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

Creating a Balanced Scorecard Confirm or develop strategy Filter metrics to ‘vital few’ Draft scorecards, targets & iterate Identify metrics xxx Improve Customer Service xxx xxx First Draft Metrics Strategy Increase Efficiency Measurable xxx Controllable Focused xxx Increase Productivity xxx Execute plan Communications Training Roles and Responsibilities Management Process IT Platform

Internal Business Processes Step 1: Confirm or Develop Strategy 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 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? Financial Balanced Scorecard from 30,000 Feet Balanced? Balanced? Internal Business Processes Customer Mission and Strategy 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? Balanced? 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? Learning and Growth

Organizational entrenchment Metrics should be… Linked KPIs must have strong and clear linkage with organization vision, strategy, and goals Controllable Individual metrics KPIs must be owned by those who will be accountable Measurable Must be measurable with available data that is easily trackable Balanced KPIs must be balanced to include financial and non-financial metrics as well as leading and lagging metrics Focused Set of metrics Performance should be assessed on the ‘vital few’, not the ‘trivial many’ KPIs Appropriate targets Targets must be set appropriately so that they are stretch, but achievable; they should reviewed frequently Cascaded Must cascade up/down so that achievement of lower level KPIs ensures company reaches its corporate goals Organizational entrenchment Buy In Organizational buy-in is critical and requires that metrics and targets are accepted by each organization

After identifying potential metrics filter down to ‘vital few’ Initial set of metrics (50+ potential metrics) Controllable Measurable Mix Focused 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 ‘Vital Few’ (target <15 metrics per scorecard)

Why Use Balanced Scorecard? 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.”

State of Utah Scorecard Template Period Department/Division Name Logo Mission Statement Metric Status Trend Target Current Previous Measured Definition Metric Category Metric Category Metric Category Footnotes Executive Director Contact Info

State of Utah Three Year Performance Plan: Balanced Scorecard Implementation FY 2007 Department and Division Level FY 2008 Management Level FY 2009 Employee Level Scorecards statewide at the department and division level Scorecards at the sub-division or “manager” level Scorecards at the employee level and link to employee performance plans Performance management training for Senior Management including cabinet and sub-cabinet directors(~250 people) Performance management training for sub-division/managers (~4,500 people) Performance management training through “CPM” curriculum available for all state employees “Department Performance Review Meetings” on a quarterly basis with governor and senior staff