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The Balanced Scorecar d Institute Improve Public Sector Results With A Balanced Scorecard: Nine Steps To Success Howard Rohm Vice-President, the Balanced Scorecard Institute Director, U.S. Foundation for Performance Measurement Internet: www.balancedscorecard.org e-mail: [email protected] 2003 by Howard Rohm. All rights reserved. Phone: (919) 859-0084 Performance Counts The Balanced Scorecar d Institute Seminar Objectives Describe a framework for building and implementing

public-sector balanced scorecard performance systems Understand how a scorecard system can help align organization effort with agency mission and strategy Share best practices and lessons learned 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Basic Design Of A Balanced Scorecard Performance System Objective Customers/Citizens Customers Objective Measure Target Initiative Budget Target Financial

Measure Initiative Internal Business Business Process Process Internal Internal Business Initiative Initiative Processes Vision & Strategy Measure Target Target Objective Measure Objective Learning & Growth Learning & Target Growth Objective Measure

Initiative Source: Kaplan & Norton 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Public-Sector Balanced Scorecard Mission Customers/Citizens Measure Target Initiative Customers & Stakeholders Objective Learning & Growth Budget Objective Measure Target

Financial/Budget Strategy Organization Capacity Objective Measure Target Initiative Internal Business Business Process Process Internal Internal Business Initiative Initiative Processes Measure Target Target Objective Measure Objective 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d

Institute Balanced Scorecard (BSC) System Components 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Balanced Scorecard Logic Customer Requirements Phase I: Strategic Foundations Phase II: Strategy Phase III: Performance Measures Phase IV: New Initiatives 2003 by Howard Rohm. All rights reserved. Budget Activities Performance Counts

The Balanced Scorecar d Institute Building & Implementing A Balanced Scorecard 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Customer Customer Values Values Institute Organization Organization Pain Pain Building & Implementing A Balanced Scorecard Organization Organization Values Values Vision

& Mission Vision & Mission 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Building & Implementing A Balanced Scorecard Themes Strategic Results Strategies 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Building & Implementing

A Balanced Scorecard Strategy Elements 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Building & Implementing A Balanced Scorecard Performance Drivers Enablers Causal Links 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Building & Implementing

A Balanced Scorecard Performance Measures Targets Baselines 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Building & Implementing A Balanced Scorecard New Projects 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Building & Implementing A Balanced Scorecard

Software Performance Reporting Knowledge Sharing 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Building & Implementing A Balanced Scorecard Alignment Business & Support Unit Scorecards 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced

Scorecar d Institute Building & Implementing A Balanced Scorecard Performance Results Revised Strategies 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Customer Customer Values Values Institute Organization Organization Pain Pain Building & Implementing A Balanced Scorecard Performance Results Revised Strategies Organization Organization Values Values

Vision & Mission Vision & Mission Alignment Business & Support Unit Scorecards Themes Strategic Results Strategies Software Performance Reporting Knowledge Sharing Strategy Elements Performance Drivers Enablers Causal Links New Projects Performance Measures Targets Baselines 2003 by Howard Rohm. All rights reserved.

Performance Counts The Balanced Scorecar d Institute Strategy Strategy Mapping Performance Measures Implementation 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute People and their managers are working so hard to be sure things are done right, that they hardly have time to decide if they are doing the right things. Stephen R. Covey

2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Focus On Organization Strategy Continuous Leadership Budget For Performance Strategy = Manage For Performance Develop Strategy To Support Mission Our Approach To Accomplishing Our Mission Make Strategy Actionable

Align Work With Mission 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Step Two Define Strategies Mission: Provide information services to citizens Vision: Enable Internet access to all available information Strategic Themes: Build the information infrastructure Improve operational efficiency and effectiveness Strategies: Develop an on-line, 24/7capability to access information services Build knowledge and skills, to cross-sell new banking products Call Center Strategies: Provide caller support on an exceptions basis Provide critical customer intelligence to Web site designers 2003 by Howard Rohm. All rights reserved. Performance Counts

Strategy Translates What Customers Want Into What We Must Deliver The Balanced Scorecar d Institute Values Customer Requirements Business Strategy Mission Vision Operations Organization Results Business Units Support Units Teams & Individuals 2003 by Howard Rohm. All rights reserved.

Performance Counts Strategy Translates What Customers Want Into What We Must Deliver The Balanced Scorecar d Institute Best Practices Values Customer Requirements Business Strategy Mission Vision Operations Organization Results Business Units

Support Units Teams & Individuals 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Strategy Strategy Mapping Performance Measures Implementation 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Strategy Is A Hypothesis About What Drives Organization Success

Training Information Technology Service Quality Customer Confidence Customer Satisfaction Program Effectiveness Leadership Identify the key performance drivers that lead to successful strategy execution Adapted From: John Krieger, Paramount Consulting 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute

Citizens Step Four Public Sector Strategy Map Lower Wait Time Increase Satisfaction Reduce Costs Budget Lower Cycle Time Internal Business Process Organization Capacity Improve Skills 2003 by Howard Rohm. All rights reserved. Reduce Procurement Steps

Increase Network Capacity Performance Counts The Balanced Scorecar d Institute Citizens Step Four Public Sector Strategy Map Lower Wait Time Increase Satisfaction Reduce Costs Budget Lower Cycle Time

Internal Business Process Organization Capacity Best Practices Improve Skills 2003 by Howard Rohm. All rights reserved. Reduce Procurement Steps Increase Network Capacity Performance Counts The Balanced Scorecar d Institute Strategy Strategy Mapping Performance Measures

Implementation 2003 by Howard Rohm. All rights reserved. Performance Counts Step Five The Balanced Scorecar d Institute Performance Measures Performance Measures Should Help Us Decide: Are We Doing Things Right? Are We Doing The Right Things? (How?) (What?) Input Process Output Outcome

Input: Resources, including cost and workforce Process: Activities, efforts, workflow Output: Products and services produced Outcome: Results, accomplishments, impacts 2003 by Howard Rohm. All rights reserved. Performance Counts Step Five The Balanced Scorecar d Institute Performance Measures Performance Measures Should Help Us Decide: Are We Doing Things Right? Are We Doing The Right Things? (How?) (What?) Input Process

Output Input: Resources, including cost and workforce Process: Activities, efforts, workflow Output: Products and services produced Outcome: Results, accomplishments, impacts 2003 by Howard Rohm. All rights reserved. Outcome Performance Measures Performance Counts The Balanced Scorecar d Institute Develop Performance Measures Program Logic Model Inputs Process/ System Output Intermediate Outcomes

End Outcome Source: Gardner Shaw & Howard Rohm 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Develop Performance Measures Program Logic Model Inputs Process/ System Output Intermediate Outcomes End Outcome Causal Analysis Desired

Outcome Source: Gardner Shaw & Howard Rohm 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Develop Performance Measures Program Logic Model Inputs Process/ System Output Intermediate Outcomes End Outcome Process Flow Causal Analysis Prototype

Product Desired Outcome Acceptable To Market Not Acceptable Results Of Testing Back to Laboratory Source: Gardner Shaw & Howard Rohm 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Customer/ Stakeholder Internal Business Processes Financial /

Budget Organization Capacity Balanced Scorecard Performance Measures What We Want To Measure Results Process Activities (Quality, Quantity, Timeliness, Efficiency) Results Or Inputs Behavior Changes Knowledge, Skills, & Abilities Efficiency 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Customer/ Stakeholder Internal

Business Processes Financial / Budget Organization Capacity Balanced Scorecard Performance Measures Measurement Categories Achievement of Strategic Results Business Impacts Changes in Process Efficiency Return on Investment (Program/Service Effectiveness) Or Input Measures (Resource Adequacy) Changes in Employee Knowledge, Skills, Attitudes, Behavior, and Abilities Service Efficiency/Effectiveness Measures Infrastructure Capacity Gain Measures 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Customer/

Stakeholder Internal Business Processes Financial / Budget Organization Capacity Balanced Scorecard Performance Measures Best Practices Measurement Categories Achievement of Strategic Results Business Impacts Changes in Process Efficiency Return on Investment (Program/Service Effectiveness) Or Input Measures (Resource Adequacy) Changes in Employee Knowledge, Skills, Attitudes, Behavior, and Abilities Service Efficiency/Effectiveness Measures Infrastructure Capacity Gain Measures 2003 by Howard Rohm. All rights reserved. Performance Counts The

Balanced Scorecar d Institute The Finished BSC Tells Our Story Infrastructure Perspective Process Perspective Financial Perspective Customer Perspective Objectives Measures Initiatives Strategy: Our Approach To Accomplishing Our Mission 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute

Putting It All Together Federal Government Logistics Center Mission Vision Strategy Objectives Measures T 1 Targets Initiatives I 1 S1 O1 O2 O3 Provide Logistics Support and Products to Assure Safety for the Flying Public World-class, Customer Driven; Providing Quality Services Worldwide S2 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) M MM 1 1 2 S1-O1-M1: % on-time delivery S1-O2-M1: % defective product S1-02-M2: % defective shipments TT 11 S1-O1-M1-T1: 100% in 2002 S1-02-M1-T1: Zero in 2002 S1-02-M2-T1: Zero in 2002 S1-I1: Re-engineer delivery process S1-I2: Six Sigma training I 2 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute

Putting It All Together Local Government Mission Strategy Objectives T 1 I 1 S1 O1 O2 O3 M 1 Measures Initiatives Be the Best Local Government Service Provider Vision Citizen Needs & Desired Outcomes Targets

Serve County Residents by Helping Improve Their Lives and Community M M 1 1 T 1 T 1 S2 S1: Increase value by providing more cost-effective services S2: 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-O1-M1-T1: Skills index = 80% in 2002 S1-02-M1-T1: 7% improvement above baseline S1-03-M1-T1: 95% in 2002 I 2 S1-I1: New outreach program

S1-I2: Communications plan 2003 by Howard Rohm. All rights reserved. Performance Counts S em p e r F id e lis MARINE CORPS SYSTEMS COMMMAND Se m p e r F id e l is COMMAND BALANCED SCORECARD DESIRED OUTCOMES VIEW OPS EFFICIENCY LIFE CYCLE MANAGEMENT QUALITY SYSTEMS GOAL: Improve operating efficiency GOAL: Deliver highly through streamlined and effective systems and innovative business equipment using Life Cycle systems Management

GOAL: Improve quality of systems and equipment provided to operating forces Equip the Warfighter to Win WARFIGHTER/ STAKEHOLDE R HI-PERFORMANCE ORG GOAL: Become a proud, high-performance, teambased learning organization in a professional environment Acquire Best-Value Products Improve Delivery Time Improve External Communications (BETTER)

Improve LCM Focus WORK SYSTEM (FASTER) Improve Command Planning & Resource Allocation Increase Internal Process Efficiency FINANCIA L (SMARTER) Increase Collaborative Partnerships Improve Systems Integration Increase Financial Efficiency (VALUE) HUMAN SYSTEM

Understand and Meet Explicit & Implicit Customer Requirements Optimize Operating Budget Improve Team-based Workforce Competency Identify & Meet Future Skills Requirements Improve Infrastructure Support Improve Internal Communications Improve Workforce Satisfaction & Commitment Improve Workforce Knowledge, Skills & Abilities The Balanced

Scorecar d Institute Strategy Strategy Mapping Performance Measures Implementation 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute SAS Institute pbVIEWS iDashes 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d

Institute Step Seven Automation Software Solution Space Enterprise Requirements Few measures Basic tracking Small office COTS Data Base Time and Cost to Implement 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Step Seven Automation Software Solution Space Enterprise

Requirements Numerous measures Visualization & charting Multiple locations Web input & publishing Commentary Few measures Basic tracking Small office PMIS COTS Data Base Time and Cost to Implement 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Step Seven Automation Software Solution Space Links to legacy systems Composite measures Many data/reporting locations Integrate with enterprise systems

Advanced executive reporting Web input & publishing Advanced analysis Enterprise Requirements Numerous measures Composite measures Visualization & charting Multiple locations Web input & publishing Commentary Few measures Basic tracking Small office Data Warehouse PMIS COTS Data Base Time and Cost to Implement 2003 by Howard Rohm. All rights reserved. Performance Counts Data Warehouse Features: Strategic Performance Management Collect and transform data from virtually any data source and manage the process Fully automated solution Communicate on strategy, provide early indicators

Collaborate on knowledge and share best practices enterprise-wide Integrate with any performance framework Robust analytics, including predictive analysis, cost analysis, correlation/impact analysis, trend analysis, and data mining Dynamic, customizable strategy maps Ability to integrate with other enterprise solutions One consistent Intelligence Architecture across the enterprise Step Eight The Balanced Scorecar d Institute Align The Enterprise View With Business And Support Units Vision: Be The Best Local Government Service Provider Strategy Objectives Measures Agency Department Team/ Individual 2003 by Howard Rohm. All rights reserved.

Performance Counts Step Eight The Balanced Scorecar d Institute Align The Enterprise View With Business And Support Units Best Vision: Be The Best Local Government Service Provider Practices Strategy Objectives Measures Agency Department Team/ Individual 2003 by Howard Rohm. All rights reserved. Performance Counts The

Balanced Scorecar d Institute Strategic Strategic Goals Goal 1 Goal 2 Goal 3 Goal 4 Goal 5 Goal 6 Goal 7 Goal: Performance-Based Budget Budget Recipients Infrastructure Other Indirects Balanced Scorecard Program 1 $ xx M M E A

S U R E S $ xx M $ xx M Citizens xx M M Program 2 $$ xx $ xx M Program 4 Goal 8 Program 3 $ xx M Contractors Program 5 $ xx M $ xx M Program 6 $ xx M Goal 9 Suppliers

$ xx M 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Summary 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Typical Timeline Building The Corporate Scorecard Week 1 2 3

4 5 6 7 8 9 10-16 Getting Started Set Strategic Context Develop Strategy & Objectives Define Performance Measures Develop New Initiatives Design Performance Reporting Adapt Management Review Process Executive Sessions

2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Balanced Scorecard Implementation 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 budget development separately from strategy development Measures set independently of a performance framework, or measures with no ownership Loosing momentum No performance targets, or targets set too high or too low Little or no strategic feedback Lack of meaningful employee involvement 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced

Scorecar d Institute The Balanced Scorecard Is (Is Not) IS: IS NOT: A strategy-based management system A performance measurement tool A communications tool for the whole organization An EIS for executives only A journey A project Hard work Easy A change initiative Business as Usual Balancing non-financial, efficiency, infrastructure, & financial views of performance Putting your existing metrics into 4 bins Increased accountability

Tighter individual control Aligning vision with operations A TQM, Six Sigma, or reengineering project 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute Getting Quick Results Mr. Rohm: I am new to BSC. Could you email me a list of measures for each of the four perspectives? (Name withheld to protect the poor man!) 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar

d Institute Its about management and change first; measurement and technology are second Howard Rohm Internet: www.balancedscorecard.org e-mail: [email protected] Phone: (919) 859-0084 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute References A Balancing Act: Developing and Using Balanced Scorecard Performance Systems , Howard Rohm, Perform, June 2002 Building & Implementing A Balanced Scorecard: Nine Steps to Success TM, Howard Rohm, U.S. Foundation for Performance Measurement Performance Scorecard ToolkitTM, 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 2003 by Howard Rohm. All rights reserved. Performance Counts The Balanced Scorecar d Institute The Balanced Scorecard Institute Information Clearing House Balanced Scorecard Training, Coaching & Consulting (GSA Schedule) Performance Measurement Development and Training (GSA Schedule) Upcoming Events: Balanced Scorecard Workshop: March 2003; Brussels, Belgium Balanced Scorecard Workshop: April 2003; Washington, DC Performance Measures Workshop: May 2003; Washington, DC Balanced Scorecard Workshop: Summer 2003; Minn.-St. Paul, MN

Balanced Scorecard Workshop: Fall 2003; Washington, DC Web: www.balancedscorecard.org E-Mail: [email protected] Phone: (919) 859-0084 2003 by Howard Rohm. All rights reserved. Performance Counts

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