Performance management and measurement in small communities: taking the first step towards implementing a balanced scorecard approach.

• Author: Dawe, Tom
• Position: Solutions

Performance management and measurement is a process that has demonstrated positive impact for smaller communities and through the effective use of community resources, the process need not be costly.

As the public sector moves towards greater transparency and accountability, citizens expect agencies to employ best practices in the area of performance management and measurement programs. The challenge for a public sector senior management team is where to start. One tool that has been used in both the public sector and private sector is the balanced scorecard system.(1)

Many of the organizations using balanced scorecard management successfully are large entities or agencies that have the "horsepower" and financial resources to implement the balanced scorecard. Without doubt, governments considering tools such as the scorecard should be aware that the effort required will be significant and examples of smaller community successes, elusive.

WHAT IS THE BALANCED SCORECARD?

The balanced scorecard (BSC) is a management tool that can assist organizations seeking to adopt a strategic focus. The tool divides an organization into four perspectives, which are;

1) Customer or stakeholder--addressing the needs of citizens, customers, and partners

2) Financial--fiscal responsibility

3) Internal--processes and procedures

4) Learning and growth--people, culture, and technology

PHASES IN BUILDING A BALANCED SCORECARD

* Phase I

The Strategy Map

In building a public sector BSC, the four perspectives are presented in the form of a strategy map. The strategy map captures 15-20 strategic objectives and spreads them across the four perspectives. By linking the impacts of each objective and illustrating how they are interdependent the strategy map offers the added benefit of being a highly effective communication device (see Exhibit 1).

* Phase 2

Strategic Objective Ownership

With the strategy map and strategic objectives identified, the next phase is to establish specific owners for each strategy. With the owners determined, a one- to two-hour workshop is recommended during which the owners of each strategic objective, with the assistance of other members of the management team, establish a definition for their strategic objective(s). This step is crucial, because without a clear and concise definition of what the strategic objectives mean, there cannot be consensus as to how to achieve them.

* Phase 3

Measures or Indicators of Success

Measures or indicators of success for each strategic objective are then identified. Each measure should be quantifiable and provide a barometer of the current state for each of the strategic objectives. An acronym which dissects the components of relevant measures is SMART. It refers to those measures that are specific, measurable, achievable, realistic, and timely Determining the best measures is one of the more challenging aspects of the BSC process. In some cases, the organization will identify meaningful measures or indicators and be able to access supportive information with minimal effort. In other cases, the measures while identifiable, may prove difficult to support with relevant data. In addition, there will be those measures or indicators that the management team will struggle to identify. Should identifying meaningful measures prove too difficult or time consuming, leave this area of the BSC blank and over time attempt to revisit and refine them such that they can become part of the BSC process.

* Phase 4

Establishing Targets for Each Measure and Initiatives

With the measures defined, setting targets for each measure follows. The targets should identify the current performance state and the desired state. The difference between the two states is called the performance gap.

Where there is a performance gap in the current level of performance as compared to the desired state, specific initiatives are required. Each initiative will have a specific owner with a work plan...