The Glue

Why It's Critical the CEO Holds a BSC Review by Month 4 of the Deployment

It takes time to get an Executive Management Team (EMT) ready for its first structured Balanced Scorecard (BSC) business review. They first have to cascade scorecards, gather the data, configure their scorecard software, and train the users.  Despite all this pre-work, I believe it's critical that the CEO makes sure there's a corporate scorecard review by month 4 of deployment.

Why? I believe the CEO can fulfill 3 of his/her 4 main functions as they relate to the BSC by month four (too often, these CEO reviews get pushed out to month eight, nine, or later awaiting some unrealistic "scorecard perfection").

So what are these 3 functions and what should be discussed for a BSC that's still "under construction"?

A Performance Management Conference Yields Gems & Duds - Part 2

In my previous post, I shared an overview of what I thought was the biggest gem to come out of a recent Performance Management conference for local government. Now on to a presentation that left me scratching my head...

"The Dud" was a puzzling presentation that came from a major city mayor’s office official.  It asked a very intriguing question: Is there a real relationship between citizen satisfaction scores and the outputs and activities governments pursue?  In other words, do people become happier with their government when the right things are done?

His initial example looked at the relationship between citizen satisfaction of the police department with the reduction in the crime rate.  The chart and data showed that the crime rate seemed to have little impact on satisfaction.  So, his question of, “do satisfaction scores matter?” really popped with this slide. 

However, it made me wonder why there is a presumed connection in this example?  Most people never interact with the police.  Personally, I don’t connect my satisfaction with police to the crime rate (if I was a robbery victim, for example, and was visited by a courteous, responsive officer who followed up on my report, I would be very "satisfied" with the police, despite the rate of criminal activity).   

A Performance Management Conference Yields Gems & Duds

Last week, I attended a Performance Management conference designed specifically for state, county, and local governments.  There were a few gems and a few duds, both of which contributed to my take-aways. Today, I'll recap what I felt was the biggest gem.

The Gem of the event came from the City of Miami Beach. 

The folks in the budget office of Miami Beach have been at it for some time.  So from a strategy execution methodology, they have the model down quite well.  This isn’t really news. 

What really struck me was their story from this past year.  As some may know, the state of Florida recently went through a politically-driven change to its property tax system –- resulting in significantly reduced tax revenues for county and city governments.  Miami Beach was no exception to the revenue drop, and for its size, it took a major hit.

So, Miami Beach had the unique opportunity to utilize its wonderfully developed strategy execution system to manage a strategy of downsizing.  How can downsizing be done in a strategic way to minimize the negative impact on citizen outcomes and services?  This was their challenge.

How a Balanced Scorecard Changes as You Move Down in the Organization

A Balanced Scorecard is a great tool to communicate the strategic objectives, measures, and initiatives throughout an organization. It assists in providing focus and alignment at all levels and even facilitates daily decision making.

However, the definition of an effective scorecard changes slightly as it is deployed downward, to meet the needs of the individual scorecard owners and the organization.

The reasons and ways that the scorecards change are as follows:

Integrating the Balanced Scorecard with Operating and Capital Budgets

Organizations using a Balanced Scorecard framework to deploy their annual strategic business plans find that with each new fiscal year, the scorecards get better and better, accountability grows in the organization with recurring monthly scorecard reviews, and the scorecards are deployed deeper and deeper into the organization.

But most organizations continue to struggle with how to fully integrate Scorecards with budgets, as well as how to handle having too many non-priority initiatives.

The two issues are closely related.The integration of the budgets is largely a sequence and timing issue, as many organizations are “upside down.”

If an organization’s fiscal year and calendar year are the same, then the budgets will be completed usually by November or early December. In many organizations that haven’t integrated scorecards with the budgets, the scorecards may not even be completed for the next fiscal  year by that time.

So, a re-sequencing must occur over time, as follows:

How Organizational Culture Affects Target Setting

In two previous blogs (Setting Effective Targets & Three More Ways to Set Targets), I talked about the best ways to set targets for performance measures on Balanced Scorecards.

There are also psychological and cultural aspects that impact how an organization sets targets.

If an organization is risk averse or if management tends to look for someone to blame when performance falls short, targets will be predictably less aggressive and easily achievable. This is usually referred to as “sandbagging” and occurs because the penalty for under-achieving a target is so much greater than the risk of being accused of setting soft targets.

On the other hand, organizations that reward real achievement and where missing a stretch target is not punished, but merely analyzed for root causes and addressed, real “stretch” targets are more likely.

If you're in an organization that leans more toward the risk averse culture, how do you encourage employees to set real stretch targets?

First, examine the management style and their reaction to missed targets. If it is punitive in nature, that managerial behavior must change or the employees will never trust management enough to take a risk and set a stretch target.

However, I have seen organizations where the management reaction to missed targets is healthy, yet the targets are still easily achievable for other cultural reasons. Sometimes these reasons are merely perceived, but as we know, perception is reality.

Recognizing Performance Excellence - Congrats to Coral Springs

The entire ActiveStrategy team sends out our hearty congratulations to our client, the City of Coral Springs, who was recently recognized with the prestigious Malcolm Baldrige National Quality Award, the top honor a U.S. company can receive for quality achievement and performance excellence. 

For those not familiar with the Baldrige, this is an extremely comprehensive program that evaluates organizations in these areas: leadership; strategic planning; customer and market focus; measurement, analysis, and knowledge management; human resource focus; process management; and business results.

Coral Springs is one of only five recipients of the 2007 awards and is the first state or local government in the nation to receive the award. This is the first year non-profit organizations could apply for the award, after testing a pilot program in 2006. The awards will be presented at a ceremony in Washington, D.C. early next year.

Coral Springs, located in Broward County, Florida, is also a two-time winner of the Florida Sterling Award, a state program based upon the Baldrige. These awards are a testament to the City's efforts, as well as the significant results achieved, during their ongoing journey toward performance excellence.

This journey began in 1993, when Coral Springs began using a business model that takes customer input and data analysis into consideration before mapping initiatives in the Strategic and Business Plans. The City develops process improvements while comparing results to Fortune 500 businesses and top local governments.

Having worked with many other Baldrige applicants and winners in the past, we know how difficult it is to even receive a site visit, let alone win the award. Keep up the excellence!

Where's the Strategy?

I just turned 40 last week and since I spent much of my birthday thinking about today's blog, it dawned on me that I need a social life.  Nevertheless, here we go...

The most common problem I find with strategy execution after the first few months of implementation is: the organization’s balanced scorecard loses its strategic focus and turns into mere reporting.

The ripple effects are these:

1. Extra work for front line staff without the payoff of executive review
2. Executive staff dissatisfaction with the results their scorecard is achieving
3. Diminished alignment of projects to strategic objectives

By making sure you do the following on your balanced scorecard framework, you can prevent these from happening to your organization: