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White Paper


Challenges and Benefits of Implementing Clear Strategy Execution in the Public
Sector | Dr. Behrouz Aslani, American Institute of Higher Education Resources

BALANCED SCORECARD: A SURVIVAL PATH FOR PUBLIC SECTOR


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Balanced Scorecard: A Survival Path for Public Sector
2009

Table of Contents

Introduction 3
Basics: The Balanced Scorecard for the Public Sector 3
Typical Challenges of Implementing Balanced Scorecard 5
Conclusion 8
Next Steps 8
About the Author 8







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Balanced Scorecard: A Survival Path for Public Sector
2009

Introduction

Privat e as well as public organizat ions can no longer remain passive t o t he
ever-changing and dynamic environment t hat of f ers consumers/buyers an
un-precedent power in demanding bet t er service, lower price, and higher
qualit y product s/services.
Lack of comprehensive percept ion of t he organizat ion s capabilit ies result s
in ill-def ined goals t hat lead t o serious limit at ion in achieving organizat ional
goals. Theref ore, select ing an appropriat e set of st rat egies f ounded on t he
t horough underst anding of t he organizat ion s absorpt ive capacit y and t he
high end communicat ion t echnology is not a luxury any more. It is t he
survival necessit y.
In general t he public sect or has been st ruggling wit h sat isf ying t heir
st akeholders. Many indict ors are measured in a silo f ormat wit hout any
comprehensive view of t he overall perf ormance and proper st rat egy. For
example, select ing a new st rat egy f or U.S. Post Of f ice in of f ering f ast and
reliable mail service such as Next Day Delivery service was int roduced only
when t he privat e sect or leveraged on t hese indicat ors and caused a
reduct ion in t he market share f or US Post Of f ice.
The public sect or in Calif ornia is now recognizing t he vit al role of t he
st rat egy t o respond t o t he account abilit y and perf ormance measurement
required t o sat isf y t heir st akeholders. In t his development pat h, Balanced
Scorecard (BSC) developed by Drs. Kaplan and Nort on- has been
considered as a proven managerial t ool t hat would help t o def ine and
implement t he appropriat e st rat egy.
This whit e paper will review basics of t he BSC and t hen discuss challenges
and benef it s of t his managerial t ool t o t he Calif ornia public sect or.

Basics: The Balanced Scorecard for
the Public Sector

The Balanced Scorecard met hodology is f ounded on t he ground of open line
of communicat ion among management and st akeholders. In t his regard,
keeping st rat egy exclusive t o t he board makes it a f ailure f rom t he

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Balanced Scorecard: A Survival Path for Public Sector
2009
perf ormance evaluat ion point of view. Everybody should be aware of t he
st rat egy and adjust his/her perf ormance/dut ies t owards t he set direct ion.
Inst ead of emphasizing only one dimension (i.e. f inance), t he BSC
encompasses all act ivit ies surrounding an organizat ion. As t he f igure below
depict s t he BSC is f unded on select ed perspect ives represent ing t he main
and ult imat e/major issues t hat an organizat ion would int eract wit h. These
perspect ives -f or public sect or- t ypically are: Cust omer, Finance, Int ernal
processes, and Learning and Growt h. The cust omer perspect ive is put at
t he t op priorit y.
Figure 1 below shows t he relat ionship among t hese perspect ives.

Figure 1: Typical Perspectives on a Balanced Scorecard for the Public Sector
Balanced Scorecard has been developed f or San Diego Count y f or f ive
major groups of : Healt h & Human Services, Land Use & Environment ,
Public Saf et y, Communit y Services, and Finance & General Government f or
an est imat ed 3 million resident s. In t he Count y of Orange (since 2006),
under t he St rat egic Focus, t hree (out of 24) agencies/depart ment s such as:
Of f ice of Treasurer-Tax Collect or, Probat ion, and Orange Count y Parks
have def ined t heir perspect ives. It is planned t o implement comput er
sof t ware f or an est imat ed 1200 reader users and 100 f unct ional users
enabling access t o t he perf ormance indicat ors.
The Key Perf ormance Indicat ors (KPI) are among main component s of t hese
perspect ives. Since the ult imat e aim of t he BSC is t o arrive at a set of
measurable indicat ors t hat would represent t he st at us of t he organizat ion
vis--vis t he t arget and goal, t heref ore, it is advised t o have a limit ed
number (about 12-20) key perf ormance indicat ors. It should be not ed t hat
t here are t wo t ypes of indicat ors: lead and lag indicat ors. Lead indicat ors

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Balanced Scorecard: A Survival Path for Public Sector
2009
are t hose t hat give leading inf ormat ion t o reach object ives while t he Lag
indicat ors are t hose t hat represent t he end result .
The Key Perf ormance Indicat ors (KPI) are driven f rom an elaborat ed graph
called St rat egy Map. St rat egy map depict s t he cause and ef f ect relat ionship
of many sub-indicat ors t hat cont ribut e t o t he object ives and t arget s of each
perspect ive. For example, indicat or such as % increases in t he number of
cust omers (as KPI) could be result ing f rom sub-indicat ors such as higher
cust omer sat isf act ion, improved design, et c. t hat are def ined f rom t he
lower levels in t he St rat egic Map.

Typical Challenges of Implementing
Balanced Scorecard

Management Buy-in
Designing and implement ing t he st rat egy require t he const ant support and
backing f rom t op management . Management support and t heir approach t o
creat e a cult ural change is t he required f oundat ion t o encourage employees
and depart ment s t o engage in t his process. For example, management
endorsed incent ive programs could be a reward f or f inding ef f icient
met hods in st reamlining operat ions or improving cust omer sat isf act ion.
These programs are popular and would bring a quick accept ance
environment .
Participation, Engagement and Cultural Change
A comprehensive st rat egic plan such as BSC needs part icipat ion and act ive
engagement of t he employees t hat carry out t he moment um of cult ural
change. Incent ive programs and employee rewards f or t hose aligned wit h
t he organizat ion perf ormance should be planned and execut ed so t hat t he
cult ural change becomes ef f ect ive and be a part of t he core compet ency of
t he organizat ion. Addit ionally, it is est imat ed t hat at least 25%-30% of t he
public employees will be ret iring wit hin t he next 4-5 years. The newly hired
will bring wit h t hem a new wave of cult ural shock f or t he exist ing
employees. Theref ore, incent ive programs should encompass bot h exist ing
and new employees while emphasizing on t he result rat her t han ef f ort .
Channels of Communication
Despit e t he f act t hat t he public sect or in Calif ornia is exposed t o an open
line of communicat ion, special care should be devot ed t o overcoming
misunderst anding/misint erpret at ions of vision, mission, value, st rat egy, et c.

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Balanced Scorecard: A Survival Path for Public Sector
2009
This is normally overcome t hrough t raining sessions f or management and
st akeholders along wit h a specialized web sit e addressing t he BSC
progress.
Selecting computer software
Collect ing dat a and displaying perf ormance indicat ors on real t ime basis
require sophist icat ed comput er sof t ware. Usage of spreadsheet is
discouraged. Comput er sof t ware should allow t he users t o export , cut and
past e inf ormat ion, and grant access right s (f or viewing and designing
int erf aces). Easy t o use along wit h capabilit ies in displaying inf ormat ion
according t o t he cust omer pref erence in a short t ime should be of great
import ance. Vendors cost s including maint enance and license f ees should
be compared along wit h t heir scalabilit y. A t ypical scorecard int erf ace is
shown on Fig. 2 below.

Figure 2: Balanced Scorecard view in supporting software

Allocation of Resources
Calif ornia is passing t hrough a period of f inancial hardship. It is est imat ed
10% cut across t he board is planned f or next f iscal year. Thus it is
ant icipat ed t o wit ness a slow down f or new development project act ivit ies
except f or f ew agencies such as The Orange Count y Transit Aut horit y
(OCTA), Airport s (San Diego, San Francisco, and Los Angeles), and Harbor
(San Pedro).
Performance Indicators

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Balanced Scorecard: A Survival Path for Public Sector
2009
Select ing t he appropriat e key perf ormance indicat ors is essent ial t o display
t he organizat ion s perf ormance. However, t his is somet imes t raded f or t he
second best indicat ors due t o t he lack of dat a. There have been cases t hat
some perf ormance indicat ors were ignored on t he ground t hat t he sof t ware
was not able t o capt ure t he dat a or it did not allow f or manual input by
users. This mat t er could be overcome by proper planning t o collect t he
appropriat e dat a in t he f ut ure t o measure t he best indicat ors. Addit ionally,
sof t ware compat ibilit y f or import ing and export ing dat a is very crucial.
Data integration
Most of t en dat a is dispersed and available t hrough dif f erent dat abase
comput er syst ems. Newly est ablished indicat ors require manual dat a
collect ion bef ore select ing a plat f orm t o reside.

Continuous strategic implementation
Implement ing st rat egy is not a st op-and-go process. It is a cont inuous
process. Organizat ions and ext ernal f orces such as: laws, cust omer
expect at ions, and demand are const ant ly changing. Theref ore, an of f ice of
t he st rat egy should be est ablished and be mandat ed t o check on t he
reviewing and updat ing perf ormance indicat ors and t heir measurabilit y.


Figure 3: Balanced Scorecard Regional Display



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Balanced Scorecard: A Survival Path for Public Sector
2009
Conclusion

As a clear strategy execution tool for the public sector BSC brings great success
if properly planned and executed. Management should always support BSC
during planning and implementation phases. BSC is an on-going process and
should not be considered as a Stop-and-Go process. Issues such as employees
participation and engagement along with cultural changes, communication
channels, and selecting the best indicators for presenting the organizational
performance should be properly executed.
Additionally, a key facet in enabling a smooth implementation/change process is
selection of the right software that is easy to use, Web-enabled, seamless data
integration, easy importing/exporting data, and report with low cost and
maintenance fee are among main parameters for the software selection. In this
regard, QPR as one of the world leaders of the performance management,
distinctly, by far stands out among its competitors.

Next Steps

To learn more about QPR Softwares Balanced ScoreCard solution please visit
http://www.qpr.com/balanced-scorecard.html
To learn more about testimonials from other (public) organizations about QPR
Balanced Scorecard solution please visit
http://www.qpr.com/cpm-customers.html

About the Author

Dr. Behrouz Aslani Ph.D. is recognized f or his ext ensive high-level
collaborat ive leadership globally; and managed int ernat ional project s and
high level t raining including applied st rat egic management in t he t welve
count ries Armenia, Denmark, Iran, Japan, Cameroon, Chad, Mexico,
Russia, Senegal, Swit zerland, Tanzania, and t he U.SA. He has been
working wit h Unit ed Nat ions f or Indust rial Development Organizat ion

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Balanced Scorecard: A Survival Path for Public Sector
2009
(UNIDO) and t he Unit ed St at es Agency f or Int ernat ional Development
(USAID). His is Fluent in French and Persian, underst ands German, Turkish,
and read Arabic. His St rat egic Management Web-based comput er
simulat ion model is already in f ive languages Armenian, English, French,
Russian, and Spanish. This sof t ware has been used very successf ully t o
t rain managers in many count ries including in Mexico.
Dr. Aslani holds a Ph.D. in Indust rial Engineering and Dual Mast ers: M.A. in
Economics and M.S. in Indust rial Engineering all f rom STANFORD
UNIVERSITY, St anf ord, Calif ornia. Addit ionally he has Civil Engineeri ng
Diploma f rom ECOLE POLYTECHNIQUE FEDERALE DE LAUSANNE,
Lausanne, Swit zerland.
The American Inst it ut e of Higher Educat ion Resources (AIHER) is locat ed in
Orange Count y and very act ive in t he Business Management Consult ing
including: St rat egic Management and Balanced Scorecard, Improved
Organizat ional Ef f ect iveness, Improve Qualit y, Product ivit y, and Cost
Ef f ect iveness, St reamline Organizat ional Process, Improve Account abilit y,
Enhanced Communicat ion, and Management Training.
URL: ht t p://www.aiher.com

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Balanced Scorecard: A Survival Path for Public Sector
2009
QPR Software Plc

QPR Software Plc is an international, highly regarded partner for enterprises
and public sector in process development and business performance
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