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Strategic Use of Financial Indicators: Performance Measurement and Strategy

Strategic Use of Financial Indicators: Performance Measurement and Strategy. APHA LEARNING INSTITUTE, 2007 Part 3 Peggy A. Honore, DHA HHS, USM Cheryll D. Lesneski, DrPH, MA SPH, UNC Chapel Hill William N. Zelman, PhD SPH, UNC -Chapel Hill.

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Strategic Use of Financial Indicators: Performance Measurement and Strategy

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  1. Strategic Use of Financial Indicators: Performance Measurement and Strategy APHA LEARNING INSTITUTE, 2007 Part 3 Peggy A. Honore, DHA HHS, USM Cheryll D. Lesneski, DrPH, MA SPH, UNC Chapel Hill William N. Zelman, PhD SPH, UNC -Chapel Hill

  2. The Perfect Storm: Performance Measurement Systems are In! Accountability Movement (Government)3 Balanced Scorecard Movement4 Process Improvement Movement1 Performance Measurement2 • Google Hits 10/21/07: • Process Improvement ~117,000,000 3. Government Accountability ~22,500,000 • Performance Measurement ~ 89,000,000 4. Balanced Scorecard ~ 2,190,000

  3. Key Requirements of a Financial Performance Measurement System Help to Identify and Communicate: • Current status • Trends • Possible problems • Possible solutions Help to plan future activities See for instance: Doug Ishigaki, Effective Management Through Measurement, May 14, 2004 http://www.ibm.com/developerworks/rational/library/4786.html

  4. Performance Measurement Systems Operational Strategic • Strategic Management • Operational Management • Strategic Measurement • Operational Measurement The goal is to manage for the short term while continuing to dream for the long term.

  5. Performance Measurement Systems Operational Mantras: Long term goals are made up of short-term wins. What gets measured, gets managed. • Operational Management • Operational Measurement • Definitions of Operations: • A series of actions or activities designed to achieve a result. • Often used with the modifier day-to-day

  6. Performance Measurement Systems Strategic Mantras: If you fail to plan, you plan to fail. Win the battle, but lose the war. • Strategic Management • Strategic Measurement • Definitions ofStrategic: • A management buzzword that's often misunderstood. • Along termplan… • Keysuccess approaches (vs. tactics and activities)

  7. The Problem…. Illustrated

  8. The Problem….Illustrated Goal

  9. The Problem….Illustrated Goal Here: 2001-2006 arelagging indicators. They tell us where we’ve been. Here: 2001-2006 areleading indicators. They help tell us how we are progressing toward our goal.

  10. Factors Mitigating Strategic Financial Management in Public Health Departments1 • Dependence on governmental funding • Annual budgeting • Categorical funding • Line item budgeting • Focus on annual performance • “0” Surplus • Competition with other priority services • Other 1. No order implied

  11. The Relationship Between Revenues, Services and Resources Revenues/Funding Services Expenses/Resources

  12. Performance Measurement Systems: Leading and Lagging Indicators, Measuring and Managing Key Elements Strategic Goals Lagging Indicators Leading Indicators Measure Standard Ownership Activities

  13. Desired Sources of Funds: 2010 Current Budget: $1,800,000 Goal: $2,500,000 by 2010 $2,500,000 Other County State Contracts FFS $160,000 2010 $1,600,000 $310,000 $150,000 $280,000 Cont. New New Cont. New Cont. New Cont. New Cont. $1,200,000 $400,000 ($280,000) Program C Program A ($400,000) .... Program B ($270,500) Program N ($.......)

  14. Leading and Lagging Indicators Key Elements Strategic Goals Lagging Indicators Leading Indicators Goal 1. To Increase Revenues to $2,500,000 in by 2010. • Existing Programs • Existing Sources • New Programs • New Sources $Actual Revenue/ $2,500,000 target by 2010 $ from continuing sources/annual target $ from new sources/Annual target

  15. Leading and Lagging Indicators Key Elements Strategic Goals Lagging Indicators Leading Indicators Goal 1. To Increase Revenues to $2,500,000 in by 2010. • Existing Programs • Existing Sources • New Programs • New Sources $Actual Revenue/ $2,500,000 target by 2010 $ from continuing Programs/ Annual target $ from new programs/ Annual target

  16. Performance Measurement Systems: Leading and Lagging Indicators, Measuring and Managing Key Elements Strategic Goals Lagging Indicators Leading Indicators Measure Standard Ownership Activities

  17. Leading and Lagging Indicators Goal 1. To Increase Budgeted Revenues to $2,500,000 by 2010 Measure Standard Ownership Activities $Raised/Target $ • Increase line item in County Budget • Grant proposals submitted • Contracts signed • Etc. Position Name 90%

  18. Exercise: Leading and Lagging Indicators Key Elements Strategic Goals Lagging Indicators Leading Indicators

  19. Exercise: Leading and Lagging Indicators Measure Standard Ownership Activities

  20. Strategic Use of Financial Indicators: Performance Measurement and Strategy APHA LEARNING INSTITUTE, 2007 Peggy A. Honore, DHA HHS, USM Cheryll D. Lesneski, DrPH, MA SPH, UNC Chapel Hill William N. Zelman, PhD SPH, UNC -Chapel Hill

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