Measuring for Performance: The Balanced Scorecard

What gets measured gets done.

If you can’t measure it, you can’t manage it.

When performance is measured, performance improves.

“What you measure is what you get. Senior executives understand that their organizations measurement system strongly affects the behavior of managers and employees.” -Kaplan and Norton

“The Balanced Scorecard gives government organizations a tool to plan, communicate and drive new strategies to meet the needs of stakeholders, including constituents and legislators…[while] demonstrating accountability for program and organizational outcomes/results.”

-Gartner-- Balanced Scorecard: Holistic View of Public-Sector Strategy, 2001

Increase Productivity

Increase Efficiency

Improve Customer Service

xxx

xxx

Strategy

Identify metrics

Controllable

Focused

Measurable

Filter metrics to ‘vital few’

Draft scorecards, targets & iterate

IT Platform

TrainingCommunications

Roles and Responsibilities Management Process

Execute plan

Creating a Balanced Scorecard

Confirm or develop strategy

xxx

xxx

xxx

xxx

First Draft Metrics

Mission and

Strategy

- What are our human capital issues and requirements (skill mix, critical skills, morale, motivation, training, development, bench strength, etc.)?- What infrastructure resources are critical to our success (tools, methods, knowledge bases, labs, etc.)?- What organizational capital resources are critical (structure, leadership, culture, values, etc.)?- What actions and initiatives do we take in light of the above?- Who takes them?- How do we measure and manage progress?

- Who are our shareholders or stakeholders?- What do they expect from us?- What are our goals?- What actions and initiatives do we take in light of the above?- Who takes them?- How do we measure and manage progress?

- What processes are critical to our success (efficiency, innovation, learning, etc.)?- What are the critical dependences and relationships among processes?- How must these be structured or organized?- What actions and initiatives do we take in light of the above?- Who takes them?- How do we measure and manage progress?

- Who are our customers?- What do they value?- What do we provide them?- What value propositions do we offer?- What is our brand image?- How do we establish, sustain, and leverage client relationships?- What actions and initiatives do we take in light of the above?- Who takes them?- How do we measure and manage progress?

Balanced Scorecard from 30,000 Feet

Balanced?Balanced?

Balanced? Balanced?

Financial

Internal Business Processes

Learning and

Growth

Customer

Step 1: Confirm or Develop Strategy

Metrics should be…

• KPIs must have strong and clear linkage with organization vision, strategy, and goalsLinked

Controllable

Cascaded

Measurable

Focused

Balanced

Appropriate targets

Buy In

• KPIs must be balanced to include financial and non-financial metrics as well as leading and lagging metrics

• Performance should be assessed on the ‘vital few’, not the ‘trivial many’ KPIs

• KPIs must be owned by those who will be accountable

• Must be measurable with available data that is easily trackable

• Targets must be set appropriately so that they are stretch, but achievable; they should reviewed frequently

• Must cascade up/down so that achievement of lower level KPIs ensures company reaches its corporate goals

• Organizational buy-in is critical and requires that metrics and targets are accepted by each organization

Individual metrics

Set of metrics

Organizational entrenchment

Controllable

Measurable

Mix

Focused

After identifying potential metrics filter down to ‘vital few’

Initial set of metrics(50+ potential metrics)

‘Vital Few’(target <15 metrics per scorecard)

Metric owner influences/controls outcome measured

Input data available, objective and comparable over time

Duplication and “non-priority” metrics removed

Leading and lagging financial and non-financial metrics

Why Scorecard?

Translate strategy into action, making strategy everyone’s job.

Manage the intangible assets e.g., customer satisfaction, innovation, employee capabilities

Measure what matters - the critical few vs. the trivial many – in real time, not just after the fact

Create a daily management system for the day-to-day navigation of the business

To Scorecard Successfully

Reach cross-functional agreement on strategic direction

Translate strategy into “everyday speak”

Understand the cause and effect of linkages between strategy/initiatives/processes

Identify most important measures of success, critical strategic initiatives, and process drivers

Cascade the Scorecard into the organization

What You’ll Get

Alignment and focus of the organization around a common purpose and strategic direction

Improved resource prioritization and allocation

Improved basis for business development and growth planning

An ongoing feedback mechanism to make real-time, mid-course adjustments to priorities

A set of balanced metrics

“Now I understand how I contribute to the business strategy – and the bottom line.”

Why Use Balanced Scorecard?

Metric Status Trend Target Current Previous Measured Definition

Department/Division NamePeriod

Mission Statement

Logo

Metric Category

Metric Category

Metric Category

Footnotes Executive Director Contact Info

State of Utah Scorecard Template

FY 2009 Employee Level

FY 2008 Management Level

FY 2007Department and Division Level

•Scorecards statewide at the department and division level

•Performance management training for Senior Management including cabinet and sub-cabinet directors(~250 people)

•“Department Performance Review Meetings” on a quarterly basis with governor and senior staff

•Scorecards at the sub-division or “manager” level

• Scorecards at the employee level and link to employee performance plans

•Performance management training for sub-division/managers (~4,500 people)

•Performance management training through “CPM” curriculum available for all state employees

State of Utah Three Year Performance Plan: Balanced Scorecard Implementation