1 Performance Management Using the Balanced Scorecard Approach - PowerPoint Presentation

1. 1Performance Management Using the Balanced Scorecard ApproachOffice of Quality ManagementOffice of Research ServicesNational Institutes of HealthSeptember 2005

2. Additional informationFor more information on Performance Management in the Office of Research Services:http://www.ors.od.nih.gov/OD/OQM/Pages/index.aspxOr Contact:Antonio RodriguezRodrigan@mail.nih.gov(301) 402-3440AcknowledgmentsThis training was developed by the Balanced Scorecard for Government, Inc., in collaboration with the Office of Quality Management. 2

3. 3Training ObjectivesDiscuss how to develop a sound value propositionRevisit how to define strategyReview how to dvelop objectives for the four BSC perspectives:CustomerInternal Business ProcessLearning and GrowthFinancial

4. 4Value PropositionThe Value Proposition should be established with the Research Community in mind and should be derived using the following formula:Value = Product and/or service attributes + image + relationshipThe value proposition should establish why we do what we do, and what impact does it have on the community for whom we provide our services.

5. 5What is the value propositionfor your Service Group?What is the contribution that we make to the NIH Research Community and other interested parties?CustomersStakeholdersIt is a theory that must be tested

6. 6First, you must consider “Who are our customers?”Customers:Are the recipients of our goods and servicesAre the direct beneficiariesMay also be stakeholdersStakeholders:Influence budget, funding, and resource allocationsAre alter egos of customersFill a stewardship or regulatory roleNote: Customer segmentation data should clarify your customers/stakeholders.

7. 7Customer segmentationEXAMPLECustomersThe NIH Institutes ORS program managersORS service providersORS administratorsStakeholdersORS Advisory Committee IWG and MBWGFARBDHHSOMB/GAO/CongressOSHAJCAHO/AAALAC

8. 8Why do we distinguish stakeholders from other customers?Stakeholders have different issuesNeed different approachStakeholders can increase or decrease funding (regardless of how customers feel)Stakeholders can formulate or influence policyCustomers and stakeholders may each value something different

9. 9What do customers really want?What value do we provide to customers?What would happen to customers if we were no longer around?How much are customers willing to pay for our products/services?What is our obligation to customers?What can we do to ensure their support?What can we do to better educate them?

10. 10What do stakeholders really want?What do our stakeholders value?How does what they value differ from what our customers value? What is our obligation to stakeholders?What can we do to ensure their support?What can we do to better educate them?

11. 11The Value PropositionGeneric Model  The value proposition should establish “why”EXAMPLEValue = (Product / Service Attributes) + Image + RelationshipFunctionalityQualityPriceTimeExample: Federal AgencyProduct/Service AttributesImageRelationshipAccessible (Services)Consistent(Products)Dedicated(People)Professional(Staff)Personal Relationships(Customers)Service Oriented(Employees)VALUE PROPOSITION STATEMENT“We bring value to NIH by providing our customers with convenient, accessible, and consistent services to ensure that visiting scientists acquire the required visas in the least amount of time at the best price to the agency.”

12. 12What value do we offer our customers/stakeholders? Why are you in business?Value = (Product / Service Attributes) + Image + RelationshipFunctionalityQualityPriceTimeWhat is the VALUE PROPOSITION for your Service Group?Product/Service AttributesImageRelationship??????

13. 13Type your Value Proposition on your Performance Management Plan (PMP)Type in value proposition (VP) here.

14. 14What is strategy?Think of Strategy as a Way to Get to Your DestinationStrategy

15. 15Revisit Strategy

16. 16The BSC Provides Structure and Context for Effective Strategic ManagementInformed executives managing a strategic agendaThe Power To Rapidly Implement Strategy, Learn, and ImproveMotivated workforce implementing strategy and documenting progress

17. 17Strategic Management Is Based Upon a “Double Loop” Learning ApproachFinancialPerspectiveCustomerPerspectiveInternalPerspectiveThe StrategyLearning PerspectiveStrategic Learning LoopPerformanceInitiatives & Programstest the hypothesesoutputresultOperational Control LoopcorrectionsinputFinancialCustInternalL&GStrategic ObjectivesFinancially StrongDelight the ConsumerWin-Win RelationshipSafe & ReliableCompetitive SupplierMotivated & PreparedStrategic MeasuresReturn of Capital EmployedMystery Shopper RatingDealer/Pioneer Gross Profit SplitManufacturing Reliability IndexDays Away from Work RateLaid Down Cost vs. Best Competitive Ratable SupplyStrategic Competency AvailabilityBalanced Scorecardupdate the strategyStrategicFeedback& Learning

18. 18Elaborate on Your StrategyThink more deeply about your strategy choices Write your own strategy statementMay help to develop a strategy mapWhat may help with expanding your thinking on strategy?What demands are the customers or “chain of command” placing on the Service Group?Are your customer demands for services changing dramatically?Has the environment changed to require new products/services, or service levels, from your group?Are there expectation for reduced unit cost?What is the future direction of your Service Group?

19. 19Describe Service Group Strategy on your Performance Management Plan (PMP)Describe your strategy here by expanding on your choice(s( from prior years.

20. 20From Strategy to Objectives…..Next, our focus will be on crafting the objectives. Objectives should enable the achievement of your value proposition and strategy.

21. 21Constructing the Performance Management Plan Objectives

22. 22ObjectivesObjectives are a means to achieveyour value proposition and strategy.PerspectiveCustomerInternal Business ProcessLearning and GrowthFinancialInformation NeededCustomer/stakeholder segmentation, value proposition and strategyProcess maps, process data, value proposition and strategyFuture needs of the customer and the organization, enablers (people, tools, culture) to get there, value proposition and strategyCustomer demands for services/service levels, willingness to pay for services, funding levels available for Service Group, value proposition and strategy

23. 23Crafting Objectives By PerspectiveCustomerInternal ProcessesFinancialLearning & Growth

24. 24Customer Perspective

25. 25What Do Our Customers Really Want?(Outcome or “end-state”)What are we really trying to accomplish as a Service Group?What outcomes are we offering customers with our Service Group/Discrete Service offerings?What will our customer base look like 5-7 years from now?What will our customer needs be in the future?

26. 26Customer Objectives EXAMPLEOBJECTIVESIncreased customer satisfactionIncreased customer loyalty (repeat business)Best value products and services (repeat business, word of mouth referrals, requests for partnershipsNew customer acquisition and increase in market shareSupplier of choice (word of mouth referrals, repeat businessCollaborator of choice (request for project/scientific collaborations

27. 27Internal Business Process PerspectiveInternal Business Process Perspective

28. 28What is Your Value Chain?How do we get new demand? Where does it come from?What processes do we need to perform very well? (process maps)How do we complete the work? (deployment flowcharts) How do we deliver it to our customers?How can we improve our processes to meet attributes identified in the value proposition?

29. 29Review Process MapsEXAMPLE

30. 30Internal Business ProcessesWhat is the value we offer to our customers? (How do we create value for our customers, stakeholders, employees) through our processes?What key processes do we need to focus on?What aspects of the processes are important (e.g., predictable performance, efficient, safe)

31. 31What improvements can be made in our internal processes?What do we need to do better to make our customers happy?Can we be more efficient or more effective at what we do?

32. 32Internal Business Process ObjectivesEXAMPLEOBJECTIVESPrompt (fast) delivery of products and servicesFaster response to customer requestsReduced cycle timeIncreased capacityLower error rateReduced reworkImproved quality

33. 33Learning and Growth Perspective

34. 34Learning & GrowthThe formula for this perspective is a function of:People, Tools, and ClimateLearning and Growth objectives are a function of future customer and organizational needs.

35. 35The Learning & Growth PerspectiveWhat are the future needs of our Service Group in terms of:Organization Learning & Growth = ƒPeopleTools,ClimatePeople, Learning & Growth CategoriesSkills & CompetenciesWhat do we need in terms of skills & competencies for our employees?What will we need in the future?Knowledge& Technology AssetsWhat do we need in terms of knowledge base and technology tools to assist our employees?What will we need in the future?Climate forActionWhat do we need in terms of our environment to encourage our workforce to be productive?What will we need in the future?

36. 36What “enablers” will prepare us for the future?EXAMPLEOrganization Learning & Growth = ƒPeople,Tools,ClimateTypical Learning & Growth ObjectivesSkills & CompetenciesEngineering skillsTraining to required levelsProgram Management skillsKnowledge& Technology AssetsTechnologiesDatabasesExperience capturedBest practicesClimate forActionLeadershipAlignmentResults OrientedTeaming

37. 37What do our employees need to help us achieve our goals?What skills need to be addressed? What will the knowledge and skill needs be over the next 5-7 years?Do we need to train/recruit/contract out?

38. 38Learning & Growth Objectives EXAMPLEOBJECTIVESHigh quality work environmentDiverse, mobile workforceWorkforce is recognized and rewardedKnowledge is a valued assetIncreased skills among employeesInnovative people who take risksRight staff for “ORS of the future”

39. 39Financial PerspectiveFinancial Perspective

40. 40FinancialThis perspective is typically composed of the following elements:Funding (Revenue)Cost (expenses)Demonstrated savingsWhat will our financial requirements be in the future?It is always about the value we offer to the organization.

41. 41What do our financial stakeholders expect from us?Can we do this now?How can we contribute?Can we increase revenue? What cost savings can we realize?What obligation do we have in our spending activities?How do we manage the gap between customer demand and funding levels?

42. 42Financial ObjectivesEXAMPLEOBJECTIVESLower unit costAcceptable total ownership costImproved management of resourcesImproved utilization of assetsInvestment in products for future capabilities

43. 43Generating and Finalizing ObjectivesNew Teams…..Recommend about 2 sessions with the Performance Management (PM) Team and your consultant Identify pool of objectivesNarrow objectives to critical few in each perspectiveConsultant can lead team through use of “identification and selection” procedure to gather Team’s input and consolidate the list of objectivesEnter objectives onto the Service Group’s Performance Management Plan (PMP)

44. 44Enter Your Objectives on your Performance Management Plan (PMP)- available on the web page

45. 45Resist The Urge To Jump AheadAt this point most people jump into measures…and when they get there, they start listing all of the “action items”There is one last step before moving to measures…

46. 46Enter Your Objectives on your Performance Management Plan (PMP)PMP is available on the web page

47. 47Define Objectives (cont.)Common ORS ObjectivesEXAMPLEObjectiveC1: Increase customer satisfactionF1: Minimize unit cost at a defined service level. DescriptionC1: A relationship with the people we serve that increasingly promotes good will, repeat business, commendations, and minimal complaints.F1: Understanding the total dollar cost to provide measurable service and products at agreed upon terms in order to reduce these costs to levels that meet or exceed customer expectations of market prices.

48. 48SummaryA good PMP will “tell the story” of your Service Group.This training has given you new information that your Team can use to develop your PM roadmap:Value PropositionStrategyObjectivesCustomerInternal Business ProcessLearning and GrowthFinancial