You are on page 1of 13

Management Case Study

Building a Strategy Map to Drive


Performance Accountability and
Improvement: The Case of Audit Scotland

For more information please visit: www.ap-institute.com


Building a Strategy Map to Drive External and Internal Performance Accountability and Improvement API Case Study

Building a Strategy Map to Drive Performance Accountability and


Improvement: The Case of Audit Scotland

By
Bernard Marr* and James Creelman

Abstract: This case study describes the best-in-class implementation of a


performance management framework in form of a strategy map with supporting Key
Performance Questions and Key Performance Indicators. It shows how Audit
Scotland, the nation‟s independent auditor of public bodies, was able to distill the
long stakeholder wish-list down to a simple and focused strategy map. Outlining the
strategic priorities on just one page using simple language has completely
transformed the way Audit Scotland is managing its performance to ensure external
accountability and internal performance improvements.

Version: 18th May 2010 * corresponding author

Bernard Marr is the Chief Executive and Director of Research at the Advanced Performance Institute. E-mail:
bernard.marr@ap-institute.com
James Creelman is a Fellow of the Advanced Performance Institute

The Advanced Performance Institute (API) is a world-leading independent research and advisory
organisation specialising in organisational performance. It provides expert knowledge, research, consulting
and training to performance orientated companies, governments and not-for-profit organisations across the
globe. For more reading material or information on how the API might be able to help your organisation please
visit: www.ap-institute.com

How to reference this case study:


Marr, B. and Creelman, J. (2009) Building a Strategy Map to Drive Performance Accountability and
Improvement: The Case of Audit Scotland, Management Case Study, The Advanced Performance Institute
(www.ap-institute.com).

© 2010 Advanced Performance Institute, BWMC Ltd. (All rights reserved) www.ap-institute.com Page 2
Building a Strategy Map to Drive External and Internal Performance Accountability and Improvement API Case Study

Building a Strategy Map to Drive Performance Accountability and


Improvement: The Case of Audit Scotland

properly, efficiently and effectively. With about 300


Introduction
full-time equivalent employees and an operating
Having amassed a wealth of useful data and budget of £27.5 million, the organization arranges
information regarding stakeholder priorities over the the audits of about 200 public bodies, such as the
years, Audit Scotland faced the not uncommon Scottish Government, 32 councils and 44 joint
challenge of distilling this down into something that boards and committees (including police and fire,
was focused and manageable. health boards and rescue services). Importantly,
Audit Scotland is independent of the bodies that it
To achieve this, Audit Scotland crafted a strategy audits.
map that comprises just two core activities and nine
supporting performance enablers. Each of these, Three types of audit
which are collectively aligned to the organization‟s
Audit Scotland conducts three types of audits:
vision, is supported by Key Performance Questions
(KPQs) and Key Performance Indicators (KPIs) –
1. An annual audit provides an independent
which together provide rich insights into how the
opinion of the public bodies‟ financial
organization is progressing toward its strategic
arrangements and governance practices.
goals.

2. Best value audits provide an independent


The strategy map is designed to help Audit Scotland
opinion of an organization‟s outcomes focus as
make step-change improvements in performance
well as the effectiveness of its corporate
and to provide a more streamlined and focused
performance management and use of
corporate plan.
resources.

An Impact framework is also being used to assess


3. Performance audits provide an independent
and report the longer term benefits of Audit
assessment of key areas of parliamentary or
Scotland‟s work, which will serve to provide a more
public interest, often spanning traditional sector
complete view of the organization‟s performance.
boundaries. Performance audit reports include
“Scotland Public Finances,” „The role of Boards,‟
About Audit Scotland
„Efficient Justice‟ and „Public Sector Pension
Headquartered in Edinburgh, Audit Scotland was Schemes‟.
created in 2000 to provide the Auditor General and
the Accounts Commission with the services that Together, these three audit types provide a detailed
they need to check that public money is spent and systematic evaluation of the efficiency and

© 2010 Advanced Performance Institute, BWMC Ltd. (All rights reserved) www.ap-institute.com Page 3
Building a Strategy Map to Drive External and Internal Performance Accountability and Improvement API Case Study

effectiveness of how the nation‟s public information that was generated from surveys,
organizations work and are being managed. discussions and other formats, the more challenging
it became to identify and focus on the critical few
Identifying Stakeholder Requirements things that will really make a difference to our
As well as helping to improve how others work, performance,” comments McGiffen. “We knew we
Audit Scotland is firmly committed to continuously had very good information, but we were having
improving its own performance. As part of this difficulty in distilling it into something that was
ongoing process, during 2008 the organization focused and manageable.”
conducted consultation with a broad range of
stakeholders, including staff, partners and clients, in A Powerful Corporate Vision
order to better understand how to meet their needs To support this distillation, Audit Scotland engaged
going forward. “We knew that the business and the services of the Advanced Performance Institute
operating environment of our stakeholders was (API). During the winter of 2008, API worked with
rapidly changing,” says Diane McGiffen, director of Audit Scotland to create a corporate strategy map
corporate service. “And we wanted to ensure that (shown on Figure 1) which identified the key
we captured these changing circumstances in our strategic objectives and supporting activities that
corporate plan for 2009-2012.” would be required to deliver to the following vision:
“On behalf of the Auditor General and the Accounts
Using an external research company Audit Scotland Commission, we will provide assurance to the
generated substantial quantitative and qualitative people of Scotland that their money is spent
information as to how its various stakeholder groups appropriately and we will help public sector
thought it was performing and what they thought its organizations in Scotland to improve and perform
priorities should be over the following five years. better.”
“We also extended this exercise to our staff which
gave excellent additional insights into how we This vision speaks directly to the efficiency (value
should develop and improve,” says McGiffen, for money) and effectiveness (performance
whose wide ranging remit includes being in charge improvement) strands of Audit Scotland‟s
of business planning and performance reporting and responsibilities. As with any useful vision, this
heading up human resources and training, became the anchor of the subsequent internal
information technology, finance, administration and discussions that focused on crafting the strategy
communications. map. However, it should be noted that in the
process of creating the strategy map the vision was
The data challenge slightly amended and updated. “This was a useful
Although such widespread consultation provided a outcome of the workshops conducted to create the
wealth of valuable data, Audit Scotland found itself map,” says McGiffen. “The vision we have now
in a position that is common across both public and captures the essence of the priorities that our
commercial organizations. “The more data and stakeholders and clients have identified for the next
five years.”

© 2010 Advanced Performance Institute, BWMC Ltd. (All rights reserved) www.ap-institute.com Page 4
Building a Strategy Map to Drive External and Internal Performance Accountability and Improvement API Case Study

Figure 1: Audit Scotland‟s Corporate Strategy Map (source: Audit Scotland Corporate Plan 2009-12)

Stakeholder priorities • Improve the transparency of our costs and


The priorities identified by the stakeholders groups, governance arrangements.
which have therefore become the key priorities of
Audit Scotland, are: The priorities are based on the following issues that
stakeholders are grappling with, that emerged
• Deliver more streamlined audits in partnership through the consultation process:
with other scrutiny bodies.
• Maximize our contribution to the improvement of • increasing pressure on public spending
public services. • Increasing emphasis on more efficient working
• Increase the impact of our work.
• Become a centre of excellence for public audit.

© 2010 Advanced Performance Institute, BWMC Ltd. (All rights reserved) www.ap-institute.com Page 5
Building a Strategy Map to Drive External and Internal Performance Accountability and Improvement API Case Study

• The continuing need for high standards of organization in unison toward step change
corporate governance, financial management performance improvement.
and control
• The need to deliver more efficient and effective In-house consultation
scrutiny and accountability. Wide-ranging staff engagement was seen as crucial
for securing buy-in to the strategy map concept.
Creating the Corporate Strategy Map “Through focus groups and discussions with small
The first step in creating the strategy map that groups of staff we gained feedback on what they
would deliver to the vision and stakeholder priorities thought of the map, what they thought were its
involved API conducting focused and individual strengths and weaknesses and where they saw
interviews with each member of the executive areas for improvement,” recalls McGiffen. “This
management team and the assistant directors as showed us how closely the management team‟s
well as the organization‟s chair John Baillie and views were aligned with those of their colleagues
another board member. and the staff feedback was used to inform the final
map.”
A core benefit of one-to-one interviews is that it
enabled the external facilitator to gain a clear According to McGiffen, the clarity and simplicity of
picture as to how individual senior managers viewed the map helped most staff to understand and talk
the drivers of organizational strategic success. Any about what it means to them “Within the group
differences were debated within the workshops discussions it became evident that colleagues could
conducted to create the strategy map, with the see how it all fits together, what Audit Scotland is
ultimate goal of reaching consensual agreement as trying to achieve, how it will be achieved and what
to the critical few drivers of success. they must do in their own jobs to make it happen.”
This, she adds, was largely due to the map‟s
Strategy mapping workshops simplicity and accessibility.
Audit Scotland‟s management group created a draft
strategy map in two dedicated workshops. A key Ensuring the map is simple and focused
role of the external facilitator was to ensure the As an illustration of simplicity, the map comprises
selection of truly strategic objectives, rather than just eleven elements: two core activities (which
goals that are essentially operational. Audit Scotland calls objectives) and nine
performance enablers (which Audit Scotland calls
A further role was to facilitate the creation of cross- supporting activities). A prime driver of formulating
organizational objectives instead of ones that could the strategy map was to distil and make
be siloed – that are of relevance and interest to just manageable a mass of data and information, Audit
one part of the organization. Audit Scotland‟s Scotland rightly realized that there would be little
management team wanted to ensure that the benefit in creating an elaborate and complex map.
strategy map would galvanize the whole of the Indeed the experience of other companies shows

© 2010 Advanced Performance Institute, BWMC Ltd. (All rights reserved) www.ap-institute.com Page 6
Building a Strategy Map to Drive External and Internal Performance Accountability and Improvement API Case Study

that complicated maps do not provide sufficient “People in most organizations, and we are no
focus onto the key drivers of success and rarely exception, have quite rightly developed strong
survive over the longer term due to being too disciplines in KPIs as a way to monitor and improve
unwieldy and unmanageable – a fate Audit Scotland performance,” says McGiffen. “KPQs do not replace
was determined to avoid. KPIs but are an enhancement. KPQs help us to
capture a much richer set of information than cannot
Although simple, the map is far from simplistic. be gained solely from performance data.”
Rather, each objective and supporting activity
serves as a doorway to a host of performance Today, KPQs are used to discuss performance at
management and measurement focal points – many organizational levels within Audit Scotland
primarily captured through Key Performance and Audit Scotland is refining and developing its
Questions (KPQs) and Key Performance Indicators collection and reporting of data to address the
(KPIs) - that work together to provide an overall KPQs. A key initiative was a Performance
picture of how well Audit Scotland is performing Management Festival held over two days to bring
and, ultimately, to steer the organization toward the focus and attention from across the business to the
delivery of its vision and priorities (For more performance reports.
information on KPQs and KPIs see the API white
paper „What are KPQs‟ and the API management We will now explore how the objectives/activities on
overview „Key Performance Indicators‟1). the map, KPQs and KPIs work together with Audit
Scotland‟s strategy management framework.
Although KPIs are commonly used within
organizations, KPQs are substantially less so. So Two strategic objectives
as an explanation, a KPQ focuses on and highlights As cited, Audit Scotland‟s strategy map includes just
what the organization needs to know in terms of two core activities (called objectives in their case),
executing existing strategic objectives. KPQs these being: “we will conduct excellent risk based
enable a full and focused discussion on how well audits of the public sector and report them in
the organization is delivering to these objectives public,” and “we will systematically identify and
and serve as an important bridge between promote good practice to help public bodies to
organizational goals and KPIs. Indeed KPQs are improve.”
used to provide a performance context to KPIs and
help to more effectively prioritize the indicators Although both objectives are equally important, a
chosen, and this was certainly true of Audit key message that emerged from the extensive
Scotland. stakeholder consultation was that they were looking
to Audit Scotland to do more to help them to
improve performance. The KPQs to support the
1
http://www.ap-institute.com/resources.htm „improve‟ objective (and note that KPQs and indeed
KPIs are still work in progress within Audit Scotland,
while they test which are the most powerful

© 2010 Advanced Performance Institute, BWMC Ltd. (All rights reserved) www.ap-institute.com Page 7
Building a Strategy Map to Drive External and Internal Performance Accountability and Improvement API Case Study

questions and indicators to focus on) presently effectively identify appropriate topics for its audit
include: „to what extent has our work led to work. Closely engaging and partnering with other
improvement‟ and „to what extent are we identifying scrutiny bodies and improvement agencies also
and actively promoting good practice (or better helps to avoid duplication of effort and maximizes
ways of doing things) to help public bodies improve. Audit Scotland‟s contribution to the improvement of
Note that the KPQs focus on both „lagging‟ (that is public services.
how we have performed) and „leading‟ (how we will
improve performance) dimensions, enabling a fuller To support the improvement objective it is also
overview of past, present and likely future recognized that it must clearly communicate its
performance. findings and recommendations to ensure that its
messages are heard and its recommendations are
KPIs for these KPQs include „impact reports‟ (see followed up.
later in this case study for details of Audit Scotland‟s
impact framework); „client feedback‟; „number of KPQs used for this activity are „to what extent are
presentation at meetings, events and conferences we keeping our stakeholders informed about our
which include best practice guidance,‟ and programmes of work and their role/implications‟ and
„performance audit reports with good practice „how well do we engage the people we work with.‟
recommendations‟ (see Figure 2 for examples). KPIs include „positive stakeholder feedback‟
(engagement levels, clarity about and acceptance of
Supporting Activities roles), „website statistics (downloads, click
How Audit Scotland achieves its objectives is throughs) and the „number of shared risk
largely through the delivery of enabling objectives assessment frameworks in place.‟
(called supporting activities in their case). In
creating the map, the senior team strived to ensure Internal process improvement
that there was a balance of focus on what matters Step-change internal business process
to stakeholders, what matters to staff and improving improvements are largely captured by the
some of the key business support processes to supporting activity: „We will deliver our work and
support that work. manage our resources efficiently and effectively and
will be clear where we need to improve. We will
Stakeholder-facing performance improvement have excellent governance procedures and will
For a stakeholder-facing improvement, consider the monitor and report on the impact of our work.‟
activity: „We will closely engage and communicate
with our key stakeholders, clients and partners, and This activity sets out to ensure that Audit Scotland
other scrutiny bodies.‟ has strong internal governance processes in place
and that it is deploying best practice public
Audit Scotland recognizes that it is only through management principles and procedures. To this
close engagement and communication that it can end, Audit Scotland carries out a programme of

© 2010 Advanced Performance Institute, BWMC Ltd. (All rights reserved) www.ap-institute.com Page 8
Building a Strategy Map to Drive External and Internal Performance Accountability and Improvement API Case Study

internal best value reviews to improve its efficiency „percentage of invoices paid within 30 days and
and effectiveness and manage its risks. „internal best value reports published.‟

The KPQs for this activity include „to what extent Staff performance improvement
have we effectively and efficiently managed our Moving onto improving staff performance this is
resources to deliver our outputs‟ and „how effective captured by several supporting activities, including
are our internal governance arrangements for „We will maintain and develop our professional skills
delivering our objectives.‟ KPIs include: „percentage and competencies‟.
of audit reports delivered on-time and to budget,‟
„reducing our carbon footprint by one per cent,‟ As with any high-performing organization, Audit

Figure 2: Sample KPIs and Evidence of Performance (source: Audit Scotland Corporate Plan 2009-12)

© 2010 Advanced Performance Institute, BWMC Ltd. (All rights reserved) www.ap-institute.com Page 9
Building a Strategy Map to Drive External and Internal Performance Accountability and Improvement API Case Study

Scotland recognizes that it can only deliver high- sharing our key findings internally‟, and „to what
quality work if its staff have the right skills and extent are we able to find and share the information
competencies to do their job well. To achieve this, that we find‟. KPIs include „focus group feedback‟,
the organization strives to embrace an ethos of „intelligence reports‟, „publication of technical
continuous improvement and continues to invest in bulletins‟, „number of briefing reports produced and
the development its people. The organization has shared internally‟.
recently revised its competency framework and has
embedded this into its Performance Development Creating Strategy Maps for Specific Activities
System. Regular individual performance reviews are Audit Scotland is presently reviewing and
used to assess and follow-up on training and developing how it gathers, organizes and shares
development needs. knowledge and intelligence. This is leading to some
interesting applications of the strategy map concept,
The KPQs for this activity include „to what extent are as McGiffen explains. “Our strategy map identifies
our employees engaged and motivated‟ and „to the key support activities where we need to focus
what extent do we have strong and effective attention and commit resources,” she says. “What
leadership in the organization‟. KPIs include „staff we are doing now is creating strategy maps for
survey results,‟ „staff focus group feedback‟ and the specific areas where we want to prioritize major
development of „360 degree feedback (through performance improvements, such as information
which employees are appraised by a range of and knowledge management and shared learning.”
people, including their managers, colleagues and She continues: “Our stakeholders are increasingly
direct reports)‟. looking to Audit Scotland to share knowledge and
information quickly from the full range of our work
Knowledge management and advanced knowledge sharing and collaborative
A particularly interesting supporting activity, in that it capabilities. However, our technologies and
clearly demonstrates how Audit Scotland is working methodologies don‟t enable us to do what we need
to improve its own internal capabilities in order to to do to meet stakeholder requirements. We have
help its stakeholders improve is „We will gather, started to invest in this area and a strategy map
organize and share knowledge and intelligence.‟ should prove a powerful mechanism for prioritizing
our investments against identified stakeholder
The organization recognizes that the basis of its needs.” Environmental performance is another area
work is having the right knowledge and intelligence. for which a dedicated strategy map will be created.
Therefore it is working diligently to ensure that the
right information is systematically gathered, that it is Performance Reporting
organized in the most appropriate way, and shared With the strategy map now the core tool for driving
among staff and externally with stakeholders. performance improvement, Audit Scotland ensures
that it is closely managed on a day-to-day basis,
KPQs for this activity are „to what extent do we hold and this is the responsibility of McGiffen and a small
the information that we need‟ ' to what extent are we

© 2010 Advanced Performance Institute, BWMC Ltd. (All rights reserved) www.ap-institute.com Page 10
Building a Strategy Map to Drive External and Internal Performance Accountability and Improvement API Case Study

team from corporate reporting that is skilled in data then „trialed‟ and improved during a staged mock
analysis. The team reports performance to the performance review meeting with the directors.
management team and board on a quarterly basis,
who particularly look to see how objectives and Impact Framework
activities are improving and to focus on areas that Performance improvement is also being galvanized
are proving challenging and where corrective action through the deployment of an impact framework to
might be required. assess and report on the longer term impact of
Audit Scotland‟s work - in particular its performance
From a reporting standpoint, the strategy map and audits - and to capture evidence of that impact. The
related KPIs have also enabled McGiffen and her organization has identified four areas where it
team to cut the corporate plan down from a lengthy expects its work to have an impact and contribute to
document to something concise and focused and improvements:
that is more accessible to external stakeholders and
internal staff respectively. • Assurance and accountability
• Planning and management
Performance Management Festival • Economy and efficiency

One innovative approach to engage people in • Effectiveness and quality.

performance reporting was to stage a „Performance


Management Festival‟. In late 2009 Audit Scotland The impact framework describes the types of

invited key staff for a two-day festival of measurable change expected to result from Audit

performance. The aim was to bring together KPI Scotland‟s work within the different categories of

owners, performance analysts, and directors and impact and includes examples of how individual

board members to agree performance reporting reports may contribute to these changes.

formats. Using an off-site location with music, guest


speakers and performances this innovative event, The impact framework is expected to dovetail well

facilitated by the API, was designed to make the with the strategy map in providing a complete view

topic of measurement and performance reporting of how Audit Scotland is performing now and is

interesting, engaging and fun. likely to perform in the future.

During the two-day event staff re-designed Conclusion

performance reports using the latest techniques of In conclusion, McGiffen summarizes the role that
information communication and data visualization. the strategy map has played in improving the
Within these reports, headlines and narratives performance of Audit Scotland. “From the beginning
(essentially a performance story) were used to we knew that we wanted our Corporate Plan to be
capture the key messages, using ideas and simpler and more relevant and meaningful for
graphic/textual formatting from magazines and colleagues.” she says, “From an external
newspapers. These new performance reports were
perspective we also knew that as an organization

© 2010 Advanced Performance Institute, BWMC Ltd. (All rights reserved) www.ap-institute.com Page 11
Building a Strategy Map to Drive External and Internal Performance Accountability and Improvement API Case Study

we wanted a framework that would help our demonstrate to stakeholders and clients that we are
stakeholders understand what we do and what we doing what we promised that we would do.”
have to be best at.”

“The strategy map is helping us to meet our external www.ap-institute.com


For more case studies, reports and
and internal goals,” she continues. “But in the final articles visit www.ap-institute.com
analysis, it is perhaps most important that the map
has better positioned Audit Scotland to be able to

“Working with the Advanced Performance Institute to develop a performance framework in form of a
strategic map, KPQs and KPIs has exceeded my expectations. It has helped us clarify our strategic
objectives quickly and easily in a way we couldn‟t have done on our own. The strategy map has
completely transformed the way we now communicate about our goals and deliver our strategy and it
has been an extremely powerful tool to engage everybody in managing and delivering performance.”

Diane McGiffen, Director of Corporate Services, Audit Scotland


committed to investing in the future of itself and the country by building on the best
management techniques they can find. Their programme is as good as anything we
have seen.”

Endnotes, References & Further Reading


Dr David Norton – Co-creator of the Balanced Scorecard

Marr, Bernard (2010), “The Intelligent Company: Five Steps to Success with Evidence-Based
Management”, Wiley, Oxford.

Marr, Bernard (2009), Managing and Delivering Performance: How Government, Public Sector
and Not-for-profit Organizations can Measure and Manage what Really Matters, Butterworth-
Heinemann, Oxford.

Marr, Bernard (2006), “Strategic Performance Management”, Butterworth-Heinemann, Oxford

© 2010 Advanced Performance Institute, BWMC Ltd. (All rights reserved) www.ap-institute.com Page 12
Building a Strategy Map to Drive External and Internal Performance Accountability and Improvement API Case Study

Highlights from the API resources library:


Our Resource and Research Library offers a selection of relevant downloads and links to books, articles and
case studies. These have been selected as useful information sources for further reading and to illustrate best
practice and leading thinking.

Some key ideas explained in simple terms:

 What is Performance Management?


 What is the Balanced Scorecard?
 What is a Key Performance Indicator?

To read more just click: http://www.ap-institute.com/resources.htm

© 2010 Advanced Performance Institute, BWMC Ltd. (All rights reserved) www.ap-institute.com Page 13