What is a Balanced Scorecard?
A Balanced Scorecard can be described as “... a carefully selected set of quantifiable measures derived from an organization’s strategy ...” (Paul R. Niven, Balanced Scorecard Step-by-Step for Government and Nonprofit Agencies).
The traditional Balanced Scorecard is comprised of four perspectives: Financial, Customer, Learning and Growth, and Internal Business Processes. Each perspective provides a different way of looking at an organization’s performance. The purpose of using multiple perspectives is to shift away from the traditional focus on financial measurement and to include other measures that are important to the success of an organization.
The Nanaimo Model
Connection to the 2012 to 2015 Strategic Plan
Usually, the measures contained in a Balanced Scorecard would be derived from an organization’s strategy. Because the development of the City of Nanaimo’s Balanced Scorecard preceded the strategic planning process, the measures were largely drawn from other strategic processes, such as the Official Community Plan and other master plans.
Over time, the Balanced Scorecard will evolve to include many of the outcomes of the City's Strategic Plan and other future processes like the Transportation Master Plan.
How were Performance Measures Selected?
Performance measures can be broken into three basic types:
- Input – tracking of program inputs, such as staff time and budgetary resources. These are simple to measure but provide limited information for decision-making and analysis.
- Output – (a.k.a. activity measures) track the results generated from the use of program inputs, e.g., number of people serviced, amount of garbage collected, or building permits issued. These measures may provide information on whether desired results are being achieved, but may not disclose whether clients are better off.
- Outcome – (a.k.a. impact measures) track the benefit received by stakeholders as a result of the organization’s operations. Outcome measures shift the focus from activities to results, from how a program operates to what it achieves. These can be difficult to measure and the link between cause and effect is less obvious.
The City of Nanaimo’s Balanced Scorecard uses a mix of input, output and outcome measures, with an emphasis on outputs and outcomes.
A set of draft measures was prepared by a staff team that represented a cross-section of the City’s departments. This was presented to Council in September 2011. In choosing the draft measures, a number of factors were considered:
- Linkage to strategy – Does this measure link back to a strategy or priority of the organization, such as an approved master plan or specific directed Council priority? Can we identify objectives, targets and initiatives related to this measure?
- Degree of City control or influence – How much control or influence does the City have over this measure?
- Will it be easily understood – Will the measure be understood by the public without additional explanation?
- Frequency of Updating – How often is the data collected? Is there likely to be noticeable change during this period. Most of the measures chosen will be updated annually.
- Accessibility of data – Is the data available now to calculate this measure?
- Quality of data – Avoid using data that can be skewed by a few abnormal outcomes.
- Date Driven – Attempt to avoid measures that have an end date. What happens after the objective is achieved? Is it really a measure or is it an initiative?
- Quantitative & Objective – Try to make the measure quantitative and objective. Can a target be set?
- Dysfunctional – Could this measure drive the wrong behaviour?
Once Council had reviewed the draft measures, staff began the process of collecting the data, including any comparatives data from previous years or other municipalities. Where there were established objectives, targets and initiatives, these were included in the presentation. In some cases, these will need to be developed going forward. Some measures were modified to fit the data that is currently available. In a few cases, no data is available and processes will need to be developed.
The Future of the Balanced Scorecard
The performance measures on the Balanced Scorecard will be updated periodically as new data becomes available. The measures themselves will be reviewed annually to ensure that they remain relevant to the City’s strategy.