyStrategy Goal Measure Target InitiativeInternal Business ProcessGoal Measure Target Initiative

Internal Business ProcessGoal Measure Target InitiativeInternal Business Process


Learning and Growth

Corporate

Business UnitsSupport Units

Team/Individual

Step Eight

Adapted from: Kaplan & Norton


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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


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OutputOutputInputInput ProcessProcess

Programs & Operations

Evaluate & Change

Strategic Direction

Planning

Management

Adapted from: Balanced Scorecard Collaborative

Balanced Scorecard

Budget Formulation & Costing

O

U

TC

O

M

E

S

Strategy Objectives

PerspectiveMeasures

Strategy Objectives

PerspectiveMeasures

Strategy Objectives

PerspectiveMeasures

Strategy Objectives

Perspective #1Measures

Step Nine


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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

Performance

Measures

MeasurePerformance


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U.S. Foundationfor PerformanceMeasurement Goal: Performance-Based Budget

RecipientsRecipients

Suppliers

Contractors

CitizensME

ASURE

S

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 3Goal 4Goal 4

Goal 5Goal 5

Goal 6Goal 6

Goal 7Goal 7Goal 8Goal 8

Goal 9Goal 9


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Summary


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The Balanced Scorecard Is (Is Not)

A strategic performance management

system for the whole organizationA communications tool to make

strategy clear to everyone

A way to balance financial and non-

financial views of organization

performance

A journey

A system for increasing accountability

A commitment to change

A way of aligning organization visionwith human and capital resources, and

with day-to-day operations

A performance measurement tool to

control individual productivityA flavor of the month performance

measurement system

About placing your existing

performance measures into four

categories

A project

Easy

The status quo

A TQM initiative

IS: IS NOT:


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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


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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

Dont 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


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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, takepower, takethe cube root and prepare wonderfulthe cube root and prepare wonderful

diagrams.diagrams.

But you must never forget that every oneBut you must never forget that every one

of these figures comes in the first instanceof these figures comes in the first instance

from the village watchman, who just putsfrom the village watchman, who just putsdown what he pleases."down what he pleases."

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


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Strategy = Doing the right things

Operations = Doing things right

Change = Doing things differently

StrategyStrategy = Doing the right things

OperationsOperations = Doing things right

ChangeChange = Doing things differently

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


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SUCCESS = Effective, Well Executed Strategy

+ Efficient Operations

+ Meaningful Change

SUCCESS =SUCCESS = Effective, Well Executed StrategyEffective, Well Executed Strategy

++ Efficient OperationsEfficient Operations

++ Meaningful ChangeMeaningful Change

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


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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


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Its about management and

change first; measurement

and technology are second

Its about management and

change first; measurement

and technology are second Howard Rohm

Internet: www.balancedscorecard.org

e-mail: [email protected]

Phone: (202) 251-7676

improve public sector results with bsc

Documents

performance ounts

public sector results

desired level of performance

results environment

scorecard system

abalanced scorecard

processing time

certain time