Howard Rohm Vice-President, the Balanced Scorecard Institute

1. 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: hhr@balancedscorecard.org Phone: (919) 859-0084

2. 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

3. Budget Measure Target Initiative Objective Customers Customers/Citizens Objective Measure Target Initiative Financial Learning & Growth Internal Business Process Vision & Strategy Measure Target Initiative Objective Internal Business Processes Learning & Growth Objective Measure Target Initiative Source: Kaplan & Norton Basic Design Of A Balanced ScorecardPerformance System

4. Mission Customers & Stakeholders Customers/Citizens Objective Measure Target Initiative Organization Capacity Internal Business Process Financial/Budget Measure Target Initiative Objective Budget Measure Target Objective Internal Business Processes Learning & Growth Objective Measure Target Initiative Public-Sector Balanced Scorecard Strategy

5. Balanced Scorecard (BSC) System Components

6. Balanced Scorecard Logic Customer Requirements Phase II: Strategy Phase I: Strategic Foundations Phase III: Performance Measures • Budget • Activities Phase IV: New Initiatives

7. Building & Implementing A Balanced Scorecard

8. Building & Implementing A Balanced Scorecard • Customer Values • Organization Pain • Organization Values • Vision & Mission

9. Building & Implementing A Balanced Scorecard • Themes • Strategic Results • Strategies

10. Building & Implementing A Balanced Scorecard • Strategy Elements

11. Building & Implementing A Balanced Scorecard • Performance Drivers • Enablers • Causal Links

12. Building & Implementing A Balanced Scorecard • Performance Measures • Targets • Baselines

13. Building & Implementing A Balanced Scorecard • New Projects

14. Building & Implementing A Balanced Scorecard • Software • Performance Reporting • Knowledge Sharing

15. Building & Implementing A Balanced Scorecard • Alignment • Business & Support Unit Scorecards

16. Building & Implementing A Balanced Scorecard • Performance Results • Revised Strategies

17. Building & Implementing A Balanced Scorecard • Customer Values • Organization Pain • Organization Values • Vision & Mission • Performance Results • Revised Strategies • 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

18. StrategyStrategy MappingPerformance MeasuresImplementation

19. “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

20. Continuous Leadership Focus On Organization Strategy Budget For Performance Develop Strategy To Support Mission Strategy = Our Approach To Accomplishing Our Mission Make Strategy Actionable Manage For Performance Align Work With Mission

21. 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

22. Strategy Translates What Customers Want Into What We Must Deliver Values Customer Requirements Organization Results Operations Business Strategy Mission Business Units Support Units Vision Teams & Individuals

23. Strategy Translates What Customers Want Into What We Must Deliver Best Practices Values Customer Requirements Organization Results Operations Business Strategy Mission Business Units Support Units Vision Teams & Individuals

24. StrategyStrategy MappingPerformance MeasuresImplementation

25. Strategy Is A Hypothesis About What Drives Organization Success Training Program Effectiveness Service Quality Customer Confidence Customer Satisfaction InformationTechnology Leadership Identify the key performance drivers that lead to successful strategy execution Adapted From: John Krieger, Paramount Consulting

26. Step Four Public Sector Strategy Map Increase Satisfaction Lower Wait Time Citizens Budget Internal Business Process Organization Capacity Reduce Costs Reduce Procurement Steps Lower Cycle Time Increase Network Capacity Improve Skills

27. Step Four Public Sector Strategy Map Best Practices Increase Satisfaction Lower Wait Time Citizens Budget Internal Business Process Organization Capacity Reduce Costs Reduce Procurement Steps Lower Cycle Time Increase Network Capacity Improve Skills

28. StrategyStrategy MappingPerformance MeasuresImplementation

29. Are We Doing Things Right? (How?) Are We Doing The Right Things? (What?) Input Output Outcome Process Step Five Performance Measures Should Help Us Decide: Performance Measures Input: Resources, including cost and workforce Process: Activities, efforts, workflow Output: Products and services produced Outcome: Results, accomplishments, impacts

30. Are We Doing Things Right? (How?) Are We Doing The Right Things? (What?) Input Input Output Output Outcome Outcome Process Process Performance Measures Step Five Performance Measures Should Help Us Decide: Performance Measures Input: Resources, including cost and workforce Process: Activities, efforts, workflow Output: Products and services produced Outcome: Results, accomplishments, impacts

31. Develop Performance Measures Program Logic Model Process/ System Intermediate Outcomes End Outcome Inputs Output Source: Gardner Shaw & Howard Rohm

32. Develop Performance Measures Program Logic Model Process/ System Intermediate Outcomes End Outcome Inputs Output Causal Analysis Desired Outcome Source: Gardner Shaw & Howard Rohm

33. Prototype Product Acceptable Not Acceptable Results Of Testing Back to Laboratory To Market Develop Performance Measures Program Logic Model Process/ System Intermediate Outcomes End Outcome Inputs Output Process Flow Causal Analysis Desired Outcome Source: Gardner Shaw & Howard Rohm

34. Balanced Scorecard Performance Measures What We Want To Measure Customer/ Stakeholder Internal Business Processes Financial / Budget Organization Capacity Results Process Activities (Quality, Quantity, Timeliness, Efficiency) Results Or Inputs Behavior Changes Knowledge, Skills, & Abilities Efficiency

35. Balanced Scorecard Performance Measures Measurement Categories Achievement of Strategic Results Business Impacts Customer/ Stakeholder Internal Business Processes Financial / Budget Organization Capacity 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

36. Balanced Scorecard Performance Measures Best Practices Measurement Categories Achievement of Strategic Results Business Impacts Customer/ Stakeholder Internal Business Processes Financial / Budget Organization Capacity 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

37. Financial Perspective Customer Perspective Measures Objectives Initiatives The Finished BSC Tells Our Story Infrastructure Perspective Process Perspective Strategy: Our Approach To Accomplishing Our Mission

38. Putting It All Together – Federal Government Logistics Center Provide Logistics Support and Products to Assure Safety for the Flying Public Mission World-class, Customer Driven; Providing Quality Services Worldwide Vision S1: Become more customer-driven S2: Increase business opportunities S1 S2 Strategy S1-01: Assure timely delivery (Customer) S1-02: Raise quality level (Customer) S1-03: Reduce cycle time (Internal) O1 O2 O3 Objectives S1-O1-M1: % on-time delivery S1-O2-M1: % defective product S1-02-M2: % defective shipments M 1 M 2 M 1 Measures 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 T 1 Targets S1-I1: Re-engineer delivery process S1-I2: Six Sigma training I 1 I 2 Initiatives

39. Putting It All Together – Local Government Serve County Residents by Helping Improve Their Lives and Community Mission Be the Best Local Government Service Provider Vision Citizen Needs & Desired Outcomes S1: Increase value by providing more cost-effective services S2: Reduce violence, harm & injury through community partnerships S1 S2 Strategy S1-01: Optimize organization (Internal) S1-02: Identify service & resource gaps (Employee) S1-03: Survey citizens (Customer) O1 O2 O3 Objectives S1-O1-M1: Skills match index S1-O2-M1: Cost per unit service S1-03-M1: Citizen satisfaction rating M 1 M 1 M 1 Measures S1-O1-M1-T1: Skills index = 80% in 2002 S1-02-M1-T1: 7% improvement above baseline S1-03-M1-T1: 95% in 2002 T 1 T 1 T 1 Targets S1-I1: New outreach program S1-I2: Communications plan I 1 I 2 Initiatives

40. MARINE CORPS SYSTEMS COMMMAND COMMAND BALANCED SCORECARD – DESIRED OUTCOMES VIEW OPS EFFICIENCY GOAL: Improve operating efficiency through streamlined and innovative business systems LIFE CYCLE MANAGEMENT GOAL: Deliver highly effective systems and equipment using Life Cycle Management HI-PERFORMANCE ORG GOAL: Become a proud, high-performance, team-based learning organization in a professional environment QUALITY SYSTEMS GOAL: Improve quality of systems and equipment provided to operating forces Equip the Warfighter to Win WARFIGHTER/ STAKEHOLDER (BETTER) Acquire Best-Value Products Improve Delivery Time Improve External Communications Improve LCM Focus Understand and Meet Explicit & Implicit Customer Requirements Improve Command Planning & Resource Allocation WORK SYSTEM (FASTER) Increase Collaborative Partnerships Increase Internal Process Efficiency Improve Systems Integration FINANCIAL (VALUE) Increase Financial Efficiency Optimize Operating Budget Improve Team-based Workforce Competency HUMAN SYSTEM (SMARTER) Identify & Meet Future Skills Requirements Improve Infrastructure Support Improve Internal Communications Improve Workforce Satisfaction & Commitment Improve Workforce Knowledge, Skills & Abilities

41. StrategyStrategy MappingPerformance MeasuresImplementation

42. SAS Institute pbVIEWS iDashes

43. COTS Data Base Step Seven Automation Software Solution Space Enterprise Requirements • Few measures • Basic tracking • Small office Time and Cost to Implement

44. PMIS COTS Data Base Step Seven Automation Software Solution Space Enterprise Requirements • Numerous measures • Visualization & charting • Multiple locations • Web input & publishing • Commentary • Few measures • Basic tracking • Small office Time and Cost to Implement

45. Data Warehouse PMIS COTS Data Base 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 Time and Cost to Implement

46. 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

47. Vision: Be The Best Local Government Service Provider Strategy Objectives Measures Agency Department Team/ Individual Step Eight Align The Enterprise View With Business And Support Units

48. Vision: Be The Best Local Government Service Provider Strategy Objectives Measures Agency Department Team/ Individual Step Eight Align The Enterprise View With Business And Support Units Best Practices

49. Goal: Performance-Based Budget Strategic Goals Budget Recipients Balanced Scorecard Infrastructure Other Indirects M E A S U R E S Program 1 $ xx M Goal 1 Suppliers $ xx M Goal 2 $ xx M $ xx M Program 2 $ xx M Goal 3 $ xx M Goal 4 Program 3 $ xx M Goal 5 Contractors Program 4 Program 5 $ xx M Goal 6 $ xx M Goal 7 Program 6 $ xx M Goal 8 Citizens $ xx M Goal 9

50. Summary