Subsystems of Budget Execution

1. Subsystems of Budget Execution Q: What are the four subsystems?

2. Subsystems of Budget Execution • Revenue Administration • Cash Management • Procurement • Risk Management

3. Strategic Management 57.508-201 The Budget as a Policy, Planning and Information Tool Meeting 11 – April 13, 2011

4. Strategic Management A strategic management system provides the broad framework that encompasses all of the processes of an entire organization operating within an agreed upon set of purposes and interdependent components

5. Strategic Management • Ongoing process • Integrates planning into budgeting & managing • Mission, customer & issue focused • Emphasizes decentralization & shared vision • Translates goals into action • Efficiently uses all resources • Makes the tough choices • Evaluates performance & results • Long range view oriented on the future

6. Strategic Agenda • Pursuing continuous improvement • Cutting “red tape” • Seeing citizens / clients as customers • Putting customers’ needs before process • Empowering employees to get results • Targeting quality & efficiency • Getting back to essential services • Evaluating results via customer feedback

7. Strategic Management “Strategic management is not a clean, step by step process. It is not linear, but a messy, iterative process that requires hard work and dedication from most people in the organization to move it toward the future. It represents a new focus for the organization; a focus on a compelling vision of the future.” Denise Lindsey Wells Strategic Management for Senior Leaders

8. Strategic Management Six Tasks • Defining the mission & forming the vision • Setting measurable objectives • Outlining the strategy to meet the objectives • Executing the strategy • Evaluating performance • Regularly implementing course corrections

9. Mission Statement A mission statement should answer these questions: • What does your organization / program do? • For whom? • Why? • How?

10. Goals vs. Objectives Mission: In partnership with the diverse communities we serve, the Health Department strives to assure, promote, and protect the health of the people of Lowell County. Goals: • Maintain or decrease levels of reportable diseases • Contribute to a reduction in incidence and impact of disease • Improve access to health services for underserved residents • Contribute to a reduction in the teen pregnancy rate • Decrease substance abuse and its impact on families • Improve the percentage of babies born healthy

11. Goals vs. Objectives SMART • Specific – Action oriented and easily understood • Measurable – Quantifiable and verifiable • Attainable – Challenging but realistic • Results Oriented – Focused on outcomes not methods • Time Bound – Reasonable yet aggressive time frame

12. Strategic Management Goal-directed decisions and actions in which capabilities and resources are matched with the opportunities and threats in the environment

13. What’s So Strategic? • A shift in focus from the inputs that are used to run the organization to the outputs and outcomes the organization desires to achieve • A focus on optimizing organizational performance and process quality as keys to delivering quality services • An organizational culture that adapts more easily to change • Longer range thinking about the present and the future

14. Strategic Components • Writtenstrategic plan • Organizational relationships defined • Inputs and outputs specified • Operational plan • Resource plan (program / performance budget)

15. Strategic Planning

16. Strategic Planning • SWOT Analysis & Visioning • Where your organization is • Where you want to take the organization • Goals and objectives • Operational Plan of Execution • How you intend to get there • Action steps • Program budget

17. STEP Analysis A scan of the external environment in which the organization operates in terms of these factors: • Social • Technological • Economic • Political

18. Framework Set Goals to Guide Decision Making • Assess community needs, priorities, challenges and opportunities • Identify opportunities and challenges for services & assets • Develop and disseminate broad goals Develop Approaches to Achieve Goals • Develop financial policies • Develop programmatic, operating and capital plans • Develop programs & services consistent with policies and plans • Develop management strategies

19. Framework Develop Budgets Consistent with Approaches • Develop a process for preparing and adopting a budget • Develop and evaluate financial options • Make choices necessary to adopt a budget Assess Performance & Make Adjustments • Monitor, measure, and assess performance • Make adjustments as needed

20. Three Kinds of Objectives • Performance • Targets for efficiency and effectiveness • Financial • Targets for resources • Strategic • Targets to strengthen overall position

21. Crafting the Strategy • Objectives are measurable results • Strategy is how to achieve these results Overall strategy is a blend of intended actions as well as responsiveness to unanticipated developments within the core values

22. Executing the Strategic Plan • Strategy Implementation • Realistic objectives with appropriate actions • Control and Evaluation • Continuous assessment and adjustment

23. Strategy Implementation • Organizing • Communicating • Culture building • Motivating • Budgeting • Supervising • Leading

24. Control and Evaluation Result or Outcome Condition of improvement or well-being for client population Indicator or Benchmark Standard which helps quantify the achievement of a result Performance Measure Measure of how well a program or service system is working

25. Performance Measures • Public Works: • X miles of streets cleaned per Y dollars • X tons of waste collected per Y dollars • Libraries • X number of books circulated per Y dollars • X number of reference questions answered • Police? Planning? Finance? Education?

26. Communicating the Vision Communication, Communication, Communication • Challenges and motivates workforce • Arouses strong sense of organizational purpose • Induces employee buy-in • Galvanizes people to the organization

27. Why Shared Vision Matters When all employees understand and are committed to the organizations mission and strategic vision, both daily execution and responses to change and adversity are greatly improved

28. Not a Automatic Ten Major Pitfalls • Top management assumes that it can be delegated • Top management spends too much time on day-to-day • Failure to set appropriate organizational goals • Failure to involve staff in the planning process • Failure to use plans as standards for performance • Failure to create climate conducive to planning • Assuming that planning is separate from management • Inserting too much complexity and formality • Failure to integrate all departmental plans • Top management making too many seat-of-the-pants decisions

29. Strategic Management Q: So, why do we need “strategic management”?

30. Why Strategic Management For Your Organization to Succeed in the Face of: • Increasing demands • Severe financial constraints • Growing complexity of public issues • Growing pressure from the public

31. Why Strategic Management For Your Employees • Gives everyone a clearly defined role • Makes a difference in performance levels • Provides systematic approach to uncertainties • Coordinates and focuses employees

32. Why Strategic Management For Your Organization • Crystallizes long-term direction • Reduces riskof rudderless decision-making • Conveysorganizational purpose and identity • Keeps actions of all employees on common path • Avoids mission creep • Helps organization prepare for the future

33. Strategic Management The process by which the guiding members of an organization envision its future and put into place the necessary resources, procedures and operations to achieve that future

34. So What Does All This Have to Do with Budgeting? It is the strategic plan that drives budget formulation It allows the organization’s leaders stay on top of the priorities so they can budget the resources the organization needs to carry out its strategic agenda

35. So What Does All This Have to Do with Budgeting? If the budget cannot be fully funded to meet all of the demands, it is the strategic prioritization of the objectives and action steps that guide the deployment of the limited resources

36. So What Does All This Have to Do with Budgeting? Sometimes the availability of additional resources is not always readily apparent, but strategic management can make them more visible When the organization establishes what is really important, it also makes explicit those actions that are not as important… Eliminating low priorities and redundancies in assignments can free up additional resources making them available for strategic actions

37. Budgets: More Than Numbers Improved Performance & Results Accountability through Strategic Management

38. Regionalization of Services

39. Strategic Management System Q: So, what’s a strategic management system?

40. Strategic Management System A management system that links strategic planning and decision making to the day-to-day business of operational management

41. More Than Just a Plan Strategic management goes beyond the development of a strategic plan to the deployment and implementation of the plan and the evaluation of its results Deployment involves communicating the plan to all employees and getting their buy-in Implementation involves adequately resourcing the plan, putting it into action, and managing those actions Evaluation consists of tracking implementation actions, assessing how the organization is changing as a result of those actions and using that information to update the plan

42. Role of Senior Management Since strategic management is a continuousprocesssenior leaders must be facilitators, consensus-builders, coaches, consultants, and champions of their organization’s culture And they must be constantly in tune with their environments to change their organization as necessary

43. The Difference? • Focus shifts from the inputs that are used to run the organization to the desired outcomes • Optimizing organizational performance and service quality within limited resources is the priority • Actions based on a plan (not a reaction) • Organization-wide communication and involvement • The organization can adapt more easily to change • The organizational boundaries are more flexible

44. First Step: The Plan WARNING: Do not bother to go through a strategic planning exercise unless and until the leadership team is committed to carrying it out. If there is no follow-through, confusion will arise at the operational level, and it will result in cynicism about any improvement efforts.

45. Assign roles and responsibilities Establish priorities Involve mid-level management as active participants Think through how to manage implementation Charge mid-level management with aligning action plans Make careful choices about the form and content of the plan No accountability for deployment Too many goals, strategies, or objectives with no priorities Plan in a vacuum No overall strategy to implement Make no attempt to link with day-to-day operations Not being thorough - glossing over the details Keys to Success… or Failure

46. Who Does What? • Senior leadership • Reaches consensus on strategic plan • Develops deployment and implementation methods • Planning team members • Development of strategies from goals and objectives • Incorporates feedback from organization input • Program managers • Shares plan with employees • Collects feedback • Resource managers • HR, budget, etc., incorporate plan needs

47. Problem Areas Caution: Strategic planning is about change that leads the organization toward a better future; therefore, don’t ask for feedback on the plan by sending it out asking for comments Advice: To foster ownership of the plan, develop a feedback process that actively involves line managers and staff

48. Problem Areas Caution: The more strategic the plan, the harder it is to ensure that the workforce feels it is contributing directly to the organization’s mission Advice: It is crucial to make the plan a living document so start by using routine organizational terms and by continually asking how daily work relates to the plan

49. Problem Areas Caution: During deployment, it is important for the program managers to continue to focus on the good of the whole organization, not just their own functional areas Advice: Encourage open and candid communication among all program managers so that issues are brought out and dealt with constructively during planning phases

50. Problem Areas Caution: Sometimes the resources or skills needed to accomplish an objective are not available and sometimes more study is needed Advice: The first step may be to put together a team to conduct additional study. The results of the study effort will determine what changes have to be made in staffing or other resources before the action steps can be implemented