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Balanced Scorecard Workshop: Presented By: Matt H. Evans, CPA, CMA, CFM
Balanced Scorecard Workshop: Presented By: Matt H. Evans, CPA, CMA, CFM
Presented by: Matt H. Evans, CPA, CMA, CFM Public Sector Retreat on Malcolm Baldrige Performance Excellence
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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
Table of Contents
Balanced Scorecard Basics Creating the Strategy Map Good Performance Measurements The Final Scorecard Components Case Study Exercise Some Final Points
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.
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A 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)
Required to develop long-term Strategic Plans ("SP") Specify general Goals and Objectives Develop Annual Performance Plans ("APP")
Where 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!
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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.
Stakeholders
If we succeed, how will we look to our stakeholders?
Internal Processes
To satisfy our customers, at which processes must we excel?
Agency Investments
In order to succeed, what investments in people and infrastructure must we make?
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Objectives
Measures
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Financial Management
Decreased Litigation Costs
Relationship Management
Enhanced Public Confidence Increased Investment Accountability
Environmental Health
Improved Water Quality
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Make sure your objectives have a direct relationship to your goals and your goals have a direct relationship to your mission and values.
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Table Of Contents
Balanced Scorecard Basics Creating the Strategy Map Good Performance Measurements The Final Scorecard Components Case Study Exercise Some Final Points
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Internal Process
Leadership Development
Knowledge Management
Investments
Human Capital
IT Infrastructure
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The 4 to 5 Rule
Weak
Strong
Way of pulling out both drivers and outcomes that match up against the core competencies of the business model
Customer Perspective Customer Growth Timely Delivery Retention Rate Pricing Quality
Customer Satisfaction
Service Reputation
Outcomes Drivers
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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"
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Promote Transparency: Ensure Alignment: Each sub-unit and individual link their objectives to the map. Communicate with and educate constituents, partners, oversight bodies, and the general public.
Source: "Using Balanced Scorecard Technology to Create Strategy-Focused Public Sector Organizations", Robert S. 19 Kaplan, April 21, 2004, pg. 20
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
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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
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GOG Scorecard
Lean Processes
Agency Scorecard
Process Efficiency
Grow Globally
Outlet Scorecard
Streamline Processes
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Stakeholder
Strategy Map
Faster Service Access Detailed statement of what is critical to successfully achieving the strategy How success in achieving the strategy will be measured and tracked The level of performance or rate of improvement needed Key action programs required to achieve objectives
Internal Process
Lean Processes
Objective Description
Eliminate waste, reworks, and other errors in our processes
Measure
Number of Reworks
Target
2 per setup per month each Outlet Office
Initiative
Lean / Six Sigma
L&G
Investments
Invest in IT
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Goal
Achieve Agency operational efficiencies with best practices in the private sector
Objective
Reduce Operational Service Costs by 50% over the next 5 years
Measurement
Cost per Outlet Office, Cost per Region, Cost per FTE
Target
5% - Year 1 10% - Year 2 15% - Year 3
Initiative
Activity Based Costing / Management
Reduce identified re-activities within primary processes by 80% over the next 3 years
Waste Volume Charts, Rework Tracking, Cycle Time End to End in S-LX (5 of 7 Regions)
Waste stream reductions of 5% each year, Reworks cut in half for next 3 years, cycle time cut by 75%
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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: a. Mission b. Goals c. Budgets d. Targets
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Multiple 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.
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Table Of Contents
Balanced Scorecard Basics Creating the Strategy Map Good Performance Measurements The Final Scorecard Components Case Study Exercise Some Final Points
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Types of Measurements
Measure Type
Leading Lagging Input
Definition
Intermediate outcomes that predicts or drive bottom-line performance results Bottom-line performance results resulting from actions taken Amount of Investments, assets, equipment, labor hours, or budget dollars used
Example
Employee turnover rate Employee satisfaction rating Number of cashiers
Output
Outcome
Objective / Quantitative
Subjective / Qualitative
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Internal Processes
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
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
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a. b. c. d.
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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.
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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
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2.
3.
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Measurement
% of Global Outlets that follow the end to end process defined in IRPS Number of score studies completed % of Region Centers using ABC Models to manage 65% of their allocation costs % of eligible employees who are participating in the Competency Model Development Program % of map points loaded and operational in GPS Tracking
0 = Does not apply 1 = Poor
Relevant
3 3 3
Measurable
1 2 2
Actionable
2 3 3
2 = Acceptable
3 = Good
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Multiple 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.
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Annual performance goal 1A: Reduce deaths per crashes to 1.10 per 100m miles traveled by 2005
Goal
Program
Program Performance Measures
Program Components
Program Component Performance Measures
Activities
Activity Performance Measures 42
Desired Outcome
Acceptable
To Market Results Of Testing
Not Acceptable
Back to Laboratory
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Table Of Contents
Balanced Scorecard Basics Creating the Strategy Map Good Performance Measurements The Final Scorecard Components Case Study Exercise Some Final Points
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Examples of Targets
Average Turnaround Times at Docking Sites Utilization Rate for Self Serve Web Portal Rotation Internship Participation Rates Glider integration mapping tool used for geo-sets % of agency SES Levels following IRPS from end to end for the entire year % funding through SEPCO for space mapping 8 days FY05 10% FY05 1,800 FY05 Establish baseline 30% FY05 7.5 days FY06 18% FY06 2,500 FY06 8 per sets 40% FY05 6.8 days FY07 25% FY07 3,900 FY07 10 per sets 65% FY05
30% FY05
35% FY06
45% FY07
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Characteristics 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
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Goals or Objectives
Improve identification and delivery of all agency services across the full stakeholder spectrum Improve the employee turnover and satisfaction scores Reduce agency costs and streamline our services for more direct service delivery
Expand the overall knowledge base so that inter-functions can learn from one another
Develop a more systematic process across the entire agency to better connect to our customers Reduce reworks and overlaps between our seven shared service centers
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Initiative
Lean Process / Six Sigma
Activity Based Costing / Management (ABC/M)
Output Measurement
Number of Projects Defined by Region
% of Service Center Outlets with ABC Models in place for Allocation Costs
Outcome Measurement
Overall reductions in errors, reworks, and cycle times
Reductions in identified reactivities per process study
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Strategic 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
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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
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TABLE OF CONTENTS
Balanced Scorecard Basics Creating the Strategy Map Good Performance Measurements The Final Scorecard Components Case Study Exercise Some Final Points
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TABLE OF CONTENTS
Balanced Scorecard Basics Creating the Strategy Map Good Performance Measurements The Final Scorecard Components Case Study Exercise Some Final Points
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Balanced Scorecard
Learning & Growth Perspective Learning & Growth Perspective Measurements and Targets Internal Process Perspective Strategy Map
Customer Focus
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Additional 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)
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