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Weekly UpdatesFourteen years after the concepts of the balance scorecard were introduced by Robert S. Kaplan and David P. Norton,' the question remains--"Is scorecarding in the public sector just a passing management fad?." In short, the answer is--"no"
Due to the nature of the mission and goals of most government agencies, an enterprise scorecard system can be an excellent tool for successful planning, executing, monitoring, and reporting of progress in achieving performance goals in the public sector.
WHAT IS A SCORECARDING SYSTEM?
The terms "scorecard" and "balanced scorecard" are often used interchangeably Several definitions of a scorecarding system follow:
* A method of visualizing important metrics relating to the health and/or strategy of an organization presented in a report, dashboard, or scorecard format.
* "A strategic management tool that helps measure, monitor, and communicate your strategic plan and goals through the organization in a way that is understood by everyone. (2)"
* "A framework for implementing strategy that translates an organizations' mission and strategy into a set of performance measures. (3)"
The On-Line International Scorecard Study was designed to investigate the use and adoption of scorecarding worldwide in the public and private sectors. (For more information or to participate in the study, go to www.scorecardsurvey.imanet.org.) Available on the Web in eight languages, the survey is sponsored by professional and consulting organizations from around the world. (4) The role of these non-financial sponsors is to solicit the participation of their members and clients in the survey
Useful information on the changing use and increasing popularity of scorecarding in the both the public and private sectors came from the 2005-2006 survey, and its predecessor two years before. What accounts for the increased popularity of scorecarding in the public sector? It is due, in part, to three main factors:
1. The increased demand for government accountability and delivery of efficient services with ever-tightening funding sources.
2. An increase in the skill level of government managers. Many of the "best and brightest" now make the government their preferred career choice.
3. The increasing availability of enterprise-class scorecarding software to facilitate the scorecarding process in extremely complex government operations.
GOVERNMENT ACCOUNTABILITY
The discipline of performance accountability and reporting is quickly becoming a sophisticated "best practice" at all levels of government. This is being driven by several forces, including:
* Greater public awareness and demand for visibility and accountability
* Mandates and policies such as the Government Performance and Results Act (GPRA) (5) and the President's Management Agenda at the federal level
* Reporting requirements such as the Performance and Accountability Report and Service Efforts and Accomplishments reporting
* Guidance from standards-setting bodies and professional organizations such as the Federal Accounting Standards Advisory Board, Governmental Accounting Standards Board, Association of Government Accountants, and the Government Finance Officers Association.
From the international scorecard study there is sufficient evidence to suggest an evolution of measurement and management practices. For the first few years, many organizations, public and private, struggled to get accurate management and performance reporting in a timely manner. Documenting, communicating, and monitoring strategy was considered by many to be a luxury, when survival was the primary goal for numerous organizations. In the initial study, many organizations focused more on the basic scorecarding activities; they stated that their main reasons for scorecarding were more tactical than strategic in nature. The ability to track many types of performance measures, to get key performance indicator (KPI) reports, and to have scorecard reporting at many levels within the organization ranked highest (75 percent to 83 percent of survey respondents) on the list of many organizations just beginning their scorecarding effort.
In time, respondents report more accountability-related reasons for scorecarding. It appears that the more experience organizations have with their scorecarding system, the more they desire accountability and strategy monitoring as part of their system. Additionally many of the accountability measures that appear in their scorecarding system can be used for their PAR reporting.
INCREASED SKILL LEVEL OF GOVERNMENT MANAGERS
The survey asked about the knowledge level of the people involved in implementing their scorecarding system. In 2003-2004, the survey showed 43 percent of the participants had a knowledge level beyond the beginner or novice level. In 2005, 50 percent of the implementers had experience beyond the level of beginner or novice; however, this modest increase of 7 percent over a two- to four-year period produced remarkable results.
In 2003, respondents were providing comments about their implementations such as:
* "Trying to get started ... seems we can't all agree on measures or metrics!!
Too many chiefs and not enough Indians ..."
* "Just beginning implementation."
* "We are in the process of developing a scorecard."
* "Pilot project suspended awaiting rollout of enterprise data warehouse to automate process for refreshing ABC Model/Scorecard with cost/performance data."
* "Currently building one."
By 2005, the comments changed dramatically Now comments were more about benefits they had received, instead of struggles with implementation:
* "It has focused the staff on key performance objectives that are important to senior management and tracks [our] progress."
* "Greater awareness of our successes and the things we need to do to remain successful. Painful awareness that much of our success is due to heroic effort, and not to well-defined processes."
* "I strongly agree this will be factual once completely rolled out. To date the networking between bases and sharing of actions and measurements to achieve the vision (most did not even know our mission/vision) has made this effort a huge success already."
* "Improved linkage between functions to achieve objectives."
* "Better understanding of performance implications of individual activity."
* "We can now focus our remedial action attention effectively to improve the business."
* "The greatest benefit to date has been the breaking down of silos between SBUs and the sharing of information, plans, challenges, etc."
Those involved in scorecarding had gained experience over this two- to four-year interval and were helping their organizations attain greater benefits. Seventy percent of organizations now report receiving significant benefits from their scorecarding system.
ENTERPRISE-CLASS SCORECARDING SOFTWARE
There are many organizations that begin their scorecarding effort using inexpensive, in-house available tools such as MS Excel[R], MS Access[R], and MS PowerPoint[R]. Eventually, organizations of a reasonable size find this bootstrapping effort provides diminishing returns and they begin searching for a more permanent solution. Enterprisewide software has certainly made the ongoing effort and maintenance aspects of a scorecarding system more palatable, and also made scorecard results available to a wider audience. They are feature rich, typically have automated and manual data input abilities, and provide a consistent look and feel for all users. These basic attributes, which are common to off-the-shelf enterprise applications, are often missing from homegrown programs. Purpose-built enterprise applications also have taken the pressure off of the IT departments, as they are no longer being asked to continually develop and maintain programs for scorecarding. Many applications on the market today are, for the most part, driven by end-users, or super-users rather than IT staff.
Respondents were asked to check from a list all the software features they desired in their scorecarding system. From the time the initial survey was completed in 2003-2004 to the 2005-2006 survey, there was little change in the top five most-requested scorecarding system features from the public sector (see Exhibit 1). The main difference was that the percent of organizations requiring the feature today is higher than it was previously
Exhibit 2 gives a more complete picture of how desired features ranked based on the 2005 survey. Although the top five features are focused mostly on KPIs and accountability, strategy-related features such as cause and effect maps (strategy maps), frameworks, communicating vision and strategy, and having the mission and vision included in the application also rated very high on the list of desired features (all greater than 70 percent).
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Other features that ranked high on the "must have" list were:
* Security such that a user can only see those measures and strategic objects that they should see
* E-mail alerts to tell a user when a condition has been met or not met (e.g., measure has a status of red, data is due or overdue)
* Web-based reporting to allow wide access at many locations
* Traffic lighting and trend indicators for results
* The ability to get data from legacy systems.
Finally, it is important that an interface be intuitive in order to reduce the cost of training, and encourage users to adopt it.
SUMMARY
Scorecarding drives excellence in business and government. Accountability, transparency, and performance management have now become essential features of the public sector thanks in part to government mandates, but also because of forward-thinking managers of top-performing government organizations. The use of scorecarding systems has indeed become more popular in the last few years and, more importantly, it has become more sophisticated and ultimately more beneficial.
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