Balanced Scorecard Metrics Workshop UC Berkeley Business and Administrative Services March, 2001

1. Balanced Scorecard Metrics Workshop UC BerkeleyBusiness and Administrative Services March, 2001

2. Workshop Agenda • Translating our mission into desired outcomes • The role of the Balanced Scorecard • How to build your Balanced Scorecard

3. Mission Why we exist Core Values What we believe in Vision What we want to be Strategy Our Game Plan Balanced Scorecard Implementation and focus Strategic Initiatives What we need to do Personal Objectives What I need to do STRATEGIC OUTCOMES Highly- Effective PROCESSES Motivated and Prepared PEOPLE Well- Utilized RESOURCES Delighted CUSTOMERS TRANSLATING OUR MISSION INTO DESIRED OUTCOMES Adapted from Kaplan & Norton, The Stategy-Focused Organization

4. The Balanced Scorecard is a framework for implementing strategy. It does that by • Identifying critical goals • Recognizing the real drivers of organizational performance • Measuring progress toward our critical goals • Communicating • Ultimate aim: alignment of our organization with our strategy

5. A balanced scorecard should tell the story of your unit’s strategy: • What are the critical goals that comprise your strategy? • How will you measure your success in reaching these critical goals?

6. Building a Balanced Scorecard Picture of future success PEOPLE VISION PROCESSES SERVICE RESOURCES • CRITICAL GOALS: what must happen in order to achieve our vision • METRICS: how to assess progress in achieving our vision

7. What is the difference between a goal and a critical goal? Answer: A critical goal is a goal that has to be achieved if the future (the VISION) is to be reached. Example: “Reduce the cost of roof repairs” is a worthy goal of our Physical Plant Department, and one that should always be pursued. But if there are competitors who can generally match or undercut our costs, the Department would be wise not to enVISION itself as the lowest-cost supplier of roofing repairs to the Campus. Instead, it might better pin its success on “quality of repairs”, or “24-hour availability”, or “thorough knowledge of the customers’ roofs”. One or more of these goals would be named in their strategy, and would be the critical goals. So when creating metrics, identify the critical goals and track these with your metrics.

8. What are some of our critical goals?

9. White = you fill in !! What will your unit’s Balanced Scorecard look like? PEOPLE PERSPECTIVE SERVICE PERSPECTIVE CRITICAL GOAL – Excellent workplace climate GOAL – Promote organizational climate conducive to high performance CRITICAL GOAL – Satisfied customers METRIC – Customer Survey results METRIC – Let’s Hear It! survey results MEASURE – Employee Survey results Reported annually CRITICAL GOAL – Knowledgable, collaborative customers CRITICAL GOAL – Skilled, knowledgable, learning-oriented staff METRIC– % of employees having Individual Learning Plan* METRIC – Reported annually CRITICAL GOAL – Safe and healthful working environment CRITICAL GOAL – METRIC – Illness/Injury Prevention Plan Performance Ranking METRIC – Reported quarterly CRITICAL GOAL – Healthy staff METRIC – Illness/injury recordable incident rate * to be changed in 2nd year to “% of employees who have fulfilled their Individual Learning Plan” Reported quarterly PROCESS PERSPECTIVE RESOURCE PERSPECTIVE GOAL – Promote organizational climate conducive to high performance GOAL – Promote organizational climate conducive to high performance CRITICAL GOAL – CRITICAL GOAL– Sound financial performance [centrally-funded unit] METRIC – METRIC- YTD Actual Expenditures minus Budgeted Expenditures MEASURE – Employee Survey results MEASURE – Employee Survey results Reported quarterly Reported quarterly CRITICAL GOAL – CRITICAL GOAL – Sound financial performance [re-charge unit] METRIC - YTD Revenue minus Expenditures METRIC – Reported quarterly Reported quarterly CRITICAL GOAL – CRITICAL GOAL – High productivity METRIC – METRIC – Reported quarterly Reported quarterly CRITICAL GOAL – METRIC –

10. How do we decide what the rest of our critical goals should be, so we can fill in those “white spaces”? Answer: Consider how these FOUR STRATEGIC THEMES can be implemented in your unit (NOTE: it is essential to do this in consultation with your boss !!) 1. EXPAND OUR VISION: • new ways of doing business • new services and products • new markets • new customer segments 2. INCREASE VALUE FOR OUR CUSTOMERS: • lower costs • faster turnaround • more accurate and effective service • higher quality products • better interpersonal relationships • greater understanding of our customers’ needs 3. ACHIEVE OPERATIONAL EXCELLENCE: • improve productivity • redesign processes 4. ENGAGE THE LARGER COMMUNITY: give to and learn from our wider base of “customers”: the citizens of California.

11. The right metrics: • Monitor progress toward critical goals • Motivate appropriate behavior • Communicate information (are understandable !!) • Identify opportunities for improvement

12. Scorecards need both outcome metrics and driver metrics: • Driver Metrics • Reflect how the outcomes are to be achieved. • Also called “leading metrics” (show early signs of strategy success) • Examples: cycle time, defect rates, efficiency, performance versus plan • Outcome Metrics • Reflect theresults or outcomes of strategies • Also called “lagging metrics” (show past performance) • Examples: profitability, market share, customer satisfaction.

13. When a Metric is NOT useful: • When the information it provides to you is not critical to your unit’s success • When it does not drive the behavior you want • When the cost of collecting the data exceeds the benefits • When the metric cannot be directly affected by the work group being measured • When it is not a metric at all (clue: can it be expressed as a number?)

14. Having trouble creating a metric to track one of your critical goals? It is often possible to track a goal indirectly: CRITICAL GOAL: Better preventive maintenance of our emergency generators.

15. The End