Outline I. Balanced Scorecard Into (R. Chavira) n n A. Balanced Scorecard Leadership Team Members Introduction Roles and Responsibilities for entire team.
The University of Texas at El Paso Balanced Scorecard Divisional Retreat 05 Division of the Vice President for Finance and Administration
Survival The Survivors of any Species are not necessarily the Strongest or the Most intelligent…. They are those who are most responsive to change…. . Only the Change ready Survive. Charles Darwin
Balanced Scorecard Leadership Team n Cynthia Vizcaíno Villa n Carlos Hernandez n Andrew Peña n Greg Mc. Nicol n Dr. Roy Mathew n Dr. Victor Pacheco n Ruben R. Chavira
The Leadership Team n n Develops the division’s vision, strategy and goals Develops Divisional objectives and targets that are aligned with the overall Universities Objectives and targets Provides leadership, endorsement and vision for the project Clears barriers to scorecard progress
n n Executive Sponsor: Cynthia Villa Balanced Scorecard Champion: Ruben R. Chavira Balanced Scorecard Advisor/Observer: Dr. Roy Mathew Business Unit Team Members: Individual Department Directors and Managers for each Business Unit
The Business Unit Team n n n Drafts the strategy map and scorecard Works with employees to develop measures supporting strategic objectives Works with the Leadership Team to plan and implement the Balanced Scorecard in the VPFA Division
Outline II. What is the Balance Scorecard V. Pacheco n n n n Introduction to the BSC What is BSC as a Management System Why Implement BSC. Expectations of BSC Advantages to the BSC approach Mission, Vision, Values Strategy
Concepts Introduction to the Balanced Scorecard What is it? Why do it? Balanced Scorecard Fundamentals The Four Perspectives Using the BSC as a Management System
What is the Balanced Scorecard Definition: The Balanced Scorecard is a management tool that provides stakeholders with a comprehensive measure of how the organization is progressing towards the achievement of its strategic goals.
What is the BSC Cont. The Balanced Scorecard: n Balances financial and non-financial measures n Balances short and long-term measures n n n Balances performance drivers (leading indicators) with outcome measures (lagging indicators) Should contain just enough data to give a complete picture of organizational performance… and no more! Leads to strategic focus and organizational alignment.
The Balanced Scorecard as a Management System BSC reviewed regularly to enhance operational decision-making n n Success of initiatives assessed based on DATA… not opinions Leading indicators evaluated to confirm accuracy of assumptions
Courtesy of California State University What are our expectations of the Balanced Scorecard? Process-Driven Services Streamlined, Value -Added Services Individuals Teams and Partnerships Bureaucratic Customer-Driven Reactive Strategy-Focused
The Balanced Scorecard as a Management System The BSC is a “Living Document” that requires regular revision of objectives, measures and initiatives: n n How are we doing? Are we measuring the right things? What initiatives do we need to get us where we want to go? Have our organizational goals changed?
Why Implement the BSC? n n n n To achieve strategic objectives. To provide quality with fewer resources. To eliminate non-value added efforts. To align customer priorities and expectations with the customer. To track progress. To evaluate process changes. To continually improve. To increase accountability.
Advantages to this Approach n Simple to Use and Understand n Based on Vision and Strategy n Multidimensional §Quantitative and Qualitative Measures §Current and Future n Provides Measurement of and Method for Improving our Services n Ties Quality initiatives together n Serves as a Communication Tool
The Strategy Focused Organization n Mission – What we do n Vision – What we aspire to be n n Strategies – What plans do we put in place to complete our objectives? Measures – Indicators of our progress
Strategies n n Strategy is simply a Hypothesis developed by the Manager. Which translates into a working Plan of Action. Strategy represents the Managers educated guess as to the appropriate course of actions given their knowledge of their Business.
Strategic Direction Create Environment For Change Strategic Performance Management System Communicate Strategies Define Objectives Implement BSC Balanced Scorecard Measure Performance Improve Processes Linking it all together…. Evaluate and Adjust Continuous Improvement Redefine Initiatives Credit California State University
Outline III. The 4 Prospectives of the Balanced Scorecard n n Financial Prospective (C. Hernandez) Customer Prospective (V. Pacheco) Internal Processes (G. Mc. Nicol) Employee Learning and Growth (Andrew Pena)
THE BALANCED SCORECARD The Four Perspectives FINANCIAL/REGULATORY To satisfy our constituents, what financial & regulatory objectives must we accomplish? CUSTOMER To achieve our vision, what customer needs must we serve? INTERNAL To satisfy our customers and stakeholders, in which business processes must we excel? LEARNING & GROWTH To achieve our goals, how must we learn, communicate and grow? Courtesy of California State University
Customer Perspective To achieve our vision What are the needs of our customers ? Possible Performance Measures… n Customer Satisfaction (Average) n Satisfaction Gap Analysis (Satisfaction vs. Level of Importance) n Satisfaction Distribution (% of each area scored)
Financial / Regulatory Perspective To satisfy our constituents, what financial and regulatory objectives must we accomplish? Possible Performance Measures… n Cost / Unit n Unfunded Requirements or Projects n Cost of Service n Budget Projections and Targets
Internal Perspective To satisfy our customers, in which business processes must we excel? Possible Performance Measures… n Cycle Time n Errors or Rework n Completion Rate n Workload and Employee Utilization n Transactions per employee
Learning and Growth To achieve our goals and accomplish core activities, how must we learn, communicate and work together? Possible Performance Measures… n Employee Satisfaction n Retention and Turnover n Training Hours and Resources n Technology Investment
Outline IV. The 5 Principals of a Strategy Focused Organization (R. Chavira) 1. 2. 3. 4. 5. Mobilize change through executive leadership Translate the strategy to operational terms. Align the organization to the strategy. Make strategy everyone’s job Make strategy a continual process.
The Strategy Focused Organization The Five Principles: 1. 2. 3. 4. 5. Mobilize change through executive leadership Translate the strategy to operational terms. Align the organization to the strategy. Make strategy everyone’s job Make strategy a continual process. Source: The Strategy Focused Organization, Norton & Kaplan
The 5 Principles of a Strategy-Focused Organization 1. Mobilize leadership for change. Senior Management must ensure that… n Strategic Plans in individual departments for the VPFA must agree with those of the University of Texas at El Paso (UTEP). n Resources must be properly managed in the appropriate areas. n All areas of the VPFA are engaging in continuous improvement efforts. n The focus will be on creating a continuous feedback process to access the effectiveness of stated strategies within the entire Division. n Creation and Maintenance of a system to monitor these activities… the Balanced Scorecard approach to performance management.
The 5 Principles of a Strategy-Focused Organization Cont. 2. Translate the strategy to operational terms. n Each department: Must develop Vision and Mission statements and Strategic Plans that are aligned with the overall Division’s Vision and Mission statements and Strategic Plans n A comprehensive tool must be put into to place to measure the effectiveness of the strategic planning process. n Measurement of results will initially be compared to established base line data. n Moving forward the prior year’s action plans will serve as the measurement to determine if resources were appropriately focused and to establish action plans for the coming year.
The 5 Principles of a Strategy-Focused Organization Cont. 3. Align the organization to the strategy. n The Balanced Scorecard Leadership Team’s vision and mission statements for the VPFA will outline how the campus administrative units will contribute to the vision, mission and strategic objectives of The University of Texas at El Paso (UTEP). n The senior managers for the VPFA will ensure that each Business unit’s vision and mission statements and strategic objectives are aligned with the VPFA’s vision and mission and strategic objectives.
The 5 Principles of a Strategy-Focused Organization Cont. 4. Make strategy everyone’s job. n All Directors have already developed vision statements, and put together strategic plans for their respective business unit. Balanced Scorecard will be the next step to ensure that all strategic plans are tied into the strategic plans for the Division and of the University. n Staff must look at how their efforts fit into the department’s strategic objectives, and must understand their impact on others in the process. They must work together with their colleagues in the process to ensure that the process is as efficient as possible. n Strategic objectives determined by the Balanced Scorecards will eventually be incorporated in the performance expectations and assessment of each employee on an annual basis for assurance that each employee stays focused on the department’s goals and objectives.
The 5 Principles of a Strategy-Focused Organization Cont. 4. Make strategy a continual process. n All of the metrics associated with the four perspectives of the BSC will be set up initially and will then continue to be refined and updated to reflect current goals and strategic objectives and any changes is the Division and the University on an ongoing basis. n There must be a continuous review and improvement cycle at all levels of the organization for the BSC on an ongoing basis.
The 5 Principles of a Strategy-Focused Organization Cont. 5. Make strategy a continual process. n The Balanced Scorecard will become an integral part of each VPFA department to keep them focused on the needs of their customers, and at the same time will assure that those delivering the services have the appropriate training and tools to service their customers.
Outline V. Why should the VPFA adopt a BSC ( C. Villa) n n n Questions we should be asking ourselves VPFA’s reasons for change. UTMB Assessment of Institutional Research. Why go to BSC Challenges
What is the driving reason for the VPFA to implement the Balanced Scorecard in the division? What is Our “Burning Platform? ” The Balanced Scorecard Leadership Team must commit to support this endeavor 100%
Questions we should be asking ourselves: 1. Do our priorities, goals and objectives align with the mission and vision of the entire division? Do they line up with the mission and vision of the University? 2. Does our division have the right priorities, goals and objectives to achieve the University’s priorities, goals and objectives? 3. Are we doing the right things in the right way to accomplish our priorities, goals and objectives?
Questions Cont. : 4. How do we know if we are fulfilling our priorities, goals and objectives? 5. Are the managerial decisions we are making to run our business on a daily basis driven by data? 6. Are the managerial decisions made using real time data or historical information? 7. Are we pro-active or reactive as an organization?
Summary of UTMB Findings The University of Texas Medical Branch (UTMB) Office of Planning and Management Systems was invited to conduct an organizational assessment of institutional research support activities and business processes offered by departments within the Office of the Vice President for Finance and Administration (VPFA), and the Office of the Vice President of Research and Sponsored Projects (ORSP). Eight interdependent themes emerged from the sessions n n n n Clarify UTEP’s long term vision for research Initiate a systematic change in specific aspects of the culture of the institution Engage faculty in developing an institutional strategic plan for research Aggressively redesign institutional work processes Enhance communication systems and processes Establish higher expectations for premier customer service Improve information systems and implement work process automation tools Provide workforce development opportunities
Summary of UTMB Findings: Summarize n n n Need to simplify the steps in each process, reduction of the time length of the processes. Need to Increase automated systems support Need to Improve communication between departments Need to Improve customer service. The need to understand the complete beginning-to-end processes of the service providers by customers.
Summary of UTMB Findings Emerging themes of concern cite in the Organization n n n A lack of human resources A lack of effective work processes A lack of the physical resources that would be required to take UTEP research to the next level. The processes for hiring staff, purchasing materials and equipment, processing travel requests reimbursement for travel, processing invoices for payment, compensating staff, and securing approvals are viewed as too labor intensive, too time consuming, and too complex. Managers agree that there is a need to develop comprehensive service standards and establish performance metrics. Accountability for the complete process does not exist in most cases.
Summary of UTMB Findings Recommendations: n The development of a clear institutional vision for research should include broad representation of faculty and leadership. n Accountability for results across departments, processes, and activities must be improved. n Improvements in customer service orientation are needed. n Encourage a change in the culture that recognizes the value of providing customer service to researchers using a facilitative approach while maintaining mandated compliance requirements. n Aggressively redesign institutional work processes. n Institutional processes must be streamlined to minimize additional steps.
Summary of UTMB Findings n Each support department should critically examine the quality characteristics (attributes) that customers seek in the deliverables produced by the departments. n Develop performance metrics for each deliverable service, publish the metrics, and hold the management accountable for performance. n Attention needs to be given to developing a customer relationship management program to enhance the working relationship between the support departments and the academic departments, and the researchers. n Tools to facilitate tracking of the status of transactions in multiple functions (IRB, purchasing, personal requisitions, IP, etc. ), and communication capabilities are severely needed. n Design and implement a rewards and recognition program for members of the finance and administration, also provide development opportunities for the staff.
Why go to Balanced Scorecard The Finance & Administrative Services. . . Division Has Taken Our Balanced Scorecard. . . Journey n n n n To. . . Improve our Division's effectiveness Focus efforts across the Division towards a single strategy Improve the culture and climate of our Division Help us prioritize daily activities Assist us with making choices while continuing to deliver services to the campus community Measure our progress towards improvement in these areas Strengthen the work of the division by building systems of accountability and continuous improvement.
Challenges n n n Institutions of Higher Education are increasingly under more pressure to demonstrate accountability. Administration of higher education must manage faced with fast changing opportunities and challenges. To link the critical and strategic success factors to specific problems to be solved and resources to be allocated.
Outline VI. What are some of the BSC Success Stories (R. Chavira) n n n University of California at San Diego United Parcel Service (UPS) California State University
Balanced Scorecard Successes University of California at San Diego n Now in its tenth year, The University of California at San Diego’s balanced scorecard process demonstrates that performance improves when it is effectively and routinely measured, analyzed and addressed. Some examples include: § In the 1994 BSC Customer Survey, two units scored in the “Excellent” range (> 3. 8 on a 5 point scale); in 2003 there were 16 units that scored in the “Excellent” range.
Balanced Scorecard Successes University of California at San Diego n n Six Business Affairs units had “Excellent” 2 -Box Ratios (the ratio of satisfied customers to dissatisfied customers; >10: 1 is defined as excellent) in 1994, whereas 16 units had “Excellent” ratios in the 2003 survey. Bookstore Retail Inventory Turnover has increased 41% in the past 6 years. Human Resources Cycle time for hiring improved 25% between 1998 and 2002. Payroll cost per W-2 has been reduced 20% since 1997.
Balanced Scorecard Successes University of California at San Diego n There is no other university in the United States that has achieved UCSD’s level of recognition for its use of the Balanced Scorecard. n n USA Today gave their highest quality award to UCSD in 1999 for its use of the Balanced Scorecard. Similar recognition has come from organizations such as: n Human Resource Executive Magazine, n The San Diego Business Journal, n The National Association of College and University Business Officers, n The San Diego Daily Transcript, n The National Association of Educational Buyers.
United Parcel Service n n 1994 Company enjoying record profits. Opportunities arising from E-commerce and global expansion. Wanted to focus on becoming more Customer Oriented, Wanted Employees to understand how their day-to-day affected the overall business and for employees to refocus on key quality measures of key processes. Scorecard became the vehicle to align all eleven of the companies Districts if more than 300, 000 employees.
UPS Continued In the words of one UPS executive” The Balance Scorecard provided a road map-the shared vision of our future goals-with action elements that let everyone contribute to our success. ” n By 1999 the Company had transformed into a more nimble customer-focused and solutions oriented business at the leading edge of technology and ecommerce solutions. n Results after 5 Years: n n UPS revenues were growing at nearly 10% annually, in an industry with average growth of 3 -4% Profitability has increase by 30% in 1998 and 40% in 1999 Forbes Magazine name UPS company of the year. Business Week Magazine described UPS as “ The foot soldiers of the dotcom revolution. ”
California State University Stanislaus n n n The Vice President of Business and Finance at CSU Believed that a division wide Balanced Scorecard would provide the assessment tool needed to verify the division’s support of and contribution to the University’s Mission and Strategic Plans. Plan was implemented in the Facilities Services, Financial Services, Human Resources, Public Safety, and Auxiliary and Business Services. First step was to Verbalize and Clarify that the Divisions Objectives from the top level (Senior Management team) down to the individual business units lined up with the Objective of the overall University. Senior Management then ensured that their commitment to the project was firmly conveyed. All levels of Management then worked to get the buy-in for the project from all Divisional Employees. Formal Measures were put into place to track progress.
Outline VII. What does this Mean? n n n What will this do for the Division Business Units? (V. Pacheco) How will this change the focus of our management teams? Data Driven Business (V. Pacheco) Underlying Questions. (V. Pacheco) Relationship between University Compact-VPFA Compact-Departmental Compact. VPFA Organizational Framework. (V. Pacheco) Strategy Map Example (R. Chavira) Examples for VPFA Divisional Balanced Scorecard
What will this Do for the VPFA Business Units? n n n Improve our Division’s effectiveness Focus efforts across the Division towards a single strategy Improve the culture and climate of our division Help us prioritize daily activities Assist us with making choices while continuing to deliver services to the campus community Measure our progress towards improvement in these areas
Focusing on peoples’ information needs. . . Courtesy of Northwest Missouri State University 1. 2. 3. 4. 5. What are your key decision areas? (as defined in your job description) What kinds of decisions do you make? What information do you need to make good decisions? What data do you need to create good information? What is the best way to obtain that data?
This and the following slide were adapted from a Dee W. Hook presentation. UNDERSTANDING INFORMATION DATA
This and the following slide were adapted from a Dee W. Hook presentation.
Underlying questions Courtesy of Northwest Missouri State University 1. Who are your customers/clients? 2. What are their expectations? 3. How do you “deliver” quality? 4. How do you know how well you are doing? 5. What performance improvement targets are reasonable?
Short Term Priorities: VPFA Divisional Compac 1. Resource Development to Build Capacity 2. Research Development 3. Improving Undergraduate Student Success. 4. Graduate Programs Development and Expansion. 5. Increased Efficiency 6. Campus Growth Management. 7. Responsive, Effective and Quality Infrastructure Support Service 8. Stewardship over Human, Financial, and Physical Assets and Ensuring Compliance with Federal, State, and UT System Mandates.
Long Term Priorities: VPFA Divisional Compac 1. 2. 3. 4. Resource Development Stabilization, Competitiveness and Sustainability of Graduate Programs. Enrollment Management and Recognition as a National Model for Education of Hispanics. Sustained Growth of Externally Funded Research Enterprise.
VPFA Balanced Scorecard Examples n n Facility Services (Juan Guerra) Purchasing (Danny Avitia) Bookstore (Annabelle Padilla) Have each Director Describe an Objective. How does it fit into the framework of the BSC. Linkage to Divisional Compact n Measurements and Targets n What data exists to track. n
Outline VIII. Follow up Activities n n Study Divisional Mission Vision and Values Read Balanced Scorecard Book Start to formulate a measurement system for current strategic objectives. Departmental Meeting with org develop spec to start formulating objective to BSC format.
Activities to follow: n n n Provide all team members with a copy of “Balanced Scorecard Step by Step for Government and Non-Profit Agencies” by Paul R. Niven. Provide articles by Robert S. Kaplan and David P. Norton on the Balanced Scorecard. Provide definitions for key terminology used for the Balanced Scorecard to ensure that all team members are on the same page, “Speaking the same language. ”
n n n Careful examination by Balanced Scorecard Leadership Team of VPFA’s divisional mission and vision statements, and current strategic plans. Focus Groups with the Directors for each Business Unit. Departmental Meeting to begin Translation of Strategic Objective to BSC format. Employee Satisfaction Survey to be conduct for the entire Division. Balanced Scorecard Leadership Team meeting to develop a top level Scorecard.
Building A House of Quality Courtesy of Northwest Missouri State University MANAGEMENT BY FACT TRUST SHARED VALUES AND VISION ASSESSMENT & FEEDBACK INVOLVEMENT HIGH EXPECTATIONS CUSTOMER FOCUS CONTINUOUS IMPROVEMENT
Action Plan n Current status of Activities
Thank You! For more information regarding this presentation contact Ruben R. Chavira Organizational Development Specialist The University of Texas at El Paso (915) 747 -8873 rchavira 2@utep. edu
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