U.S.

Foundation
for Performance
Measurement

Improve Public Sector Results With A

Balanced Scorecard: Nine Steps To Success

Howard Rohm
Vice-President, the Balanced Scorecard Institute
Director, U.S. Foundation for Performance Measurement

Internet: www.balancedscorecard.org e-mail: usfpm@fpm.com Phone: (202) 251-7676

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™
U.S. Foundation
for Performance
Measurement

“People and their managers are working so

hard to be sure things are done right, that
they hardly have time to decide if they are
doing the right things.”
Stephen R. Covey

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement Seminar Objectives

z Introduce a framework for building and implementing a

public-sector balanced scorecard performance
management system
z Learn how to use a balanced scorecard in a managing-
for-results environment
z Understand how a scorecard system can help align
organization effort with strategy
z Learn best practices, and how to overcome obstacles
and challenges

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement
Definitions
Mission: What we are about (e.g., “Our mission is to provide …”)
Vision: What we want to be in the future (e.g., “Our vision is to be the leading provider of …”)
Perspectives: Different views of our organization (e.g., customers/stakeholders, employee & capacity, financial,
internal processes)
Customers: Direct beneficiaries of our services or products (e.g., citizens)
Stakeholders: The universe of people with an interest in our products and services (e.g., Board of County
Commissioners, press, vendors, regulators)
Outcomes: What results are desired; our planned accomplishments (e.g., Improve citizen satisfaction)
Goals: What we want to achieve by a certain time (e.g., reduce no. of repeat offenders by 10% next year, increase
participation by 25% over two years, reduce annual crime rate per 100,000 people by 10%)
Strategies: How we intend to accomplish our vision and goals; our approach, or “game plan” (e.g., acquire
additional parkland, develop new faith-community and business partnerships, reduce taxes)
Objectives: Strategy components; action items that must be done (e.g., improve processing time, increase
employee skills, develop a new claims process)
Strategic Map: Cause-effect relationships among strategy components
Outputs: What is produced (e.g., no. of vaccinations given, no. of claims accurately processed)
Performance Measures (Lagging): Indicators of success (e.g., no. of citizens served last month)
(Leading): Predictors (performance drivers) of future success (e.g., increase in employee knowledge)
Target: Desired level of performance for a performance measure (e.g., customer satisfaction target = 95%)
Initiatives: Action programs that will achieve our performance goals (e.g., license renewals via Internet)

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement
Basic Design Of A Balanced Scorecard
Performance System

Budget
Objective
Financial
Measure Target Initiative

Customers/Citizens Internal Business

Internal Business Process
Process
Vision Internal Business
Customers
Objective Measure Target Initiative
&
Measure Target
Objective Measure
Objective Target
Initiative
Initiative

Strategy Processes

Innovation
Learning & Growth
Innovation
Objective Measure
& Target Initiative

Learning

Source: Kaplan & Norton

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement Public-Sector Balanced Scorecard

Mission

Customers/Citizens
Objective
Measure Target Initiative
Customers & Stakeholders

Learning & Growth

Budget Employees
Employees
Financial
Objective Measure Target Initiative
Strategy
Objective Measure Target Initiative
&
Organization Capacity
Internal Business
Internal Business Process
Process
Internal Business
Measure Target
Objective Measure
Objective Target
Initiative
Initiative

Processes

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement
Balanced Scorecard Logic

Customers Mission
Vision
Core Values
Goals
Perspectives STRATEGY Focus Areas
Strategic Map
Objectives
Measures
Targets
Initiatives

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement Committing to Performance-based
Management
From: Toward:
Control and Performance
Compliance Accountability
ƒ Rules-governed ƒ Mission driven
ƒ Limited flexible ƒ Customer driven
ƒ Non-preventive (rework ƒ Employee responsive
based on feedback)
ƒ Flexible
ƒ Negative focus
ƒ Preventive
ƒ Control of individuals
ƒ Positive, team focus

Required … a significant cultural change!

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™
U.S. Foundation
for Performance
Measurement
Balanced Scorecard Methodology:
Nine Steps To Success

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation Step One
for Performance
Measurement Organizational Assessment

Capacity Values
Building Vision
Mission
Strategy
SWOT Needs
Outcomes
Goals

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement Achieving Customer Satisfaction:
The Citizen Value Proposition
A: Develop Goals
Focus Areas Goal
1. Socio-economic Opportunity Self-sufficient residents with equal access to services
2. Good Government Efficient, effective and inclusive services
3. Community Health & Safety Safer and healthier community through high quality, cost-effective and
accessible services
4. Smart Growth Vibrant and diverse economy, enhanced quality of life, and protected
natural resources

B: Determine Citizens’ Needs and Wants

Product (Service) Features + Relationship + Image

Citizen Needs & Wants

Necessary, efficient services; effective management; accountability to citizens; healthy
community; safe community; clean air, water, and land; access to parks, open spaces, greenways,
and recreation opportunities; affordable housing; education and literacy; diversity; self-sufficiency;
safe, secure, economical energy availability

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation Step Two
for Performance
Measurement Define Strategies
Mission: Manage the Nation’s space program in a
cost-effective and safe manner

Vision: Land on the moon and return safely to earth

Strategic Themes:
1) Develop safe launch and reentry vehicles
2) Maintain a ground infrastructure

Strategies:
• Develop shuttle capable of sustaining multiple earth orbits and re-entries
• Develop materials capable of surviving multiple earth re-entries
• Develop reusable landing craft

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation Step Three
for Performance
Measurement Strategic Objectives

Increase Increase Increase Lower

Customers Involvement Safety Satisfaction Wait Time

Budget Reduce Grow Tax

Costs Base

Internal Business Process Improve Reduce

Procurement
Cycle Time Steps

Learning and Growth Increase

Improve
Skills Network
Capacity
© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™
U.S. Foundation Step Four
for Performance
Measurement Public Sector Strategic Map

Increase Increase Increase Lower

Citizens Involvement Safety Satisfaction Wait Time

Budget Reduce Grow Tax

Costs Base

Reduce
Internal Business Process Improve
Procurement
Cycle Time
Steps

Improve Increase
Learning and Growth Skills
Network
Capacity
© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™
U.S. Foundation Step Five
for Performance
Measurement Performance Measures

Performance Measures Should Help Us Decide:

Are We Doing Things Right? Are We Doing The Right Things?
Business Planning (How?) Strategic Planning (What?)

Input Process Output Outcome

Input: Resources, including cost and workforce Performance

Measures
Process: Activities, efforts, workflow
Output: Products and services produced
Outcome: Results, accomplishments, impacts
© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™
U.S. Foundation Step Six
for Performance
Measurement Initiatives

Candidate Initiatives Prioritized

Outreach programs Funded
Citizen surveys Selection Criteria Initiatives
Partnerships
F 1.
Resources required
Process improvement I
Impact potential 2.
Training courses L
ranking on strategy 3.
Knowledge building T
Multiple objectives
Policy analysis
covered
E 4.
R & D efforts R 5.
Communication plan Time
required/needed 6.
Performance-based budget

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement
Putting It All Together – Federal
Government Logistics Center
Mission Provide Logistics Support and Products
to Assure Safety for the Flying Public
Vision World-class, Customer Driven; Providing
Quality Services Worldwide
S1: Become more customer-driven
Strategy S1 S2 S2: Increase business opportunities
S1-01: Assure timely delivery (Customer)
Objectives S1-02: Raise quality level (Customer)
O1 O2 O3
S1-03: Reduce cycle time (Internal)
S1-O1-M1: % on-time delivery
Measures
M MM
S1-O2-M1: % defective product
1 1 2
S1-02-M2: % defective shipments
S1-O1-M1-T1: 100% in 2002
Targets
T TT S1-02-M1-T1: Zero in 2002
1 11 S1-02-M2-T1: Zero in 2002

S1-I1: Re-engineer delivery

Initiatives
I I process
1 2 S1-I2: Six Sigma training

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

 U.S. Foundation
for Performance
Measurement
Putting It All Together – Local
Government
Mission Serve County Residents by Helping Improve
Their Lives and Community
Vision Be the Best Local Government Service Provider
Citizen Needs &
Desired Outcomes S1: Increase value by providing more cost-effective services
Strategy S1 S2 S2: Reduce violence, harm & injury through
community partnerships
S1-01: Optimize organization (Internal)
Objectives S1-02: Identify service & resource gaps (Employee)
O1 O2 O3
S1-03: Survey citizens (Customer)

M M M S1-O1-M1: Skills match index

Measures S1-O2-M1: Cost per unit service
1 1 1
S1-03-M1: Citizen satisfaction rating
S1-O1-M1-T1: Skills index = 80% in 2002
Targets
T T T
S1-02-M1-T1: 7% improvement above baseline
1 1 1
S1-03-M1-T1: 95% in 2002

Initiatives
I I S1-I1: New outreach program
1 2 S1-I2: Communications plan

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation Step Seven
for Performance
Measurement Automation
Software Solution Space
• Enterprise-wide data
Enterprise • Composite measures
Requirements • Many data/reporting locations
• Advanced executive reporting
• Web publishing
• Advanced analysis
• Dynamic links to legacy
systems
• Numerous measures
• Advanced charting
• Multiple locations Data Warehouse
• Web publishing
• Analysis & commentary

• Few measures
PMIS
• Simple reports
• Small office
COTS Data Base
Time and Cost to Implement
© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™
U.S. Foundation Step Eight
for Performance
Measurement Cascaded Scorecards Support Strategy

Corporate

Financial
Business Units
Goal Financial
Measure Target Initiative
Support Units
Goal Financial
Measure Target Initiative
Goal Measure Target Initiative Team/
Individual

Customer Internal Business Process

Goal Customer
Measure Target Initiative
Customer Mission
Mission GoalInternal Business
Measure
Internal Target Process
Business Initiative
Goal Measure Target Initiative Goal Measure TargetProcess
Initiative
Goal Measure Target Initiative Strategy
Strategy
Goal Measure Target Initiative

Learning and Growth

Goal Learning
Measure and Growth
Target Initiative
Goal Learning
Measure and Growth
Target Initiative
Goal Measure Target Initiative

Adapted from: Kaplan & Norton

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement Communicating Corporate Strategy To
Business Units

Vision: Be The Best Local Government Service Provider

Strategy Objectives Measures

Agency

Department

Team/
Individual

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation Step Nine
for Performance
Measurement Evaluate & Change
Strategic Direction

Balanced Scorecard
Perspective
Strategy Perspective
Objectives Measures
Strategy Perspective
Objectives Measures
StrategyPerspective
Objectives #1
Strategy Objectives
Measures
Measures Planning

Budget Formulation & Costing

O
U
T
C
Input Process Output O
M
Management
Programs & Operations E
S
Adapted from: Balanced Scorecard Collaborative

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement The BSC Is The Strategic “Front-End”
Of Managing-For-Results

Corporate
BSC
Strategic
Planning Department
Evaluation BSC
Program/Service
Area Planning

Results Accountability
Performance
Measures

Measure
Performance Budget

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement Goal: Performance-Based Budget

Strategic Budget Recipients

Goals
Infrastructure
Balanced
Other Indirects
Scorecard
Program 1 $ xx M
Goal 1
M $ xx M Citizens
Goal 2 $ xx M
E
Goal 3 A Program 2 $$ xx
xx M
M
Goal 4 S $ xx M
Goal 5 U Contractors
Program 3 $ xx M
R Program 4
Goal 6
E Program 5 $ xx M
Goal 7 S
Goal 8 $ xx M

Program 6 $ xx M
Goal 9 Suppliers

$ xx M

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement

Summary

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement
The Balanced Scorecard Is (Is Not)

IS: IS NOT:
z A strategic performance management z A performance measurement tool to
system for the whole organization control individual productivity
z A communications tool to make z A “flavor of the month” performance
strategy clear to everyone measurement system
z A way to balance financial and non- z About placing your existing
financial views of organization performance measures into four
performance categories
z A journey z A project
z A system for increasing accountability z Easy
z A commitment to change z The status quo
z A way of aligning organization vision z A TQM initiative
with human and capital resources, and
with day-to-day operations

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement Performance Management System
Challenges

• Fear of measurement and new systems

• Lack of common definitions and terms
• Inconsistent or weak buy-in, and lack of understanding
• Visions and strategies that are poorly defined and understood, not
actionable, and not linked to individual actions
• Treating budgeting as separate from strategy development
• Measures that are set independently of the performance framework,
or measures with no ownership
• No performance targets, or targets that are set too high or too low
• Little or no strategic feedback
• Lack of meaningful employee involvement

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement
Best Practices

z Limit the number of measures

z Include measures for all perspectives and all strategies
z Seek balance among measures
z Develop solid baseline date
z Develop measures for past, present, and future
z Don’t over-rely on output, process and input measures
z Set stretch targets
z Watch for unintended incentives
z Hold people accountable for results
z And always, beware the watchman!
@ U.S. Foundation for Performance Measurement
© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™
U.S. Foundation
for Performance
Measurement
But, Beware The Watchman !!
"The government are very keen on
amassing statistics. They collect them,
add them, raise them to the Nth power, take
the cube root and prepare wonderful
diagrams.

But you must never forget that every one

of these figures comes in the first instance
from the village watchman, who just puts
down what he … pleases."
Sir Josiah Stamp, 1880-1944,
Head, Bank of England
© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™
U.S. Foundation
for Performance
Measurement

BSC = Strategy + Operations + Change

Strategy = Doing the right things

Operations = Doing things right
Change = Doing things differently

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement

BSC = Strategy + Operations + Change

SUCCESS = Effective, Well Executed Strategy

+ Efficient Operations
+ Meaningful Change

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement References

Building & Implementing A Balanced Scorecard: Nine Steps to Success

Howard Rohm, U.S. Foundation for Performance Measurement

Performance Scorecard Toolkit, Howard Rohm, U.S. Foundation for Performance Measurement

How To Measure Performance: A Handbook of Techniques and Tools, Performance-Based

Management Special Interest Group, U.S. Department of Energy

Keeping Score, Mark Graham Brown, Quality Resources

Performance Drivers, Niles-Goram Olve, Jan Roy and Magnus Wetter, Wiley

Operational Performance Measurement: Increasing Total Productivity, Will Kaydos, Saint Lucie
Press

The Balanced Scorecard, Robert Kaplan & David Norton, Harvard Business School Press

The Strategy-Focused Organization, Robert Kaplan & David Norton, Harvard Business School Press

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™

U.S. Foundation
for Performance
Measurement

“It’s about management and

change first; measurement
and technology are second ”
Howard Rohm

Internet: www.balancedscorecard.org
e-mail: usfpm@fpm.com
Phone: (202) 251-7676

© 2002 by Howard Rohm. All rights reserved. “Performance Counts…”™