Connecting Strategy & Action: Helping Health Care Organizations Achieve their Goals
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1 Connecting Strategy & Action: Helping Health Care Organizations Achieve their Goals Daniel A. Szpiro, PhD Dean Jack Welch Management Institute September 11, 2012, Phoenix, AZ
2 Introduction Me Industry background + academic career Experience working with managers & professionals Topic Origins go back to mid-1980 s Integrated organizational performance management always a critical topic
3 What is Control? The set of methods and tools that organization members use to keep the organization on track toward achieving its objectives Balanced Scorecard Not intended to suggest manipulation or Big Brother approach When a system or process is in control that means it is producing the intended results Effective control requires communication, motivation, commitment, and learning
4 Evolution of Control Systems In practice, control systems tend to grow from less to more formalization Informal control systems Non-formal control systems Formalization of control systems Formal information-based routines and procedures used by managers to maintain or alter patterns in organizational activities (Robert Simons)
5 Why do Control Systems Fail?
6 The Balanced Scorecard (BSC) Organization strategy describes how the organization s mission will be accomplished The BSC is a an integrated framework to aid in the operationalization of an organization s strategy Balanced Scorecard The BSC as a Control Framework Articulates linkage between strategy and operational actions Incorporates financial and non-financial measures Permits focus on key indicators of success Allows appropriate connection between measurement and reward
7 BSC Background Traditional financial measures of organizational performance have short-comings Balanced Scorecard Long-recognized need for broader measures of organizational performance, but lack of framework Kaplan & Norton published series of articles in HBR describing the Balanced Scorecard (BSC) then published a series of books
8 Traditional Perspectives in the BSC Strategy Financial Balanced Scorecard Customer Internal Processes Source: Robert Kaplan & David Norton, The Strategy Focused Organization, Learning & Growth
9 Perspectives in the BSC: Adapted for Health Care Setting Strategy Patient Balanced Scorecard Financial Perspectives in the BSC: Adapted for Health Care Internal Processes Learning & Growth
10 Perspectives in the BSC: Adapted for Health Care Setting (cont d) Strategy Patients perspective of success Patient Shareholders perspective of success Balanced Scorecard Financial Internal Processes To succeed, how organization must learn and improve Key processes that meet patient care needs Learning & Growth
11 Perspectives in the BSC: Adapted for Health Care Setting (cont d) Strategy The Past: Results Patient Balanced Scorecard Financial Where results start: The Future Internal Processes Learning & Growth
12 BSC Strategy Map for Health Care Patient Perspective Patient Care Adapted from: Robert Kaplan & David Norton, The Strategy Focused Organization, Financial Perspective Balanced Scorecard Increased Increased Growth Efficiency Internal Perspective Innovation Customer Management Operational Excellence Citizenship Learning & Growth Perspective Competencies Strategic Technologies Organizational Environment Leadership
13 The Balanced Scorecard Framework Strategic Theme Objective Measure Target Initiative Patient Financial Balanced Scorecard Internal Learning
14 The BSC Framework (cont d) Financial Customer Internal Learning Identify Strategic Based On Strategy Most Relevant and Useful Establish Stretch Balanced Theme (10-12) Scorecard (2 per) Targets Specific to the Current Planning Period Strategy Objective Measure Target Initiative
15 Identifying Measures Common sentiments of many managers I receive information I didn t ask for. I don t get the information I really need. Critical to differentiate between what can be measured and what should be measured Managers are buried in measurement! Brainstorm, then scrutinize to identify appropriate measures (i.e., measures clearly linked to the organization s objectives)
16 BSC Example Hospital Unit Strategic Theme Objective Measure Target Initiative Patient - Excellent care - Patient satisfaction - Continued visits - Patient satisfaction index - Patient retention - Referrals -%, $, # Financial - Cost efficiency - Working within budget - Developing outside sources - Budget variance - Fund raising -%, $, # Internal - Effectiveness - Ensuring quality care - Patient complaints - Patient loads -%, $, # Learning - Innovation - New initiatives for care delivery - Training hours per caregiver - Employee satisfaction -%, $, # - Turnover
17 BSC Example: Brigham & Women s Hospital
18 BSC Example: Gen. Leonard Wood Army Hospital
19 Ready for BSC? Kettering Health Network
20 BSC Presentation: Report Card Example Patient issues A Employee issues B- Efficiency issues C+ Financial issues B Overall grade B- Narrative
21 Visual Communication of BSC Desired state Present state Employees 110% 90% 70% Operational development 50% 30% Patients - internal measures Finances Patients - external measures
22 BSC Implementation Broad involvement & buy-in Manage the number of measures Rewarding scores on Balanced Scorecard Linking the part to the whole
23 Reasons for Implementing BSC Source: Progress Report on the Balanced Scorecard: A Global Users Survey, HBS
24 Final Words Trust your instincts, but back them up Take risks, but do your homework Add clarity: provide a framework to approach issues Be a missionary: create converts to advance your cause Thank you! daniel.szpiro@jwmi.com
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