Introduction to The Contemporary Balanced ScorecardStephen P. Wernet, Ph.D.Professor School of Social Work Saint Louis University Visiting Clinical Professor Virtual Academic Center School of Social Work Univ. of Southern California

Workshop Outline1. Discuss evolution of Balanced Scorecard 2. Outline Balanced Scorecard Characteristics 3. Discuss designing a 3rd Generation Balanced Scorecarda. Discuss Strategy Map b. Discuss selection and design of Key Performance Indicators (KPIs) for The Scorecard

4. Describe the process for designing a Balanced Scorecard

the formulation of great strategies is an art, and it will always remain so

The Evolution of Balanced Scorecard

an approach to managing strategy and measuring performance

Attempt to represent causality in a linkage model A limited number of measures related to specific strategic goals Mixture of financial and nonfinancial measures

1st Generation BSC

2nd Generation BSC

The Characteristics of a Balanced Scorecard

#1: Why does this organization exist? Mission Statement Destination statement

Stakeholder Perspective Customer value proposition how the organization differentiates itself from competitors to1. attract, 2. retain, and 3. deepen relationships

with targeted customers.

#2: What do you have to be really good at? Core competencies Core activities

Internal Process PerspectiveInternal operations Key processes

#3: What key resources do you need or possess?the underpinning enablers drivers of performance

Learning and Growth PerspectiveThe Non-monetarized Capitals Human Information Organization

Financial PerspectiveThe Traditional Capital

Designing a 3rd Generation Balanced Scorecard

1. Destination statement description of the organization at some future date assuming successful attainment of strategic goals

2. Strategic linkage model short and medium term objectives organized in a cause-effect diagram.

3. Measures and targets performance measures

Two interrelated components1. A Strategy Map 2. A Scorecard

1. Strategy Mapvisual representation of a company's critical objectives and the crucial relationships among them that drive organizational performance

A useful launch point for creating a Strategy Map meaningful vision and mission statements or an overarching statement of purpose

Vision Mission

We envision a world in which the power of the Gospel is engaged in the well-being of children, youth, families, individuals, and communities. Lutheran Child and Family Services of Illinois seeks to improve the well-being of children, individuals, families, congregations and communities To be a leading provider of social welfare services by responding to changing conditions in innovative ways. Direct Service To demonstrate our response to Gods love for us, and because LCFS of Illinois exists, at risk children, youth, individuals and families served will have their well-being enhanced. Advocacy Stakeholders will be informed, engaged and equipped to promote the mission of LCFS so that families and communities are stronger and healthier.

Strategic Goal Mega Ends Statement

Core Organizational Competencies/ Internal Ops.

Resources & Infrastructure

Finance

Why we exist; What we want to achieve (Mission Statement)

Mission Statement Lutheran Child & Family Services of Illinois seeks to improve the well-being of children, individuals, families, congregations and communities Vision We envision a world in which the power of the Gospel is engaged in the well-being of children, youth, families, individuals, and communities. Strategic Goal To be a leading provider of social welfare services by responding to changing conditions in innovative ways.

What we need to deliver (Destination Statement)

To demonstrate our response to Gods love for us, and because LCFS of Illinois exists, at risk children, youth, individuals and families served will have their well-being enhanced. Stakeholders will be informed, engaged and equipped to promote the mission of LCFS so that families and communities are stronger and healthier. Question for Discussion: How will we know we have reached this destination (in a targeted time period, e.g. 3 years)? What are the key performance indicators (measures) we will use to tell us we are successful in reaching this destination?

Our Core Competencies

Questions for discussion: 1. What are the core competencies needed by LCFS to enhance the well-being of children, youth, individuals and families? 2. What are the core competencies needed to inform, engage and equip stakeholders to strengthen and make families and communities stronger and healthier?

Our Key Resources Questions for discussion: (People, competencies and 1. What are the key resources needed by LCFS to enhance the well-being of children, youth, individuals values; IT Systems; and families? Infrastructure) 2. What are the key resources needed to inform, engage and equip stakeholders to strengthen and make (Innovation; Research; families and communities stronger and healthier? Leadership, Governance and Communication; Relationships)

2. The Scorecard Key Performance Indicators (KPIs) or Key Success Indicators (KSIs)

Gauge how well an organization is performing Provides a "snapshot" of performance Depicts actual performance against key performance indicators

must reflect the organization's goals must reflect the critical success factors of an organization Must be tied to a performance target must be definable must be quantifiable (typically measurable) Must be relatively stable over time Should be agreed to beforehand

there will be three or four Key Performance Indicators for the organization all units within will have three, four, or five KPIs that support the overall company goals and can be "rolled up" into them

Key metrics: Organization Revenue (Actual vs. Budget) Earned Income, Grants, Fundraising, Enterprise Costs (Actual vs. Budget) Admin, Program, Enterprise, Fundraising # of jobs created # of people employed YTD actual costs and revenues vs. budgeted Revenue by product line Gross margin Costs by product line Lbs diverted from landfill by product type

Key metrics: Programs

# of people served (actual vs. planned) # of people that complete pre-employment training program # of interactions with program staff Cost per participant

PerformWell Outcomes and Effective Practices The Outcome Indicators Project The Campbell Collaboration The Cochrane Library Social Work Policy EBP

PerformWell

http://www.performwell.org/

Outcomes and Effective http://www.oepp.org/ Practices The Outcome Indicators http://www.urban.org/center/cnp/proje Project cts/outcomeindicators.cfm The Campbell Collaboration The Cochrane Library Social Work Policy EBP http://www.campbellcollaboration.org/ http://www.thecochranelibrary.com/vie w/0/index.html http://www.socialworkpolicy.org/researc h/evidence-based-practice-2.html

The Process for Designing a Balanced Scorecard

1. Consensus needs to be achieved Generate consensus using a structured process of discussion, debate, negotiation and resolution Follow up with a series of long decision workshops/ working sessions to determine the remaining components of the BSC

Build agreement: on a set of strategic goals on the actions necessary to achieve the goals and the expected results Build a plan: for monitoring and testing implementation of the plan using indicators and targets for monitoring the external environment and testing the management teams assumptions

KPI Development ProcessRepeat and refine as necessary Inventory Define current performance KPIs measurement tools Inventory current performance targets Develop initial thoughts on key profit drivers and desired social outcomes to measure Use small, select groups to develop first-pass KPIs Identify key business and social drivers Define KPIs Identify data needs Define data needs and sources for KPIs Develop plan to close data gap if necessary Develop historical time series for KPIs Produce KPIs and review with management Build into management processes

Set Initial Targets Set aggressive but achievable targets Define acceptable control limits Identify external benchmarks and compare performance to best practices

Decide upon Establish process for data infrastructure to collection for deliver KPIs routine reviewing of routinely (i.e. KPIs dashboard) Review with Incorporate into management to routine practices gain endorsement; and core refine as required management processes

Repeat process for each team/group/business line

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2. Develop and implement a communication program to run parallel to the development work

Sep-11 1. Define work of developing new Strategic Plan 2012 - 2014 2. Review and revise Mission and Strategic Goal statements within SMT circulate New Mission and Strategic Goal to staff and other stakeholders

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

COMMENTS

need to integrate feedback from staff and Board and get final approval

3. Compose Destination Statement Circulate Destination Statement to QLT for reaction and collect feedback 4. Revise Destination Statement in SMT for final revision and acceptance Circulate Final Destination Statement to agency staff and stakeholders 5. Devise Strategy Map Device Activities, Outcomes and Strategic Linkages for organization Circulate Strategy Map to QLT for reaction and feedback Revise Strategy Map 6. Consult Stakeholders on Strategy Map 7. Incorporate Feedback from Stakeholders into Strategy Map SMT revise Strategy Map 8. Circulate revised Strategy Map for one final review, reaction and feedback from QLT and staff 9. Submit Balanced Scorecard to Board of Directors for review, reaction, feedback and approval

need to get several examples of this for staff; this work to be completed by SMT; need to reach consensus about this statement before circulating it to QLT; will likely require several meetings in SMT before ready to circulate to QLT

10. Brief Staff throughout process

need to develop a Communication Plan and strategy for keeping staff and other stakeholders about development, work and products on BSC initiative

Questions Discussion