Balanced Scorecard Workshop

Presented by:
Matt H. Evans, CPA, CMA, CFM
Public Sector Retreat on
Malcolm Baldrige Performance
Excellence
1

Purpose of the Workshop

Introduce the Balanced Scorecard to the

Organization
Make sure everyone understands how the
scorecard works
Communicate how the Balanced
Scorecard fits with the Malcolm Baldrige
Model of performance excellence

Table 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

Why the Balanced Scorecard?

The Organization will become more strategically focused
over the next ten years given the recent policy directive
issued by BSP (Budget & Strategic Planning).
People at all levels have relied heavily on tactical
performance measurements, such as number of maps
submitted, number of land structures in flow, and % of supply
vendor contracts in place.
Need more balanced approach to looking at performance,
both tactical and strategic.
Only 5% of a workforce tends to understand their companys
strategy.
86% of executive teams spend less than one hour per month
discussing strategy.
4

A Major Driver is . . .
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
region and 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.

Government 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
6

Public Sector Organizations

More Strategic Focus

Where it started . . .
Introduced in 1992, by Robert Kaplan and David
Norton, the Balanced Scorecard is the most
commonly used framework for ensuring that
agencies execute their strategies. Today, about 70%
of the Fortune 1,000 companies utilize the Balanced
Scorecard to help manage performance.

Balanced Scorecards are used as the roadmap for

creating the Strategic Management System or our
IRPS. And this will drive overall organizational
performance for our entire agency!
8

Some 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.

Four Views of Performance

Strategic Objectives

Strategy can be described as

a series of cause and effect
relationships.
Provides a line of sight
from strategic to operational
activity
working on the right
things.

Stakeholders
If we succeed, how will we
look to our stakeholders?

Internal Processes
To satisfy our customers, at
which processes must we excel?

Learning & Growth

"To execute our processes, how
must our organization learn and
improve?"

Agency Investments
In order to succeed, what
investments in people and
infrastructure must we make?

10

The Importance of Alignment

Complete Framework for IRPS

Strategy

Objectives

Measures

Agency
Department
Team/
Individual

11

Alignment all the Way Through

Goal: Improve environmental health
Performance Gap: Less than Organization watershed water quality
Initiative: Data Mining
Resource
Investment
Management

Innovation
Improved "Cause
and Effect"
Knowledge

Business
Processes
Improved Environmental
Assessment Reports

Financial
Management
Decreased Litigation
Costs

Relationship
Management

Justified Initiatives to
Improve Water Quality
Investments Available to
be Allocated to Other
Critical Areas

Environmental
Health
Improved Water Quality

Enhanced Public
Confidence
Increased
Investment
Accountability

12

In order to be successful, the

Agencys IRPS should . . .
Be comprised of a balanced set of a limited vital few
measures;
Produce timely and useful reports at a reasonable
cost;
Display and make readily available information that is
shared, understood, and used by the Agency; and
Supports the organizations values and the
relationship the organization has with customers,
suppliers, and stakeholders.
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Before we can map your strategy . . .

Get down to a set of quantifiable strategic

objectives:
Too vague
More precise

Improve Customer Service

Reduce average customer wait times by
30% by year end

Make sure your objectives have a direct

relationship to your goals and your goals have a
direct relationship to your mission and values.
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Table 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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Investments

Learning
& Growth

Internal Process

Stakeholder

Strategy Map: Capture a Cause Effect

Relationship from the Bottom Up

Improved Returns
on Investments

Economic
Model Process

Expand Global
Facility Reach

Facilities and
Fixed Assets

More rapid and

accessible services

Reduce Re-Activities
thru ABC/M

Leadership
Development

Human Capital

Establish Web
Based Self Services

Knowledge
Management

IT Infrastructure

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Two Special Techniques

for Building Strategy Maps
General Rule of Thumb to ensure strategy map is developed both
vertically and horizontally

The 4 to 5
Rule

Splitting the
Perspective

Weak

Strong

Way of pulling out both drivers and outcomes that match up

against the core competencies of the business model
Customer Perspective
Customer Growth
Timely Delivery

Retention Rate
Pricing

Quality

Customer Satisfaction
Service

Reputation

Outcomes
Drivers

17

Key Benefits of Strategy Maps

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 and ensuring
alignment"

18

Strategy Maps
A Better Way to Communicate Strategy
Executive consensus and
accountability:
Building the map eliminates
ambiguity and clarifies
responsibility.

Ensure Alignment:
Each sub-unit and individual
link their objectives
to the map.

Educate and Communicate:

Build awareness and
understanding of organization
strategy across the
workforce.

Promote Transparency:
Communicate with and
educate constituents, partners,
oversight bodies, and the
general public.

Source: "Using Balanced Scorecard Technology to Create Strategy-Focused Public Sector Organizations", Robert S.
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Kaplan, April 21, 2004, pg. 20

Multiple Choice Question

Cause 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 Processes
b. Stakeholder / Customer
c. Learning & Growth
d. Agency Investments

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Multiple Choice Question

and the answer is . . .
b Stakeholder / Customer are those who we ultimately
serve and we must meet their needs and requirements. This
is our final end result within the scorecard model.
Balanced Scorecards tell you the knowledge, skills and systems that your
employees will need (learning and growth) to innovate and build the right
strategic capabilities and efficiencies (internal processes) that deliver
specific value to the market (customer) which will eventually lead to
higher shareholder value (financial).
Having Trouble with Your Strategy? Then Map It by Robert S. Kaplan
and David P. Norton - Harvard Business Review

21

Aligning the Scorecards

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.
IRPS
Best Business
Practices

Expand Global
Reach

Expand the
Skill Base

Lean Processes

Improve Asian
Footprint

Develop the
Workforce

Agency
Scorecard

Process Efficiency

Grow Globally

Highly
Skilled
Workers

Outlet
Scorecard

Streamline
Processes

Continue to
Expand Range

Organization
Scorecard

GOG
Scorecard

Improve
Employee
Competencies

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Internal Process

Stakeholder

Extend the Map into Measurements,

Targets and Initiatives

Strategy Map
Faster Service Access

Self Service
Applications

Lean Processes

L&G

Objective
Description
Eliminate waste,
reworks, and
other errors in
our processes

Process and Value

Map Analysis

Investments

Detailed
statement of
what is critical to
successfully
achieving the
strategy

How success in
achieving the
strategy will be
measured and
tracked

Measure
Number of
Reworks

The level of
performance
or rate of
improvement
needed

Target
2 per setup per
month each
Outlet Office

Key action
programs
required to
achieve
objectives

Initiative
Lean / Six
Sigma

Web Enable
Technologies

Invest in IT

23

Alignment of Scorecard Components

Make sure the components of your scorecard fit together. We want to
create a tight model for driving execution of your strategy.

Goal
Achieve
Agency
operational
efficiencies
with best
practices in
the private
sector

Objective

Measurement

Target

Initiative

Reduce
Operational
Service Costs by
50% over the
next 5 years

Cost per Outlet

5% - Year 1
Office, Cost per 10% - Year 2
Region, Cost per 15% - Year 3
FTE

Activity
Based
Costing /
Management

Reduce identified
re-activities
within primary
processes by
80% over the
next 3 years

Waste Volume
Charts, Rework
Tracking, Cycle
Time End to End
in S-LX (5 of 7
Regions)

Lean / Six
Sigma

Waste stream
reductions of
5% each year,
Reworks cut in
half for next 3
years, cycle
time cut by 75%

24

Multiple Choice Question

Create 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

25

Multiple Choice Question

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.

26

Table 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

27

The Context of Measurement

Performance Measurement is a process by which
an agency / 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.

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Why Measure Performance?

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

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Without Measuring, Decision Makers

Have No Basis For:
Knowing what is going on in their enterprise
Effectively making and supporting decisions regarding
Investments, plans, policies, schedules, and structure
Specifically communicating performance expectations to
subordinates
Identifying performance gaps that should be analyzed and
eliminated
Providing feedback that compares performance to a
standard
Identifying performance that should be rewarded

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Types of Measurements
Measure Type
Leading

Definition
Intermediate outcomes that predicts or
drive bottom-line performance results

Example
Employee turnover rate

Lagging

Bottom-line performance results

resulting from actions taken

Input

Amount of Investments, assets, equipment,

labor hours, or budget dollars used

Output

Units of a product or service rendered

- a measure of yield

Number of Value Meal orders fulfilled

Outcome

Resulting effect (benefit) of the use or

application of an output

Customer satisfaction rating

Objective /
Quantitative

Empirical indicators of performance

Wait time

Subjective /
Qualitative

Perceptions and evaluations of major

customers and stakeholders

Customer complaints received as a %

of total customers served

Employee satisfaction rating

Number of cashiers

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Examples of Measurements by Perspective

Stakeholder / Customer

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

Learning and Growth

Percentage employee absenteeism

Hours of absenteeism
Job posting response rate
Personnel turnover rate
Ratio of acceptances to offers
Time to fill vacancy

Internal Processes
Number of unscheduled maintenance calls
Production time lost because of maintenance
problems
Percentage of equipment maintained on
schedule
Average number of monthly unscheduled
outages
Mean time between failures

Investments
% of facility assets fully funded for
upgrading
% of IT infrastructure investments
approved
# of new hire positions authorized for
filling
% of required contracts awarded and in
place

32

Multiple Choice Question

Appropriate Measurement
The measurement, % of employees following a
supervisor approved competency model, would
most likely be placed in which perspective of the
Balanced Scorecard?
a.
b.
c.
d.

Stakeholder / Customer
Learning and Growth
Agency Investments
Internal Processes

33

Multiple Choice Question

and the answer is . . .

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.

34

Some Basic Guidelines for

Good Performance Measures
You should have at least one measurement for
each objective.
Measurements define or explain objectives in
quantifiable terms:
Vague => We will improve customer
service
Precise => We will improve customer
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.
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Selection Criteria for

Performance Measurements

MEANINGFUL - related significantly and directly to organizations mission and

goal

VALUABLE measure the most important activities of the organization

BALANCED inclusive of several types of measures (i.e. quality, efficiency)

LINKED - matched to a unit responsible for achieving the measure

PRACTICAL affordable price to retrieve and/or capture data

COMPARABLE used to make comparisons with other data over time

CREDIBLE - based on accurate and reliable data

TIMELY - use and report data in a usable timeframe

SIMPLE -- easy to calculate and understand

36

Three Criteria Used for Agency Scorecard

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

37

Scoring Measurements Against

the Three Selection Criteria
A 0 or 1 in any column indicates that you need to revisit this
measurement before implementation.

Measurement

Relevant

Measurable

Actionable

% of Global Outlets that follow the

end to end process defined in IRPS

Number of score studies completed

% of Region Centers using ABC

Models to manage 65% of their
allocation costs

% of eligible employees who are

participating in the Competency
Model Development Program

% of map points loaded and

operational in GPS Tracking

0 = Does not apply

1 = Poor

2 = Acceptable

3 = Good

38

Multiple Choice Question

Match the Objective to the Metric
Assume the Agency Plan has an objective: Improve
the productivity of docking services at all stations.
Which of the following measurements would be
most appropriate for this objective?
a. Number of reruns required to complete the
docking service
b. % of vendor contracts executed in 90 days
c. Number of people completing the off-shore
warranty training program
d. % of supervisors who submitted budget
action plans within 60 days of close-outs

39

Multiple Choice Question

and the answer is . . .
a If we measure re-runs, this probably will
give us some benchmark by which we
can measure docking station efficiency
and productivity.

40

A Closer Look at How Things Link

Transportation Safety Example
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 per
100m miles traveled by 2005

Measure: Fatality rate per 100m miles traveled

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The Measurement Pyramid

Goal

Strategic/GPRA Goals
End-Outcomes

Outcome
Performance
Measures

Longer-Term Intermediate
Outcomes

Program
Program Performance Measures

Shorter-Term
Intermediate
Outcomes
& Outputs
Outputs
& Inputs

Program Components
Program Component Performance Measures

Activities
Activity Performance Measures
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Some Tools for Determining

What to Measure
Program Logic Model
Inputs

Process/
System

Output

Intermediate
Outcomes

End
Outcome

Process Flow
Causal Analysis

Desired
Outcome

Prototype
Product

Acceptable
To Market

Not Acceptable
Results
Of
Testing

Back to
Laboratory

43

Top Ten Metrics in the Public Sector

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Outputs/Product
Program Inputs
Financial Indicators
Work/Activities
Timeliness of Services
Internal Measures of Quality
Operating Ratios
Outcomes of Products or Services
External Customer Service
Equity of Services to Users

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

44

Table 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

45

How to Set Targets

Past performance trends per historical data.

Performance levels of similar organizational units
at a comparable level that facilitates
benchmarking.
Best practices across the agency, the public
sector or the private sector. Must be at a preexisting high level of performance before you use
this approach.
For newly launched services, may have to
establish a baseline per a prototype test and
extend out from this point forward.
For major strategic shifts, may have to set
directly per the plan itself without regard for hard
data.
46

Checklist for Setting Targets

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 was
met.
Long-term targets are established before short-term
targets.
Financial/Budget related targets are established
before non-financial targets.

47

Examples of Targets
Average Turnaround Times
at Docking Sites

8 days
FY05

7.5 days
FY06

6.8 days
FY07

Utilization Rate for Self

Serve Web Portal

10% FY05

18% FY06

25% FY07

Rotation Internship
Participation Rates

1,800 FY05

2,500 FY06

3,900 FY07

Glider integration mapping

tool used for geo-sets

Establish
baseline

8 per sets

10 per sets

% of agency SES Levels

following IRPS from end to
end for the entire year

30% FY05

40% FY05

65% FY05

% funding through SEPCO

for space mapping

30% FY05

35% FY06

45% FY07

48

Characteristics of Initiatives
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

49

Initiatives should enable strategic execution

Initiatives

Goals or Objectives

Value Mapping Project

Improve identification and delivery of all

agency services across the full stakeholder
spectrum

Employee Rotation Program

Improve the employee turnover and

satisfaction scores

Web Self Service Portal

Reduce agency costs and streamline our

services for more direct service delivery

Common Knowledge Center

Expand the overall knowledge base so that

inter-functions can learn from one another

Customer Survey and

Analysis Tool Program

Develop a more systematic process across

the entire agency to better connect to our
customers

Shared Service Center

Tracking System

Reduce reworks and overlaps between our

seven shared service centers
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Going from Output to Outcome

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 if the Initiative is really having strategic impact.

Initiative

Output
Measurement

Outcome
Measurement

Lean Process / Six

Sigma

Number of Projects
Defined by Region

Overall reductions in errors,

reworks, and cycle times

Activity Based Costing

/ Management
(ABC/M)

% of Service Center
Outlets with ABC Models
in place for Allocation
Costs

Reductions in identified reactivities per process study

Employee
Competency Models

% of Employees who
have a Competency
Model in place

Higher skill levels of

employees using the models

51

Strategic Themes
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

52

Multiple Choice Question

Sequence 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
a. A
b. C
c. B
d. C

Step 2
C
A
D
B

Step 3
B
D
A
A

Step 4
D
B
C
D
53

Multiple Choice Question

and the answer is . . .

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 map
Step 4 or C Extend the strategy map into
measurements and targets

54

TABLE 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

55

Case Study Instructions

The following handout is an example strategic plan for
the Western Agency Region Office (WARO).
Your team has been assigned the responsibility of
mapping the WARO Plan into a single strategy map.
Each team will be assigned to a breakout room use
post it notes on the large white template sheets
Try to limit your objective boxes on the strategy map to
no 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 study
exercise.
56

TABLE 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

57

Making the connection to the

Baldrige Criteria
Malcolm
Malcolm Baldrige
Baldrige

Balanced
Balanced Scorecard
Scorecard

Leadership
Leadership

Learning
Learning && Growth
Growth Perspective
Perspective

Human
Human Resource
Resource Capital
Capital

Learning
Learning && Growth
Growth Perspective
Perspective

Business
Business Results
Results

Measurements
Measurements and
and Targets
Targets

Process
Process Management
Management

Internal
Internal Process
Process Perspective
Perspective

Strategic
Strategic Planning
Planning

Strategy
Strategy Map
Map

Customer
Customer Focus
Focus

Stakeholder
Stakeholder // Customer
Customer Perspective
Perspective

58

Automated System Overview - IRPS

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 costing
comparisons, strategy map gap analysis, alignment point
scoring, 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)
59

Highlight Important Steps

Cascade and align strategy down to the Outlet level (and

beyond 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 drive
strategic 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.

60

Additional Information

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

Contact Information: Matt Evans, matt@exinfm.com,877-689-4097

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