Transcript Document

The Balanced Scorecard
Presented To
Finance and Administrative Services Division
Presented By
John Sanders
The California State University
Quality Improvement Programs
Seminar Outline
Introduction to the Balanced Scorecard
What is it?
Why do it?
Balanced Scorecard Fundamentals
The Four Perspectives
Measures, Targets and Initiatives
Roles and Responsibilities
The CSUSM Finance & Administrative Services Strategy Map
Using the BSC as a Management System
The Balanced Scorecard
What is it?
Definition:
The Balanced Scorecard is a management
tool that provides stakeholders with a
comprehensive measure of how the
organization is progressing towards the
achievement of its strategic goals.
The Balanced Scorecard
What is it?
The Balanced Scorecard:
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Balances financial and non-financial measures
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Balances short and long-term measures
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Balances performance drivers (leading indicators) with outcome
measures (lagging indicators)
Should contain just enough data to give a complete picture of
organizational performance… and no more!
Leads to strategic focus and organizational alignment.
The Balanced Scorecard
Why do it?
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To achieve strategic objectives.
To provide quality with fewer resources.
To eliminate non-value added efforts.
To align customer priorities and
expectations with the customer.
To track progress.
To evaluate process changes.
To continually improve.
To increase accountability.
The Balanced Scorecard
Why do it?
It works!
In just 90 days, Sandia Labs was able to redirect $190,000 in
savings by dropping initiatives that didn’t fit their overall
strategy.
“The BSC has forced our management team to focus beyond
financial measures… too often in the past we would get sucked
into short-term thinking.”
“The BSC dramatically improved our data analysis… we don’t
overreact nearly as much as we used to.”
The Balanced Scorecard and
The CSU
Campuses currently working on the BSC
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San Luis Obispo
Pomona
San Jose
San Marcos
Sonoma
Fullerton
Long Beach
Chico
Northridge
San Bernardino
Chancellor's Office
The Strategy Focused
Organization
Mission –
What we do
Vision –
What we aspire to be
Strategies – How we accomplish
our goals
Measures – Indicators of our progress
Environmental Scan
Strengths
Weaknesses
Opportunities
A Model for
Strategic
Planning
Threats
Values
Mission &
Vision
Strategic Issues
Strategic Priorities
Objectives, Initiatives, and Evaluation
The Strategy Focused
Organization
The Five Principles
1. Translate the strategy to operational
terms.
2. Align the organization to the
strategy.
Source: The Strategy Focused Organization, Norton & Kaplan
The Strategy Focused
Organization
The Five Principles (cont.)
3. Make strategy everyone’s job.
4. Make strategy a continual process.
5. Mobilize change through executive
leadership
Source: The Strategy Focused Organization, Norton & Kaplan
The Balanced Scorecard and
The Big Picture
Strategic
Planning
Mission
and
Vision
Balanced
Scorecard
•Activity Based Costing
•Economic Value Added
•Forecasting
•Benchmarking
•Market Research
•Best Practices
•Six Sigma
•Statistical Process Control
•Reengineering
•ISO 9000
•Total Quality Management
•Empowerment
•Learning Organization
•Self-Directed Work Teams
•Change Management
Strategic Direction
Create Environment
For Change
Strategic Performance Management System
Communicate Strategies
Define Objectives
Implement BSC
Balanced Scorecard
Measure Performance
Improve Processes
Linking it all together….
Evaluate and Adjust
Continuous Improvement
Redefine Initiatives
THE BALANCED SCORECARD
FINANCIAL/REGULATORY
To satisfy our constituents,
what financial & regulatory
objectives must
we accomplish?
CUSTOMER
To achieve our vision,
what customer needs must
we serve?
INTERNAL
To satisfy our customers and
stakeholders, in which business
processes must we excel?
LEARNING & GROWTH
To achieve our goals, how
must we learn, communicate
and grow?
Customer Perspective
To achieve our vision, what customer needs
must we serve?
Possible Performance Measures
o Customer Satisfaction (Average)
o Satisfaction Gap Analysis (Satisfaction vs.
Level of Importance)
o Satisfaction Distribution (% of each area scored)
Financial / Regulatory Perspective
To satisfy our constituents, what financial and
regulatory objectives must we accomplish?
Possible Performance Measures
o Cost / Unit
o Unfunded Requirements or Projects
o Cost of Service
o Budget Projections and Targets
Internal Perspective
To satisfy our customers, in which business
processes must we excel?
Possible Performance Measures
o Cycle Time
o Completion Rate
o Workload and Employee Utilization
o Transactions per employee
o Errors or Rework
Learning and Growth
To achieve our goals and accomplish core activities,
how must we learn, communicate and work together?
Possible Performance Measures
o Employee Satisfaction
o Retention and Turnover
o Training Hours and Resources
o Technology Investment
Why Measure?
• To determine how effectively and efficiently
the process or service satisfies the
customer.
• To identify improvement opportunities.
• To make decisions based on FACT and
DATA
Measurements Should:
• Translate customer expectations into goals.
• Evaluate the quality of processes.
• Track our improvement.
• Focus our efforts on our customers.
• Support our strategies.
Targets
“If you don’t know where you’re going,
you’re probably not gonna get there.”
Forrest Gump
Targets
• Targets need to be set for all measures
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Should have a “solid basis”
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Give personnel something for which to aim
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If achieved will transform the organization
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Careful not to develop measures/targets in
a fragmented approach:
i.e. Asking people to increase customer satisfaction has to be
backed up with the knowledge, tools, and means to achieve
that target.
Initiatives
Once measures and targets are
established, it is the responsibility of
management to determine HOW the
organization will achieve its goals.
Measures are used to determine the
effectiveness of strategic initiatives.
The Leadership Team
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Develops the division’s vision, strategy
and goals
Develops organizational objectives and
targets
Provides leadership, endorsement and
vision for the project
Clears barriers to scorecard progress
The Core Team
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Drafts the strategy map and scorecard
Works with employees to develop measures
supporting strategic objectives
Works with the Leadership Team to plan and
implement the Balanced Scorecard in the FAS
Division
Finance and Administrative Services
Strategy Map
FUNCTION
DEPT.
DIVISION
Link it together….
FINANCIAL
Hum. Rscrs.
Police
CUSTOMER
Univ. Police
INTERNAL
PROCESS
Facilities
Parking
Measure: Satisfaction Index
Current: 3.0
Target: 4.0
LEARNING &
GROWTH
The Balanced Scorecard as a
Management System
BSC reviewed regularly to enhance
operational decision-making
 Success of initiatives assessed based on
DATA… not opinions
 Leading indicators evaluated to confirm
accuracy of assumptions
The Balanced Scorecard as a
Management System
The BSC is a “Living Document” that
requires regular revision of objectives,
measures and initiatives:
 How are we doing?
 Are we measuring the right things?
 What initiatives do we need to get us
where we want to go?
 Have our organizational goals changed?
Advantages to this Approach
 Simple to Use and Understand
 Based on Vision and Strategy
 Multidimensional
•Quantitative and Qualitative Measures
•Current and Future
 Provides Measurement of and Method for
Improving our Services
 Ties QI initiatives together
 Serves as a Communication Tool
Suggested Readings
Kaplan, Robert and Norton, Edward. The Balanced Scorecard.
Harvard Business Publishing, 1998
Kaplan, Robert and Norton, Edward. The Strategy-Focused Organization.
Harvard Business Publishing, 2001
Buckingham, Marcus and Coffman, Curt. First, Break All the Rules
The Gallup Organization, 1999
Brown, Mark. Keeping Score. Mark Graham Brown, 1996
http://www.afd.calpoly.edu/afd/Strategic_plan/
http://cqi.csusb.edu/
Thank You
John Sanders
The California State University
(562) 951-4556
[email protected]
www.calstate.edu/qi