Construccion Del BSC - Jun11

8/6/2019 Construccion Del BSC - Jun11

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Balanced Scorecard WorkshopBalanced Scorecard Workshop

Presented by:Matt H. Evans, CPA, CMA, CFM

Public Sector Retreat onMalcolm Baldrige Performance Excellence


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Purpose of the WorkshopPurpose of the Workshop

Introduce the Balanced Scorecard to the

Organization

Make sure everyone understands how thescorecard works

Communicate how the Balanced

Scorecard fits with the Malcolm Baldrige

Model of performance excellence


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Table of ContentsTable of Contents

I. Balanced Scorecard Basics

II. Creating the Strategy Map

III. Good Performance Measurements

IV. The Final Scorecard Components

V. Case Study Exercise

VI. Some Final Points


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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 regionand global outlet offices)

- Designed around the Balanced Scorecard framework

The Balanced Scorecard will be the strategic view of performance for

the agency, balancing out our current tactical view of performance

which is already in place.

A Major Driver is . . .A Major Driver is . . .


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Government Performance Results ActGovernment Performance Results Act

Required to develop long-term Strategic Plans ("SP")

Specify general Goals and Objectives

Develop Annual Performance Plans ("APP") Specify measurable performance goals

Annual Performance Report ("APR")

Demonstrate actual results

APP goals should show the expected progress

toward meeting the long-term goals of the SP


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Public Sector Organizations Public Sector Organizations

More Strategic FocusMore Strategic Focus


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Introduced in 1992, by Robert Kaplan and DavidNorton, the Balanced Scorecard is the mostcommonly used framework for ensuring thatagencies execute their strategies. Today, about 70%of the Fortune 1,000 companies utilize the BalancedScorecard to help manage performance.

Balanced Scorecards are used as the roadmap for creatingthe Strategic Management System or our IRPS. And this

will drive overall organizational performance for our entire

agency!

Where it started . . .Where it started . . .


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Some Basic PrinciplesSome Basic Principles

Quantifies the Agency Strategy in measurable terms

Strategy is summarized on a Strategy Map over four views

of performance (perspectives).

Must capture a cause-effect relationship between strategic

objectives over the four perspectives on the Strategy Map. Critical Components include:

- Measurements

- Targets

- Initiatives

Everything must be linked: Goals to Objectives, Objectives

to Measurements, Measurements to Targets.


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Four Views of PerformanceFour Views of Performance

Strategy can be described as

a series of cause and effect

relationships.

Provides a line of sightfrom strategic to operational

activity

working on the right

things.

If we succeed, how will we look toour stakeholders?

Stakeholders

Strategic Objectives

To satisfy our customers, at whichprocesses must we excel?

Internal Processes

"To execute our processes, how must

our organization learn and improve?"

Learning & Growth

In order to succeed, whatinvestments in people and

infrastructure must we make?

Agency Investments


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Strategy

AgencyAgency

DepartmentDepartment

Team/Individual

Team/Individual

MeasuresObjectives

Complete Framework for IRPS

The Importance of AlignmentThe Importance of Alignment


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Alignment all the Way ThroughAlignment all the Way Through

Improved "Causeand Effect"Knowledge

Innovation

Business

ProcessesImproved EnvironmentalAssessment Reports

ManagementJustified Initiatives toImprove Water Quality

Investments Available tobe Allocated to OtherCritical Areas

EnvironmentalHealth

Improved Water QualityRelationshipManagement

Enhanced PublicConfidence

IncreasedInvestmentAccountability

FinancialManagementDecreased LitigationCosts

Resource

Investment

Goal: Improve environmental health

Initiative: Data Mining

Performance Gap: Less than Organization watershed water quality


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Get down to a set of quantifiable strategic

objectives:

Too vague

More precise

Make sure your objectives have a direct

relationship to your goals and your goals have a

direct relationship to your mission and values.

Before we can map your strategy . . .Before we can map your strategy . . .

Improve Customer Service

Reduce average customer wait times by

30% by year end


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Table Of ContentsTable Of Contents








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InternalProcess

Stakeholder

Le

arning

&Growth

Reduce Re-Activitiesthru ABC/M

Establish Web BasedSelf Services

Knowledge

Management

Human Capital

Improved Returns on

Investments

More rapid and

accessible services

Leadership

Development

Investment s

Strategy Map: Capture a Cause EffectStrategy Map: Capture a Cause Effect

Relationship from the Bottom UpRelationship from the Bottom Up

IT InfrastructureFacilities and

Fixed Assets

EconomicModel Process

Expand Global

Facility Reach


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Two Special TechniquesTwo Special Techniques

for Building Strategy Mapsfor Building Strategy Maps

The 4 to 5Rule

Splitting

thePerspectiv

e

General Rule of Thumb to ensure strategy map isdeveloped both vertically and horizontally

Way of pulling out both drivers and outcomes thatmatch up against the core competencies of thebusiness model

Customer Growth Customer SatisfactionRetention Rate

Timely Delivery Pricing Quality Service Reputation

Customer Perspective

Outcomes

Drivers

Weak Strong


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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 andensuring alignment"

Key Benefits of Strategy MapsKey Benefits of Strategy Maps


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Executive consensus andExecutive consensus and

accountability:accountability:

Building the map eliminates

ambiguity and clarifies

responsibility.

Educate and Communicate:Educate and Communicate:

Build awareness and

understanding of organization

strategy across the

workforce.

Ensure Alignment:Ensure Alignment:

Each sub-unit and individual

link their objectives

to the map.

Source: "Using Balanced Scorecard Technology to Create Strategy-Focused Public Sector Organizations", Robert S. Kaplan,

April 21, 2004, pg. 20

Promote Transparency:Promote Transparency:

Communicate with andeducate constituents, partners,

oversight bodies, and the

general public.

Strategy Maps Strategy Maps

A Better Way to Communicate StrategyA Better Way to Communicate Strategy


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Multiple Choice Question Multiple Choice Question

Cause Effect on Strategy MapCause Effect on Strategy Map

The top perspective of the Balanced Scorecard is the final end

results or outcomes we want to achieve. This perspective is

called:

a. Internal Processesb. Stakeholder / Customer

c. Learning & Growth

d. Agency Investments


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Once you have completed your strategy map, make sure it aligns with agencies or divisions you report up to.This overall alignment of scorecards throughout the entire Organization forms the Strategic Management

System within IRPS.

Best Business

Practices

Expand Global

Reach

Expand the Skill

Base

Lean Processes

Organization

Scorecard

Improve Asian

Footprint

Develop the

WorkforceGOG

Scorecard

Process Efficiency Grow Globally Highly SkilledWorkersAgencyScorecard

Streamline

Processes

Continue to

Expand RangeImprove Employee

Competencies

Outlet

Scorecard

IRPS

Aligning the ScorecardsAligning the Scorecards


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Detailed statement

of what is critical

to successfully

achieving the

strategy

How success in

achieving the

strategy will be

measured and

tracked

Key action

programs

required to

achieve

objectives

The level of

performance

or rate of

improvement

needed

Objective

DescriptionTarget

2 per setup per

month each

Outlet Office

InitiativeMeasure

Number of Reworks

Strategy Map

Stakeholder

InternalProcess

L&G

Faster Service Access

Self Service

Applications

Web Enable

Technologies

Process and Value

Map Analysis

Lean Processes

Investments

Invest in IT

Extend the Map into Measurements,Extend the Map into Measurements,

Targets and InitiativesTargets and Initiatives

Lean / Six

SigmaEliminate waste,

reworks, and other

errors in our

processes


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Make sure the components of your scorecard fit together. We want to create a

tight model for driving execution of your strategy.

Goal Objective Measurement Target Initiative

Achieve Agencyoperationalefficiencies withbest practices inthe privatesector

Reduce OperationalService Costs by50% over the next 5years

Cost per OutletOffice, Cost perRegion, Cost perFTE

5% - Year 1

10% - Year 2

15% - Year 3

Activity BasedCosting /Management

Reduce identified re-activities withinprimary processesby 80% over thenext 3 years

Waste VolumeCharts, ReworkTracking, CycleTime End to End inS-LX (5 of 7Regions)

Waste streamreductions of 5%each year,Reworks cut in halffor next 3 years,cycle time cut by75%

Lean / Six Sigma

Alignment of Scorecard ComponentsAlignment of Scorecard Components


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Create a Tight ModelCreate a Tight Model

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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and the answer is . . .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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Performance Measurement is a process by which anagency / program / function / outlet office objectively

assesses and evaluates the extent to which it is

accomplishing a specific objective, goal, or mission.

Performance measurement alone is incomplete.

Performance Management is a systemic link between

company strategy, Investments, and processes.

Performance Management is a comprehensive

management process.

The Context of MeasurementThe Context of Measurement


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Enables decision making

Manage by results

Promote accountability

Distinguish between program success and failure

Allow for organizational learning and improvement Justify budget requests

Optimize Investments

Provide means of performance comparison

Fulfill mandates

Establish catalysts for change

And so on

Why Measure Performance?Why Measure Performance?


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Leading

Definition

Lagging

Input

Output

Outcome

Objective /Quantitative

Example

Intermediate outcomes thatpredicts or drive bottom-line

performance results

Measure Type

Bottom-line performanceresults resulting from actions

takenAmount of Investments, assets,equipment, labor hours, or

budget dollars usedUnits of a product or service

rendered - a measure of yield

Resulting effect (benefit) of

the use or application of anoutput

Empirical indicators ofperformance

Subjective /Qualitative

Perceptions and evaluationsof major customers and

stakeholders

Employee turnover rate

Employee satisfaction rating

Number of Value Meal ordersfulfilled

Customer satisfaction rating

Wait time

Customer complaintsreceived as a % of total

customers served

Number of cashiers

Types of MeasurementsTypes of Measurements


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Stakeholder /Stakeholder /CustomerCustomer

InternalInternalProcessesProcesses

Learning andLearning and

GrowthGrowthInvestmentInvestment

ss % of facility assets fully funded forupgrading

% of IT infrastructure investments

approved

# of new hire positions authorized for filling

% of required contracts awarded and in

place

Percentage employee absenteeism

Hours of absenteeism

Job posting response rate

Personnel turnover rate

Ratio of acceptances to offers

Time to fill vacancy

Number of unscheduled maintenance calls

Production time lost because of maintenance

problems

Percentage of equipment maintained on

schedule

Average number of monthly unscheduledoutages

Mean time between failures

Current customer satisfaction level

Improvement in customer satisfaction

Customer retention rate

Frequency of customer contact by

customer service

Average time to resolve a customer inquiry Number of customer complaints

Examples of Measurements by PerspectiveExamples of Measurements by Perspective


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Appropriate MeasurementAppropriate Measurement

The measurement, % of employees following a supervisorapproved competency model, would most likely be placedin which perspective of the Balanced Scorecard?

a. Stakeholder / Customer

b. Learning and Growth

c. Agency Investments

d. Internal Processes


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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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You should have at least one measurement foreach objective.

Measurements define or explain objectives inquantifiable terms:

Vague => We will improve customerservice

Precise => We will improvecustomer service by reducing

response times by 30% by year end. Measurements should drive change and

encourage the right behavior.

Should be able to influence the outcome.

Some Basic Guidelines forSome Basic Guidelines for

Good Performance MeasuresGood Performance Measures


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1. Relevant Addresses an operational or strategic performance issue Is results- or outcome-focused Provides useful information to enable decision making

2. Measurable Quantifiable and Objective Facilitates Analysis Can be done in a timely manner with high accuracy Data are available and collectable

3. Actionable Can be tracked to an appropriate person or team responsible for the

activity measured Measure relates to process inputs that can be controlled/adjusted

to address concerns

Three Criteria Used for Agency ScorecardThree Criteria Used for Agency Scorecard


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Measurement Relevant Measurable Actionable

% of Global Outlets that follow the endto end process defined in IRPS

3 1 2

Number of score studies completed 3 2 3% of Region Centers using ABC Modelsto manage 65% of their allocation costs

3 2 3

% of eligible employees who are

participating in the Competency ModelDevelopment Program

3 2 2

% of map points loaded and operationalin GPS Tracking

3 2 2

A 0 or 1 in any column indicates that you need to revisit this measurement

before implementation.

0 = Does not apply 1 = Poor 2 = Acceptable 3 = Good

Scoring Measurements AgainstScoring Measurements Against

the Three Selection Criteriathe Three Selection Criteria

M lti l Ch i Q tiM lti l Ch i Q ti


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Match the Objective to the MetricMatch the Objective to the Metric

Assume the Agency Plan has an objective: Improvethe productivity of docking services at all stations.Which of the following measurements would bemost appropriate for this objective?

a. Number of reruns required to complete thedocking service

b. % of vendor contracts executed in 90 days

c. Number of people completing the off-shorewarranty training program

d. % of supervisors who submitted budgetaction plans within 60 days of close-outs

M lti l Ch i Q tiM lti l Ch i Q ti


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a If we measure re-runs, this probably willgive us some benchmark by which we

can measure docking station efficiency

and productivity.


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A Closer Look at How Things LinkA Closer Look at How Things Link

Mission:

Protect people and property

Strategic Goal #1:

Reduce damage caused by motor vehicle accidents

Annual performance goal 1A:

Reduce deaths per crashes to 1.10 per100m miles traveled by 2005

Measure: Fatality rate per 100m miles traveled

Transportation Safety Example


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The Measurement PyramidThe Measurement Pyramid

Goal

OutcomePerformance

Measures

Program

Program Performance Measures

Program Components

Program Component Performance Measures

Activities

Activity Performance Measures

Strategic/GPRA Goals

End-Outcomes

Longer-Term Intermediate

Outcomes

Shorter-Term

IntermediateOutcomes

& Outputs

Outputs

& Inputs

S T l f D t i iS T l f D t i i


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Some Tools for DeterminingSome Tools for Determining

What to MeasureWhat to Measure

InputsProcess/System Output

IntermediateOutcomes

EndOutcome

Program Logic Model

Desired

Outcome

Causal Analysis

Process Flow

ResultsOf

Testing

Not AcceptableAcceptable

Prototype

Product

Back to

LaboratoryTo Market


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1. Outputs/Product2. Program Inputs

3. Financial Indicators

4. Work/Activities

5. Timeliness of Services

6. Internal Measures of Quality

7. Operating Ratios

8. Outcomes of Products or Services

9. External Customer Service

10. Equity of Services to Users

Source: GAO-GGD-92-65 Agency Use of Performance Measures

Top Ten Metrics in the Public SectorTop Ten Metrics in the Public Sector


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Past performance trends per historical data. Performance levels of similar organizational units

at a comparable level that facilitatesbenchmarking.

Best practices across the agency, the public

sector or the private sector. Must be at a pre-existing high level of performance before you usethis approach.

For newly launched services, may have to

establish a baseline per a prototype test andextend out from this point forward.

For major strategic shifts, may have to setdirectly per the plan itself without regard for harddata.

How to Set TargetsHow to Set Targets


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Targets match up with measurements, one to one. Targets require improving current levels of

performance. Targets are a stretch, but achievable: they may

require improvements to existing processes. Targets are quantifiable so that the target

communicates if the expected performance wasmet.

Long-term targets are established before short-

term targets. Financial/Budget related targets are established

before non-financial targets.

Checklist for Setting TargetsChecklist for Setting Targets


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Average Turnaround Times atDocking Sites

8 days FY05 7.5 daysFY06

6.8 daysFY07

Utilization Rate for Self ServeWeb Portal

10% FY05 18% FY06 25% FY07

Rotation Internship

Participation Rates

1,800 FY05 2,500 FY06 3,900 FY07

Glider integration mapping toolused for geo-sets

Establishbaseline

8 per sets 10 per sets

% of agency SES Levels

following IRPS from end to endfor the entire year

30% FY05 40% FY05 65% FY05

% funding through SEPCO forspace mapping

30% FY05 35% FY06 45% FY07

Examples of TargetsExamples of Targets


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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

Characteristics of InitiativesCharacteristics of Initiatives


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When you first launch your Initiative, you probably want to use an Output Measurement.

Once the Initiative is up and running, change your measurement to an Outcome to see ifthe Initiative is really having strategic impact.

Initiative OutputMeasurement

Outcome Measurement

Lean Process / SixSigma

Number of Projects Definedby Region

Overall reductions in errors,reworks, and cycle times

Activity Based Costing /Management (ABC/M)

% of Service Center Outletswith ABC Models in placefor Allocation Costs

Reductions in identified re-activities per process study

Employee CompetencyModels

% of Employees who havea Competency Model inplace

Higher skill levels of employeesusing the models

Going from Output to OutcomeGoing from Output to Outcome


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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

Strategic ThemesStrategic Themes

Multiple Choice QuestionMultiple Choice Question


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Sequence Of StepsSequence Of Steps

The basic steps for creating a Balanced Scorecard include:A = Align your strategy map to other organizational units

B = Create your strategic plan including goals and objectives

C = Extend your strategy map into measurements and targets

D = Map your strategy over four perspectives

The sequence or order of these steps is (left to right):

Step 1 Step 2 Step 3 Step 4

a. A C B D

b. C A D B

c. B D A C

d. C B A D



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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 mapStep 4 or C Extend the strategy map into

measurements and targets


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Case Study InstructionsCase Study Instructions

The following handout is an example strategic plan forthe Western Agency Region Office (WARO).

Your team has been assigned the responsibility ofmapping the WARO Plan into a single strategy map.

Each team will be assigned to a breakout room useusepost it notes on the large white template sheetspost it notes on the large white template sheets

Try to limit your objective boxes on the strategy map tono more than 20 per our 4 to 5 Rule.

If you have time, you might want to consider arranging

or grouping certain objectives together around themes. Each team will provide a 10-minute brief.

You have 90 minutes to complete the case studyexercise.

TAB E OF CONTENTS


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TABLE OF CONTENTSTABLE OF CONTENTS







Making the connection to theMaking the connection to the


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Making the connection to theMaking the connection to the

Baldrige CriteriaBaldrige Criteria

Malcolm BaldrigeMalcolm Baldrige Balanced ScorecardBalanced Scorecard

LeadershipLeadership Learning & Growth PerspectiveLearning & Growth Perspective

Human Resource CapitalHuman Resource Capital

Business ResultsBusiness Results

Process ManagementProcess Management

Strategic PlanningStrategic Planning Strategy MapStrategy Map

Learning & Growth PerspectiveLearning & Growth Perspective

Internal Process PerspectiveInternal Process Perspective

Customer FocusCustomer Focus Stakeholder / CustomerPerspective

Stakeholder / CustomerPerspective

Measurements and TargetsMeasurements and Targets


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IRPS is the Organizations Strategic Management System

for creating the Strategically Focused Organization (SFO).

The Strategic Management System Module within IRPS:

Cascades scorecards down by folders

Includes a web based training component

Analytical tools include unit trends, service costingcomparisons, strategy map gap analysis, alignment pointscoring, and executive dashboard views sent to PDAs.

IRPS Scorecard Module has the following features:

- Project / Initiative Tracking with milestones- Automated Email Data Collection

- Automated Report Distribution

- Linking Capability to Agency Databases (such as SES,

G-PAC, and Shared Service Docking Databases)

Automated System Overview - IRPSAutomated System Overview - IRPS


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Cascade and align strategy down to the Outlet level (andbeyond personal scorecards) where execution takes place.

Capture cause effect linkages as you cascade and align down.

This will ensure that all of the Agency is moving in the same

strategic direction.

Identify and commit to projects and initiatives that will drivestrategic execution.

Establish performance outcomes in the form of measurements

and targets.

Review results on a regular basis within the Quarterly

Leadership Briefings using the Balanced Scorecard framework.

Highlight Important StepsHighlight Important Steps


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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) Posted on the internet at: www.exinfm.com/workshop.html

Additional InformationAdditional Information

Contact Information: Matt Evans, [email protected],877-689-4097

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