Balanced Scorecard 101 A Brief Overview of the BSC Methodology and introduction to the Contractor Program

1. Balanced Scorecard 101 A Brief Overview of the BSC Methodology and introduction to the Contractor Program Steve Logan Department of Energy BSC Program Manager 202 287-1383 Steve.Logan@hq.doe.gov Presentation to the PERT February 2009

2. 2 “One accurate measurement is worth more than a thousand expert opinions.” - Admiral Grace Hopper, USN

3. 3 What is a Balanced Scorecard?? • Definition of BSC as a strategic management system • Steps in a strategic management system: • Clarify and translate vision and strategy • Communicate and link strategic objectives and measures • Plan, set targets, and align strategic initiatives • Enhance strategic feedback and learning

4. 4 What is a Balanced Scorecard?? A Management System A Measurement System A Communication System

5. Performance Management- Not Just Performance Assessment 5 • BSC Linked to Strategic Plan • Performance Objectives Tied to Strategic Commitments • Clear Alignment from Strategic Plan to Performance Plans of Managers/Teams • Corporate Initiatives Support Operational Objectives

6. 6 BALANCED SCORECARDSTRATEGIC PERSPECTIVES CUSTOMER How do our customers see us? What must we excel at? FINANCIAL INTERNAL BUSINESS PROCESSES MISSION VISION STRATEGY LEARNING AND GROWTH Do we continue to improve and create value? Do we get the best deal for the Government?

7. 7 • The BSC reflects the balance between: • Short and long term objectives • Financial and non-financial measures • Lagging and leading indicators (i.e., outcome measures vs performance drivers) • External and internal performance perspectives

8. 8 BALANCED SCORECARDPERFORMANCE MEASURES, PERFORMANCE TARGETS AND MANAGEMENT INITIATIVESCUSTOMER PERSPECTIVE Procurement SAMPLE PAGE

9. 9 Background • In 1980’s, oversight models emphasized process conformance (Executive Order 12352) • In 1990’s, performance assessment models emphasizing results over process (National Performance Review, Executive Order 12862, Gov’t Performance and Results Act)

10. 10 Background • Interagency team develops new performance measurement approach (PMAT 1995) • Model enhanced to include strategic focus (BSC 1997)

11. 11 Contractor Balanced Scorecard • In 1998, BSC Performance Management Methodology Extended to: • Federal Property • Major Facility Contractor Purchasing and Property • Contractor BSC Replaces VBSA Model • Contractor Core Measures Developed by Govt/Contractor Team

12. 12 Contractor Balanced Scorecard • FY1998 Contractor Departmental Averages and Best-in-Class Scores Published • Benchmarking/Process Improvement Among Contractors Encouraged

13. BALANCED SCORECARD PERSPECTIVES AND OBJECTIVES 13 CUSTOMER - Customer Satisfaction • INTERNAL BUSINESS • PROCESSES • - Effective Internal Controls • Effective Supplier Management • Use of Effective Competition • - Effective Utilization of Alternate • Procurement Approaches • - Acquisition Process • - Good Corporate Citizenship • through Purchasing FINANCIAL - Optimum Cost Efficiency of Purchasing Operations MISSION VISION STRATEGY LEARNING AND GROWTH - Employee Satisfaction - Employee Alignment SAMPLE PAGE

14. 14 CUSTOMER PERSPECTIVE OBJECTIVE MEASURE NATIONAL TARGET Customer Satisfaction Data Source: Annual Customer Climate Survey or Real-Time Transactional Survey Data Generation: Accomplished by using appropriate survey instrument. Data Verification: Purchasing Directors are responsible for accuracy of survey data generation, and for retention of records in accordance with records management requirements. Records will be made available for compliance and/or DOE reviews. Core: Customer Satisfaction Rating % of customer satisfaction with the timeliness, quality, and level of communication provided by the procurement office. The Customer Satisfaction Rating must address the following elements: Timeliness:Extent of customer satisfaction with timeliness of procurement processing; planning activities; and on-going communications Quality:Extent of customer satisfaction with the quality of procurement services Communications:Extent to which procurement communicates accurate information which impacts the work of the customer’s organization 92% SAMPLE PAGE

15. 15 Steps in the Process • Contractor Prepares Annual Self- Assessment Plan (late summer) • Plan submitted to local DOE CO • Copy of Plan submitted to DOE HQ by October 15 • At end of FY, contractor prepares annual assessment results

16. 16 Steps in the Process • Results submitted to local DOE CO • Copy of Results submitted to DOE HQ by December 15 • BSC Program Manager prepares annual Departmental Average Scores • Average Scores and identification of “Best-in-Class” organizations published

17. 17 Steps in the Process • During the summer of each year, current core measures/targets are reviewed and changes made. • Revised core measures are published =================================================== BSC Program Description Document (aka: Balanced Scorecard Performance Measurement and Performance Management Program for Federal Procurement and Major Site and Facility Management Contractor Purchasing Systems) http://www.management.energy.gov/about_us/726.htm