Over the last few years, organisations in the public sector have experienced continual and rapid change. With an increasing emphasis on Best Value, organisations have had to look at new and creative ways of working to ensure the delivery of high quality services to the customer.
The Balanced Scorecard is a performance management tool, which helps organisations to link their strategic objectives to performance measures. It was devised by Kaplan and Norton as a way of providing managers with the information that they need to ‘navigate’ to future success. It assists an organisation to translate it’s mission and strategy into a comprehensive set of performance measures, through which performance can be managed.
The holistic approach
In the past many organisations have collected financial and business results measures. Whilst these are crucial, they only tell the story of past events. Alone, they are inadequate for guiding and evaluating an organisation’s journey towards best value and continuous improvement. The Balanced Scorecard brings together the financial measures of past performance with the ‘drivers’ of future performance.
Kaplan and Norton advocated a framework for viewing an organisation’s position from four perspectives – Customer, Process, Financial, and Learning and Growth, thus developing a balanced approach to performance.
Adapting to the public sector
Increasingly, many public and private sector organisations have adopted this approach and adapted it to suit their needs. Cheshire Social Services is one public sector organisation that has been using this approach for several years. Like many organisations it has a long history of strategic planning and performance management and, over the years, a vast number of performance measures have been developed internally and externally. However, a set of measures are only useful if they are closely linked to and inform policy, strategy and performance. Therefore any organisation looking at the issues of performance management must ask itself a number of questions:
* Are key strategies communicated, implemented and reviewed by all staff in the organisation?
* Does the organisation have the right performance management systems and measures to monitor the success of these policies and strategies?
* How much do performance measures concentrate on outcomes rather than outputs?
* Do managers have the right information at the right level to do their job?
* Is the organisation measuring the right things?
Cheshire Social Services adopted the Balanced Scorecard approach, with a view to addressing these issues.
The benefits of using this approach have been considerable. The balanced scorecard provides a practical framework for implementing corporate strategy and has assisted Cheshire Social Services to ensure that:
* Strategic objectives are linked to clear targets and annual budgets.
* Strategy is clarified, communicated, and cascaded via service and unit plans.
* Integrated performance measures, which are linked to operational targets, are developed and visible at every level.
* Management reports that inform decision making are produced.
* Business processes that deliver appropriate data at each level are developed.
* Organisational initiatives are prioritised and accountabilities clarified.
* There is high involvement of key stakeholders, increasing the commitment to making strategy happen.
The Balanced Scorecard, is therefore a performance management tool which helps to ensure that strategies and performance are closely monitored, evaluated and improved. It assists managers to develop a ‘learning culture’, review boundaries and look beyond. Ultimately, it assists in changing people’s attitudes and behaviours towards a customer orientated and performance management culture.