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Agenda Packet 2003/04/09
CITY OF CHULA VISTA ADJOURNED REGULAR MEETING OF THE CITY COUNCIL AGENDA April 9, 2003 CITY OF CHULA VISTA 3:30 P.M. CORPORATION YARD 1800 MAXWELL ROAD CHULA VISTA CALL TO ORDER ROLL CALL: Councilmembers Davis, McCann, Rindone, Salas, and Mayor Padilla 1. DISCUSSION OF THE OUTCOME OF THE LAST COUNCIL WORKSHOP ON MARCH 28 AND 29, 2003 AS WELL AS FUTURE GOALS AND OBJECTIVES AS THEY RELATE TO THE 2003/2004 BUDGET ORAL COMMUNICATIONS ADJOURNMENT to an Adjourned Regular Meeting on April 11, 2003 at 4:00 p.m.; thence to an Adjourned Regular Meeting on April 14, 2003 at 4:00 p.m.; and thence to the Regular Meeting of April 15, 2003, at 6:00 p.m., in the Council Chambers. ICMA Best Practices 2001 April 28, 2001 Putting Strategy First in Performance Management Corporate Perspective · The City of Charlotte has implemented a balanced scorecard that communicates its mission and strategy with tangible objectives and measures. · Creating a balanced scorecard develops consensus and teamwork throughout the organization EXECUTIVE SUMMARY For many years the City of Charlotte's City Council would set goals at an annual retreat. Many of the goals were short term and not particularly strategic or connected by themes. At its annual retreat in 1990, City Council endorsed a proposal to change its goal setting process. The City Council agreed to identify strategic themes (also known as focus areas) for the City to focus its limited resources and push for excellence. Identifying strategic themes, helped Council develop consensus and set priorities. After a decade City Council still uses its annual retreat to define strategy and set priorities. The retreat provides the framework for establishing the upcoming operating and capital budgets. As a result, the City's budget supports objectives and priorities established in the strategic plan. New money or savings, from competition or productivity improvements, is targeted to achieving strategic objectives. Elected officials are also very interested in results. City Council challenged staffto develop results oriented measures. With results oriented measures we attempt to show return on investment and demonstrate accountability. As The Empowered Manager author, Peter Brock, said, "Choosing to be accountable for results is different and better than being held accountable." Since the early 1970's, Charlotte city government has measured performance. The Balanced Scorecard (BSC) was a new way of thinking about performance measurement. The BSC was different because it required the City to translate its mission and strategy into tangible objectives and measures. The BSC tracks the implementation of the strategic plan. Other benefits or results of the BSC implementation include: · It focuses City Council's agenda on important or strategic issues. · It develops consensus and teamwork. · It enhances employee's understanding of organizationaI goals. · It communicates strategic results to citizens. City of Charlotte VISION The City of Charlotte will be a model of excellence that puts the citizens first. Skilled, motivated employees will be known for providing quality and value in all areas of service. We will be a platform for vital economic activity that gives Charlotte a competitive edge in the marketplace. We will partner with citizens and businesses to make this a community of choice for living, working and leisure activities. MISSION "Public Service Is Our Business" The mission of the City of Charlotte is to ensure the delivery of quality public services that promote safety, health and quality of life of its citizens. We will identif~ and respond to community needs and focus on the customer through: · Creating and maintaining effective partnerships · Attracting and retaining skilled, motivated employees · Using strategic business planning PROJECT DESCRIPTION (THE JOURNEY) Developing the Strategic Themes City Council began the process with a strategic visioning session, with follow-up discussions on specific themes identified through the visioning session. Several themes readily came to mind such as reducing crime and sustaining inner-city neighborhoods. During the theme discussions several Councilmembers argued that education should be one of the high priority areas. However, because education is the statutory responsibility of Mecklenburg County, Councilmembers began to focus on areas they could directly influence (i.e., having legishtive authority and legislative tools). The Council ultimately selected five focus areas to make up their strategic plan. Since 1995 the City Council has given priority to these focus areas: · City Within a City (preserving and improving older urban neighborhoods) · Community Safety · Economic Development · Restructuring Government · Transportation Focus Areas and Objectives City Within a City Provide leadership and resources to make individuals and families self-reliant; and strengthen and revitalize deteriorated neighborhoods Community Safety Provide public safety services to ensure that citizens feel safe; support programs which work to solve the root cause of crime and drug problems, such as housing, jobs, etc.; and elicit the support of other organizations to reduce crime and the influence of drags City of Charlotte 2 I Economic Development ISupport formation, retention, and expansion of business and initiatives that provide quality obs Restructuring Government Manage for results by providing the best service at the lowest cost and meeting customer expectations Transportation Address the City's road and intersection improvement needs, develop a local and regional mass transit system, and promote alternative methods of transportation such as walking and biking Council Committees The Council also structured its committee system around the focus areas to further emphasize its commitment to the focus areas. The Council Committees provide direction to the professional staff in developing policy to be presented to the entire Council fa- approval. Focus Area Cabinets Attention to the strategic plan or focus areas was expanded when the City Manager formed Focus Area Cabinets. The focus area cabinets are virtual networks, staff members linked by themes and ideas rather than function or process. Creating virtual networks emphasizes the idea that the organization's strategy and goals are "unified goals," they belong to many or ail.., not single ownership. Many of the corporate strategic initiatives depend upon collaboration across departmental lines and also upon collaboration among other community agencies (community development organizations, neighborhoods, schools, social services, chamber of commerce, employment security commission, district attorney, courts, etc.) These virtual networks foster an environment of collaboration. The Cabinets consist of Key Business Executives (department heads) whose business units directly affect or influence a particular focus area but also include some unlikely members. For instance, the Police Chief is a member of the Economic Development and Transportation Cabinets in addition to the Community Safety Cabinet. A member of the City Manager's senior staff chairs each Cabinet. The Cabinets were established to ensure Council priorities were being addressed, to develop implementation plans and to assign responsibilities for accomplishing the work. The Cabinets present the focus area plans and updates for Council's review at their annual retreat. The focus area plans contain the initiatives along with the appropriate objectives and measures. Strategy Meets Performance Measurement Soon after the City Manager launched the strategic themes (or focus areas), the City Manager became familiar with the Balanced Scorecard concept in the Harvard Business Review (January-February 1992) and directed staff to assess its potential for the city. The Balanced Scorecard (BSC) was very attractive because it was designed to emphasize strategy. Staff observed that traditional performance measurement systems often concentrate on improving cost, quality and cycle times of existing processes. The City's old measurement system .focused attention backward, not forward, it was an audit tool, not a planning tool. It did not relate to the City's vision, mission or goals. The BSC highlights processes where the City of Charlotte 3 organization must excel to be successful. The BSC's purpose is to translate mission and strategy into tangible objectives and measures. Robert Kaplan and David Norton, the architects of the Balanced Scorecard, describe it as the next generation of performance measurement. Kaplan says, "A Balanced Scorecard provides substantial focus, motivation, and accountability in Government...the scorecard provides the rationale for their existence and communicates to external constituents and internal employees the outcomes and performance drivers by which an organization will achieve its mission and strategic objectives." (The Balanced Scorecard, 1996) One premise of the balanced scorecard is that the mix of measures should be balanced among four perspectives: customer, financial, internal processes, and growth and learning. Kaplan and Norton explain how exclusive attention to financial measures can make you rich one day but out of business the next day. Their theory is that in order to be a profitable organization in the future, you have to understand what the customer wants (customer perspective), what businesses processes you must excel at (internal processes) and how do you change and improve (growth and learning). The City of Charlotte's corporate scorecard (balanced scorecard) gives a quick but comprehensive view of objectives across the five focus areas and the four scorecard perspectives: customer, financial, internal processes, and learning and growth. City of Charlotte Exhibit 1 On the City's corporate scorecard, the customer perspective captures the five focus areas. Community Safety is represented by the corporate objectives to "reduce crime" and "increase City of Charlotte 4 the t~erception of safety." City Within a City is characterized I~ the "strengthen neighborhoods" objective. Economic Development is addressed through "promoting economic opportunity." Restructuring Government is addressed through "enhancing service quality" and "maintaining competitive tax rates." Transportation is captured by the objective to "provide safe, convenient transportation." The scorecard provides a means by which the City organization can monitor progress toward customer and financial objectives while evaluating progress in building organizational capacity for future achievements (internal processes and learning and growth.) The City customized the BSC, with Kaplan and Norton's blessing, to put the customer perspective at the top of the scorecard, instead of the financial perspective as originally designed. The arrangement better reflects the public sector emphasis on effectively and efficiently meeting citizen needs rather than achieving financial goals. The balanced scorecard terminology is private sector oriented (e.g. value proposition, market segmentation, shareholders.) The balanced scorecard also introduced new terms such as lagging indicators (outcomes) and leading indicators (performance drivers). The City's staff struggled sometimes with the terminology, specifically how to translate it to familiar concepts in city government. At one time staff removed columns from a chart that were titled "lead indicator" and "lag indicator" because people were "turned-off" and/or "confused" with the terms. Gradually as the comfort level with the BSC concept increased, staffbegan using the BSC lingo or customized it (e. g., outcome indicator instead of lad indicator). Corporate Obiectives Each of the 18 corporate objectives has a broad definition, providing context for the City's goals. A sample of the objectives are: Reduce Crime - decrease crime throughout the City through the use of community-oriented policing and other strategies that target specific crime categories or offenders Grow the Tax Base - increase tax revenue by increasing new business development, retaining existing businesses, and encouraging residential/commercial developments Increase Infrastructure Capacity- increase the City's capability to support growth by optimizing existing infrastructure and increasing infrastructure capacity Close the Skills Gap- increase availability of leadership, customer service, problem-solving, technology skills, plus other skills required to support City priorities The business units identify the corporate objectives they must impact and include those in their business plans. The corporate objectives do not represent every important service delivered. Instead, it encapsulates the strategic focal points for the organization. There are a number of the 18 corporate objectives that every City business unit can embrace or impact, such as enhance service delivery, maximize benefit/cost, improve productivity, and close the skills gap. For example, basic city services such as fn-e suppression, garbage collection, or animal control are not represented individually on the corporate scorecard, yet all three services do strive to "enhance service delivery." These basic services are better addressed at the business unit level scorecard, where some efficiency or effectiveness measures may be more meaningful. The key is to identify the high or macro level corporate objectives that will maintain a strategic focus. City of Charlotte The City identified one critical, representative measure for each of the 18 objectives that are called the corporate level measures. Kaplan urged the City to take this key step because the corporate level measures provide the quick summary of progress on strategic goals. Some of the corporate level measures are: Objective Measure Target Enhance Service Delivery Service delivery rating by Be rated excellent or good in citizens as reported in the service delivery by at least biennial citywide phone 75% of citizens surveyed survey Promote Economic Percent of Charlotte Maintain 46% of all Opportunity metropolitan-area jobs in Charlotte metropolitan Mecklenburg County statistical area jobs in Mecklenburg County Provide Safe, Convenient Average ridership for all Increase ridership by 6% Transportation transit services Increase Infrastructure Percent of capital projects Fund 80% of identified Capacity funded that are included in capital needs approved lon8 ranl~e plans Implementation at Business Unit (Department) Level The City adopted the Management by Objective (MBO) measurement system in the 1970's. So the organization was accustomed to measuring a myriad of activlies (900 objectives at one time.) MBO did not reflect the City's emerging emphasis on strategic goals, mission- driven government, and rapid change. The BSC represented change - specifically change to be more strategic and more results-oriented, implementation began with four, volunteer business units. · Department of Transportation · Engineering and Property Management · Planning · Police These four business units may be characterized as risk-takers. They were willing to "test drive" a new product. They were motivated to fred a better performance management product because they knew the shortcomings of the existing system. These key business executives were open to new ideas. During 1997 each business unit developed a scorecard that links to and supports the corporate scorecard. The business plan outlines how each business unit intends to address the strategic focus areas and corporate scorecard objectives. It also identifies the measures that will be used to evaluate how well the business unit is addressing City Council priorities and providing service delivery. The business plans also may track initiatives and projects that are part of "running the business." Resistance Everyone in the organization did not share the City Manager's enthusiasm for the BSC -concept. There were several key business executives who viewed the BSC as a management City of Charlotte 6 fad and did not embrace it. They "strategically" held out till the end of the implementation period to develop their scorecards. Cascading the Scorecard The scorecard is cascaded through the organization at the business unit level and at the employee level. Since 1995 the City has rewarded employees (known as the employee incentive program) for achieving budget cost savings if their business unit met predetermined productivity and savings goals. The savings goals are identified in business plans as incentive targets. The link to employee performance evaluations has been enhanced to where most business units now tailor individual pay-for-performance objectives to the business unit's business plan (that is linked to the City's corporate scorecard.) Thus, the goals for employees are directly linked to the organization's goals. City of Charlotte Performance Management System Linkage Incentive Targets XXX~ Individual Employee Performance Plans x~ Exhibit 2 RESULTS (So What?) Budget Integration The adopted budget is a significant milestone in the execution of an organization's strategy. The City of Charlotte has integrated its balanced scorecard and its budget process. The City's budget presentation for fiscal year 2000 marked the first comprehensive attempt to show City Council and citizens how the budget was designed to meet the Council's focus area goals. The City Manager's FY2001 budget transmittal letter recommended: "...65 additional community safety officers, 18 fire fighters, and $19 million for the replacement of the Police and Fire Training Academy to address the Community Safety Focus Area...the recommended budget also includes $32 million in neighborhood improvement bonds for the City Within a City Focus Area, $5.4 million for the Eastside Strategy Plan and $1.3 million for Business Corridor Revitalization for the Economic Development Focus Area, and more than $57 million in General Obligation Bonds for roads ' to address the Transportation Focus Area" City of Charlotte 7 In addition to highlighting the focus areas in the transmittal letter, the numerous program budgets of each business unit were also examined and placed under one of the five focus areas. Those program budgets that did not directly impact a single focus area were placed in a "general government" category to show the cost of providing basic municipal services. (See attachment, Strategic Planning, Budgeting and Evaluation; and Economic Development.) The FY2001 budget also includes some performance measurement information on the cover page for each business unit's section. These cover pages provide budget highlights and performance measurement highlights that link to the corporate scorecard. (See attachment, budget cover page for Engineering and Property Management.) Since implementing the balanced scorecard, City Counc il discussions are more focused on strategic priorities rather than specific programs/services and their costs. Council does not review a line-item budget. The City of Charlotte presents a program or core service budget document. A Strategic Organization One of the Balanced Scorecard principles is that it is more important to report on strategic projects or processes (such as promoting community-based problem solving) than routine processes (such as building sidewalks). The City's expectations regarding measures have changed with the development of the corporate scorecard, it is more important to know outcomes and results on strategic initiatives than to know the level of workload or the cost of activities. Staff continues to look for those measures that indicate the City's resources make a difference. Identifying strategic measures in government is not easy. Coming up with the strategy is the fun part. The difficulty is in developing the corresponding measures that report outcomes. The City uses a quality of life index to determine the impact of strategic activities in fragile or threatened neighborhoods. This index is a leap from measuring housing code enforcement activities to being more outcome focused. The crime rate is the measure chosen to determine the impact on community safety. In the past, police measured response time which has been proven to have no affect on the crime rate. The real issue with community safety is to prevent the next crime. The new police measures are concentrating on prevention through community-oriented policing and increasing citizen perception of safety. Benefits of Implementing the Balanced Scorecard Implementing the Balanced Scorecard reinforced several points: 1. Building the scorecard develops consensus and teamwork throughout the organization. 2. Measurement gives clarity to vague concepts such as strategic goals. 3. City Council and citizens receive reports that include strategic results. Implementing Charlotte's corporate scorecard has helped the City become a more strategic organization by narrowing its focus and identifying better success measures. A majority of the city workforce understands the organization's goals. According to the 2000 Employee Opinion Survey, 57% of employees said they understand the City's overall goals. Another important benefit is the ability to provide strategic information on results to City Council-- information they can readily understand and use to make decisions. City of Charlotte 8 Mayor Pat McCrory says: "The balanced scorecard has helped me to communicate a strategic vision for the City to my constituents, the citizens, and to prospective businesses who are considering locating here. It helps the City Manager focus on things that will have the biggest impact on the City." By measuring what matters, the City has moved from the Management by Objectives system that had approximately 900 measures to the Balanced Scorecard that includes approximately 360 measures across 14 business units. The emphasis is on results-oriented measures. Today 31% of the measures are outcome or results-oriented. Approximately 51% are activity measures (most are leading indicators of ultimate outcome) and 18% of the 360 measures are output measures. RESOURCES The City hired a consultant to assist with developing the first corporate scorecard and the four pilot business unit scorecards. The consultant worked for approximately three months. Developing scorecards for the remaining business units took about one year due to workload. There were no additional personnel resources added to implement the Balanced Scorecard. Administrative staffthroughout the organization devoted time to performance management, reporting, and business plans prior to the balanced scorecard. The time previously spent on performance management was now directed to the new performance management system, the balanced scorecard. The Budget and Evaluation Office coordinates performance management for the organization. Approximately 2.5 full time equivalent in the Budget and Evaluation Office coordinates performance management and reporting. LESSONS LEARNED Charlotte has learned four lessons in the journey of implementing a scorecard. · Developing a BSC is hard work. Identifying strategic goals, objectives and measures requires introspection and determination. · Expect resistance. Change is not easy, no matter what form it takes. Using a pilot or test-driver approach creates an experimental, learning environment where the "kinks can be worked out." · You need a high-level champion. Having the chief executive officer promote the BSC helps gaarantee its success. · The process takes time and commitment. It takes time and commitment to learn the BSC concept and to actually develop scorecards CONCLUSION Over the last decade the City of Charlotte made a deliberate shifi to become a strategically driven organization. The transformation took several years and was perfected with the balanced scorecard implementation. The City combined its business planning process and its performance measurement system. The result is business plans that contain objectives and outcome-oriented measures. City of Charlotte 9 Accountability is critical to eaming and maintaining the public's trust and confidence. Today elected officials want information that will help them make good decisions. The challenge is to have the "right measures" so that informed decisions can be made and resources can be better managed. The Balanced Scorecard is a tool that provides a systematic process to implement strategy and obtain feedback or learn the results of that strategy. City of Charlotte '10 Department Perspective: Engineering and Property Management THE CHALLENGE OF PERSPECTIVE Each level of the organization views its contribution to the organization's overall success differently. Successful implementation of the corporate (City's) strategic plan and balanced scorecard at the key business unit (departmental) level requires an understanding of these perspectives. The City of Charlotte's Engineering & Property Management (E&PM) key business unit (KBU) considered these different views as its f'rst step in developing its Fiscal Year 2001 Business Plan and balanced scorecard. At the corporate and key business executive (department head) level the perspective is long- range (strategic). This view of the balanced scorecard is of an instrument that measures progress toward strategic objectives that may be many years into the future and impact many different aspects of community life. The perspective at the department is more short-range (tactical). At this level the key business executive (KBE) works with the division managers to translate the corporate view of the balanced scorecard into an instrument that focus the department's work on specific business objectives. These objectives may be from one to five years into the future and integrate all of the department's service delivery systems. Workgroups and individual employees also have a short-range perspective of the balanced scorecard. At this level division mangers work to translate the department's balanced scorecard into workgroup outcomes and/or individual tasks that are focused on successfully achieving the current year's business plan. Understanding the City's Strategy The key to developing a common vision of success at the department level is a thorough understanding of the department's roles and responsibilities in achieving the City's strategic and tactical goals. This tmderstanding required an in depth analysis of the City's strategic planning documents. The leadership of Charlotte's Engineering & Property Management (E&PM) key business conducted this analysis as part of a two-day facilitated leadership retreat. The documents analyzed by the leadership team included: · The City's Strategic Plan. This is a document reviewed and published annually by the City Council and the City's executive management team. The Strategic Plan has been formulated around the same five focus areas (Community Safety, City Within A City, Restructuring Government, Transportation, and Economic Development) for the last decade. While objectives and performance measures have been completed, refined and added to focus areas over this period, the focal point of the City's work has not changed. This continuity has proven to be a significant advantage in developing both long-range (strategic) and short-range (tactical) business plans at the departmental level. City of Charlotte '1 · The City's Capital Investment Plan (CIP) and Operational Budget. These documents demonstrate both the short and long-term Strategic Plan priorities of the City Council and the City's executive management. The budget information helped the department to develop a more detailed understanding of the City's Strategic Plan through an understanding of its budget priorities, which further defined areas of work on which the department should focus. · The corporate (City's) Balanced Scorecard. Just as the CIP and operational budget helped to refine the department's understanding of the short and long-term priorities of the City's Strategic Plan, the corporate balanced score card provides specific short- term performance measures associated with the execution of the CIP and operational budget. The corporate balanced scorecard also establishes departmental reporting requirements that help to define performance measures important for the department to track. In its aralysis, the E&PM leadership used these documents to identify its strategic and tactical responsibilities at three levels: 1. Directed Responsibilities. These are tasks or measures specifically assigned to E&PM. 2. Implied Responsibilities. These are tasks or measures not specifically assigned to E&PM, but which include work products from E&PM in the tasks or measures. 3. Business Opportanities. These are tasks or measures that do not have directed or implied responsibilities for E&PM, but for which E&PM believes it has the resources and expertise necessary to ensure a positive outcome. DEVELOPING THE DEPARTMENT STRATEGY The mission statement developed by the leadership team met or exceeded all of the criteria. The mission statement selected was Building Value for Charlotte. With the mission statement established, the leadership team next focused on the strategic objectives that would guide the department in achieving its mission and that of the City. Again the team developed criteria by which to devebp the objectives. The criteria was that: · objectives must ensure the accomplishment of the E&PM mission statement · objectives must have equal applicability across the diverse businesses of the department · objectives must be applicable at all level of the department · objectives should address success in each perspective of the Balanced Scorecard (Customer Service, Financial, Internal, and Growth and Learning). · objectives must be quantifiable · objectives must relate to the daily work of the E&PM employees · objectives should be easily communicated to and understood by staff and the public City of Charlotte Using these criteria, the E&PM leadership team developed five strategic objectives to guide the planning and execution of its work effort. These were: · Be recognized by our customers as the City's leader in providing courteous, accessible, seamless and responsive services (Balanced Scorecard Customer Service Perspective) Find ways to apply our resources to achieve City Council's priorities (Balanced Scorecard Customer Service Perspective) ·Build our competitive edge through learning, innovation and continuous improvement (Balanced Scorecard Financial Perspective) · Find the optimum balance of cost, schedule and quality that achieves the City's CIP and operational goals and satisfies our customers (Balanced Scorecard Internal Process Perspective) · Create an environment that expects and values the contributions of individuals, recognizes their diverse contributions and encourages them to develop to their full potential (Balanced Scorecard Learning & Growth Perspective) The E&PM leadership team chose four of the five focus areas that it could impact. Those strategic areas were City Within A City, Restructuring Government (now Service Excellence), Transportation, and Economic De-~elopment. Then the leadership team identified the corporate objectives that it could impact. Those objectives are shown in gray on the scorecard below. Engineering & Property Management's Balanced Scorecard / J City Council FOCUS Areas ] Exhibit 3 City of Charlotte '13 DEVELOPING THE DEPARTMENT'S PERFORMANCE MANAGEMENT PLAN Since its inception in 1997, the E&PM balanced scorecard had contained more than thirty performance measures of varying quality. The measures generally focused on capturing the work of the individual divisions within the department and not how the work of the divisions advanced the organization's strategic goals. As E&PM matured in its understanding of the value of the Balanced Scorecard, it became clear that the scorecard's potential as a performance management, reporting, and communications tool was not being realized. To reach its potential, the departmental scorecard must be based on and support the advancement of a well conceived departmental strategic plan that supports the corporate strategic plan and scorecard. Using this view of the scorecard, once the E&PM leadership team was satisfied with the mission statement and strategic objectives, they next focused on ways to measure success. Again, the leadership team developed some specific criteria for developing the performance measures. The criteria was that: · measures must ensure the accomplishment of the E&PM strategic objectives · measures must, to the maximum extent possible, be business measures that captured the integrated work of the diverse businesses of the department in delivering services · measures must be, to the maximum extent possible, productivity measures that were Specific, Measurable, Aggressive but attainable, Results oriented and Time bound (SMART) · measures must relate to the daily work of the E&PM employees · measures should be easily communicated to and understood by the staff and public This criteria and review process led E&PM to significant changes in its balanced scorecard, reducing the number of'performance measures from thirty-six in its Fiscal Year (FY) 2000 Business Plan to just fifteen in its FY 2001 Business Plan. While the overall number of measures was reduced, the use of the SMART criteria (see bullet three above) greatly improved the quality of the measures and challenges our staff to perform as a strategically focused business unit. Exhibit 4 shows how the number of measures was reduced while improving the quality of the performance measures. City of Charlotte '14 Fiscal Year 2000 Performance Measures BUJLDING Specific FOB CHAILOTTE Measurable I I Result Oriented a~.~S~C~,~r~t~onO*and~r~. Exhibit 4 COMMUNICATING THE STATEGIC PLAN E&PM uses its annual bminess plan and balanced scorecard as its primary tools in communicating the strategic and tactical goals of the department. The business plan discusses the E&PM mission and strategic objectives, the external and internal factor influencing achievement of these, and the business initiatives to be undertaken in advancing the department's strategic objectives. The balanced scorecard, included in the business plan document, communicates the department's performance management strategy. Tkis provides a set of integrated performance targets designed to focus the department's work on achieving its strategic business objectives. It also demonstrates how departmental performance targets in each of the balanced scorecard perspectives are linked t9 a specific departmental strategic objective and, in mm, how that objective is linked to a corporate strategic focus area. This is done so employees through the department have a clear understand of how the department's work helps to achieve the City's service goals. Cascading the Balanced Scorecard to Workgroups and Individual~ Depending on the size and complexity of the department, the departmental balanced scorecard may not identify specific workgroup or individual performance management measures. In these cases the division manager will need to work with workgroups and/or individuals within his/her division to develop work plans that support the depathnent's balanced scorecard. This was the case for the Business Services Division of E&PM. City of Charlotte 15 The Business Services Division provides a variety of support services (information technology, budget, finance, human resources, safety, contracting, etc.) to the department. While the department's balanced scorecard effectively captured the outcome of the division's contributions to the department, it did not capture the specific work of the division. This required translating the department performance targets to specific divisional work. To accomplish this translation, the Business Services Division conducted its own analysis using the same methodology used at the department level. The result was a work plan with specific performance targets that supported the department's balanced scorecard. This plan was documented in the division's Performance Management Matrix. The example below demonstrates the linkage developed by the Business Services Division between a department balance scorecard performance measure, a division performance measure and an individual performance measure. Performance Measure Linkage Departmental Balanced Scorecard Performance Measure ]~ I BSD Division Work Plan Performance Measure I I I Exhibit 5 The Performance Management Matrix demonstrates the linkage between performance targets, divisional objectives, depamnental objectives and balanced scorecard and finally to the City's strategic focus areas. This enables each workgroup and employee to see how their daily work contributes to the success of the division, department and the City as a whole. LESSONS LEARNED · Good strategic planning and communications are necessary foundations at both the corporate and departmental level for the balance scorecard to have a meaningful impact on the organization. · The scorecard is a tool that captures the dynamic relationship between strategic objectives and daily performance of an organization. · The scorecard measures may change as the environments in which we do business change. · Strong leadership at the executive level of the organization is critical to successfully implement the scorecard. City of Charlotte 16 CONCLUSION The successful implementation of the balanced scorecard at the department level requires the understanding that the scorecard is primarily a communications tool that focuses the organization's strategic plan to ensure its long-term success. For the scorecard to achieve its maximum utility at the department level, it needs to effectively link the corporate strategic plan and scorecard, and the department's strategic objectives and business targets to the daily work of the department's employees. When implemented correctly, the balanced scorecard provides continuity to the organization's focus even as the environment, the customer, and the organization's strategic objective change. City of Charlotte 17 Putting Strategy First in Performance Management City of Charlotte ICMA Best Practices 2001 Presenters: Curt Walton Budget and Evaluation Director City of Charlotte 600 E. Fourth Street Charlotte, NC 28202 Phone: 704-336-5019 Fax: 704-336-6644 E-mail: cwalton~,,ci.charlotte.nc.us Lisa Schumacher Budget and Evaluation Analyst City of Charlotte 600 E. Fourth Street Charlotte, NC 28202 Phone: 704-336-5018 Fax: 704-336-6644 E-mail: lschumacher~ci.charlotte.nc.us Chuck Robinson Business Services Division Manager Engineering and Property Management City of Charlotte 600 E. Fourth Street Charlotte, NC 28202 Phone: 704-336-4333 Fax: 704-336-4554 E-marl: crobinson(~,ci.charlotte .n c .us Exercise Facilitator: Matt Bronson Budget and Evaluation Analyst City of Charlotte 600 E. Fourth Street Charlotte, NC 28202 Phone: 704-336-5017 Fax: 704-336-6644 E-ma'd: mbronson~,,ci, charlotte.nc.us City of Charlotte Form of Govemment Council-Manager Legislative Body Eleven member partisan Council, with four elected at-large and seven elected from single-member districts. Mayor is elected separately and presides over meetings, but can only veto Council actions Election Schedule Mayor and Council elected every two years with no term limits Population* 545,293 Area 241 square miles Budget $1.3 billion Total Budget FY01 $701 million Operating Budget $437 million Capital Investment Budget Revenue Sources in FY01 Total Budget 34.5% Properly and Other Taxes 23.4% Water and Sewer Fees 16.7% Aviation Revenues 8.9% General Bonds 8.2% User Fees 3.4% Storm Water Fees 4.6% Other Revenues Bond Rating AAA Standard and Poors AAA Moody's Number of Employees 5,521 Socio-Economic Indictors** Persons Below Poverty (1997) 9.7% Median Household Income (1997) $45,350 Homeownership Rate 59.7% Percentage of High School Graduates 56.8% Percentage of College Graduates 19.7% LeadIng Employers 16,378 First Union Corporation 12,789 Charlotte-Mecklenburg Schools 11,843 Bank of America 9,330 Carolinas HealthCare System 7,169 Duke Energy Corporation 7,000 US Airways Other Distinguishing Characteristics I Charlotte is one of the southeast's premier places to live and work. More than 545,000 people reside in the city, approximately 1.3 million within the metro area, and 6 million within a 100-mile radius. The city is home to 292 of the Fortune 500 companies and more than 340 foreign Ems. The city is also the nation's second largest banking center with more than $362 billion In banking assets. City of Charlotte Reference List Concerning Balanced Scorecard (September 2001) Beyond Performance. Governing Magazine. November 1999 The Balanced Scorecard by Robert S. Kaplan and David P. Norton. Harvard Business School Press 1996, Boston~ Massachusetts. The Strategy-Focused Organization by Robert S. Kaplan and David P.Norton. Harvard Business School Press 2000, Boston, Massachusetts Harvard Business School Case Studies A & B on the City of Charlotte Balanced Scorecard Implementation. December 1998 and March 1999. Harvard Business School Publishing, Boston, MA 02163 or http://www.hbsp.harvard.edu, or 1-800-545-7685. Journal of Strategic Performance Measurement. February/March 1999--Strategic Performance Measurement: Lessons and Practices From the Field. (800) 431-9025 or (617) 423-2020. Journal of Cost Management. November/December 2000--Putting Strategy First in Performance Management. (800)431-9025 or http://wgLcorpfinance.com 20 CITY OF CHULA VISTA STRATEGIC THEMES APRIL 9, 2003 1. Connected, Balanced1 and Cohesive Coromunity Foster a positive and shared community identity; encourage and value public participation; improve citywide mobility; and promote a balanced mix of housing, shopping, and employment opportunities. · Foster a positive and shared neighborhood and community identity o Community participation o Neighborhood councils o Human service council · Improved mobility o Safe transit o "Walkable' communities o Infrastructure improvements · Balanced urban/suburban mix · Balanced jobs/housing mix · Citizens can work, live, play, and shop in the city 2. Strong and Safe Neighborhoods Ensure our neighborhoods and business districts are safe and appealing places to live, work, shop, and visit. · Police protection/fire protection o Emergency response and preparedness o Increase prevention efforts o Neighborhood watch programs o Enhance level of services · Neighborhood Revitalization o Code Enforcement - Take proactive approach - Enhance level of services o Refurbishing older homes o Urban development standards o Focus on 3rd avenue o Mixed use o Downtown condos · Recreation programs · DASH and STRETCH 3. Economic Development Foster a positive business climate that attracts new businesses, creates a broad range of employment opportunities, and revitalizes the downtown area. · Downtown specific plan (expand definition of downtown) · Aggressively create a business climate that attracts businesses and jobs · (Growth management (rate at which we grow, infrastructure, etc.) 4. Diverse Cultural, Educational, Recreational, and Economic Opportunities Provide a wide-range of cultural, educational, recreational, and economic opportunities that meet the needs and interests of our diverse community. · Celebrate diversity · Partnerships to promote cultural activities o Historic homeowners o Downtown business association (cinco de mayo, lemon festival,etc.) · University project/task force · World class library system · Active parks · Community centers with recreational activities · Nature Center 5. Cost Effective Government and Fiscal Stability Focus on achieving results for our citizens by providing exemplary services at competitive prices; balance short-term operational needs with long-term strategic goals; and enhance long-range financial planning to ensure fiscal sustainability. · Performance-based budgeting · Long-range financial planning · Comprehensive policies · Master planning · Multi-year contracts with bargaining groups · Maintenance of a fee structure · Fiscal stability at build out o Auto park o Regional biotech center o EUC/Freeway commercial o Entertainment zone o Bayfront development · Convention centedhotels · Power plant CITY OF CHULA VISI'A PERFORMANCE MANAGEMENT FRAMEWORK © 2003 City of Chula Vista Executive Summary Performance management can be defined as the integration of various management processes for the purpose of better aligning progran~s and resources with mission, vision, values, and long-range strategy. John Mercer, former mayor of Sunnyvale, California and a key player in the development of the Government Performance and Results Act, refers to performance management as a system that allows managers to "manage their programs in ways that maximize performance, minimize costs, and achieve the desired results." Regardless of definition, what all performance management systems attempt to accomplish is to shift the focus of an organization from accountability for processes to accountability for results. The performance management framework described in this report was developed over a three-month period by a team of executive, senior, and middle management staff chaired by the city manager. The team conducted an extensive review of background materials related to performance management, including two well-documented and successful performance management systems from the Cities of Charlotte, North Carolina and Sunnyvale, California. Paul Nivcn, a management consultant with Primerus Consulting, was brought in to present thc team with state of the art approaches to performance management and to facilitate a series of half-day workshops. The workshops were focused on developing a performance management framework that would: · Shift the focus of the decision-making process from short-term operational and financial considerations to implementing strategy and achieving desired results, · Integrate the city's existing and future management processes, including strategic planning, general planning, performance measurement, and budgeting, into a single, comprehensive framework, · Align city and departmental strategic goals and objectives with one another and with operational priorities and budgets, · Improve the communication of results to city council, management, staff, customers, and the community, · Create citywide commitment to the concepts of performance management, · Engage our customers and community in the "managing for results" process, and · Be easy and quick to implement. The workshops culminated with the team agreeing to a performance managmnent framework comprised of four major components: public input, long-range planning, business planning, and cascading of higher level plans to lower levels of the city. When fully implemented, this framework will provide the city with a cohesive and systematic process of strategic planning, priority setting, resource allocation, and performance measurement and will focus all levels of the organization on a singular purpose - achieving results for our citizens. The Four Major Components of Chula Vista's Performance Management Framework Component 1: Public Input Public input is critical to the performance management process. Quite simply, if we are to be responsive to the needs and concerns of our community we must first understand what their needs and concerns are. Therefore, Chula Vista's performance management framework, either explicitly or implicitly, incorporates public input into the general planning, strategic planning, priority setting, performance measurement, and budgeting processes. Component 2: Lon~-Range Planning The long-range planning component of the framework incorporates both strategic and general planning efforts in addition to mission, values, and vision. Mission and values were placed at the top of the framework because they serve to articulate the most fundamental aspects of our organization: why do we exist? and what do we believe in? They are generally considered timeless. In other words, we wouldn't expect them to change significantly over the years. In contrast, council's vision for the city is much less static and must be adaptable to the changing needs and desires of our community. A vision statement describes what we hope to become or achieve in the future and typically has a 10-20 year time horizon. The next element of long-range planning is our strategy (i.e. game plan) for achieving our vision. Placing strategy immediately subsequent to council's vision for the future of the city is akin to the principle of "beginning with the end in mind" from Stephen Covey's 7Habits of Highly Effective People management philosophy. Only when we have a clear understanding of what the desired "end" is can we formulate a coherent strategy for getting there. Another element of the city's long-range planning efforts is the general plan. This document, updated approximately once every 10 years, serves as a blueprint for the physical development of the city and has been incorporated in the performance management framework to ensure consistency among all of the city's long-range planning instruments. The general planning process places a strong emphasis on public participation and in this manner provides valuable insight into the community's economic, environmental and social goals. A summary of the efforts cun-ently underway to update the city's general plan is included as an appendix to the main report. Component 3: Business Planning Research has shown that nearly 90% of organizations fail to successfully implement their strategies. Some of the reasons commonly given for this include failure by management to focus on strategy, failure to link budgets to strategy, and failure to commtmicate the organizations strategy to the workforce. Chula Vista's performance management framework avoids these pitfalls through a business planning process that systematically "translates" long-range strategies into short-range operational priorities and budgets. The first step in the process of translating strategy is to define specific objectives that are consistent with the city's long-range strategy. For example, if part of our strategy ii focused on community safer),, then one of our objectives in this area might be to reduce crime. The next step is to agree upon performance measures and targets for each objective. Continuing with the above example, we might track homicide rates as a measure of our performance at reducing crime and target a 10% reduction. The final step in the process is for departments to develop programs and request budget allocations in a manner consistent with achieving these desired outcomes. Component 4: Cascading Cascading simply describes a process for driving higher-level missions, values, visions, strategies, and objectives down to lower levels of the organization. In so doing lower level units are able to demonstrate how their day-to-day activities and performance contribute to overall organizational goals and objectives. This is necessary to create synergies among the city's various departments and programs and to ensure that the efforts and activities of all staff are aligned with the strategic direction provided by council. In simpler terms, cascading ensures that everybody in the organization is pulling the rope in the same direction and the correct direction. Initially, cascading is only envisioned to occur down to the depamnent or possibly program level. In the future the framework could easily be extended down to the individual level by implementing management level performance contracts and individual performance plans and linking employee evaluations, recognition, and possibly compensation to specific outcomes. iii CITY OF CHUL^ VISTA PERFORMANCE MANAGEMENT FRAMEWORK Table of Contents Executive Summary ........................................................................................................... i Introduction ....................................................................................................................... 1 Mission, Values, Vision ..................................................................................................... 4 Pride at Work Program ................................................................................................... 4 Department and Program Level Missions, Values, and Visions .................................... 5 Strategy .............................................................................................................................. 6 Citywide Strategic Themes ................................. : ........................................................... 6 Departmental & Program Level Strategic Plans ............................................................. 7 Business Planning Cycle ................................................................................................... 8 Performance Measurement / Balanced Scorecard .......................................................... 8 Budgeting ...................................................................................................................... 12 Becoming a Strategy Focused Organization ................................................................. 14 The Five Principles of Strategy Focused Organizations ............................................... 14 Appendix A: Glossary of Performance Management Terms .................................... 17 Appendix B: Strategic Planning Process ..................................................................... 19 Appendix C: General Plan Update Summary .............................................................. 21 City of Chula Vista Performance Management Framework "Action without vision just passes the time." -Joel Barker, Author of Paradigms: The Business of Discovering the Future Introduction The impetus for creating a unified performance management framework for the City of Chula Vista arose out of council's desire to further supplement short-term operational (or tactical) plans with longer-term strategic plans and to take a more "forward-looking" view on performance.! Two simplified models of planning, budgeting, and performance measurement are shown below. Focus on Tactical Planning and a Backward-Looking View on Performance TACTICAL/OPERATIONAL ~> BUDGETS MEASURES ~ Focus on Strategic Planning and a Forward-Looking View on Performance STRATEGIC ~ (DESIRED ~ BUDGETS ' PLANNING: ~ OUTCOMES) ~ In the first model, short-term tactical planning is the primary consideration of the budget process and performance measurement is considered after the fact (i.e. a "backward- looking" view on performance) via year-end reports on the outputs achieved with the given appropriations. Contrast this to the second model where long-term strategic plarming is given increased emphasis and performance is considered ahead of budgeting (i.e. a "forward-looking" view on performance). Although overly simplified, these two models are useful because they demonstrate the bottom line of performance management, which is to articulate desired long-term strategic outcomes, quantify if those outcomes are being achieved, and allocate resources in a manner consistent with achieving those outcomes. l.h "forward-looking" view on performance focuses on desired future results and strategies for achieving them. A "backward-looking" view on performance focuses on past results. Staff has already taken numerous steps in this direction. Some of these steps include moving to a two-year budget process, participating in ICMA's Comparative Performance Measurement project, updating the city's General Plan, adding a strategic plan manager, and implementing a dedicated performance measurement software system. The performance management framework described herein serves to integrate these parts into a unified model for 1) developing strategies, 2) prioritizing initiatives, 3) justifying budgets, 4) measuring performance, and 5) communicating success in a manner consistent with council's vision and strategic direction. The remainder of this report is organized in accordance with the individual components of the framework (see Exhibit 1). First, the role of both citywide and departmental mission, vision, and values statements in the performance management framework is explained. This section also briefly describes the city's Pride at Work program. The next section deals with the important role strategy plays in the framework and the current status of the citywide initiative to develop strategic plans for each operating department. The explanation of the business planning cycle is divided into two sections: performance measurement and budgeting. In this portion of the framework, strategy is translated into operational terms and linked to operating and capital budgets. The final section of the report presents common barriers to effective strategy implementation and suggests five tactics for overcoming these barriers. This document was written with the intent of clarifying the terminology associated with performance management, strategic planning, business planning, and performance measurement as they are used in the City of Chula Vista; thus opening the door for the eventual implementation of these concepts citywide. Included as appendices to the main document are: · A glossary of performance management related terms, · A description of the city's strategic planning process, and · A brief report on the status of the city's General Plan update. 2 Mission, Values, Vision The concepts of mission, values, and vision are widely used by both public and private sector organizations as a means of articulating the unique attributes of their businesses. Surprisingly, however, little consistency seems to exist as to how these concepts are defined and used from one I Sm, egy organization to the next. This is [ UusinessVlannineCycle ,I particularly tree of mission and vision, where the meaning and use of the two Strategic concepts are routinely interchanged. Results Therefore, the first course of action in incorporating these concepts into the performance management framework was to define each of these terms as they are used in the City Of Chula Vista. Mission: The core purpose of the organization, why it exists. Values: The deeply held beliefs within an organization that are demonstrated through the day-to-day behaviors of its employees. Vision: A word picture of what the community intends to become in the future. Together these three concepts form the basic building blocks of Chula Vista's performance management framework. Pride at Work Program The Pride at Work program grew out of the city manager's desire to create a more values- driven working environment. Over the course of several months a team of 30 employees representing all departments and bargaining units met on numerous occasions to identify those values that they felt were most crucial to the organization's success. Early in the process the team realized that a meaningful set of values could not be established outside the context of organizational mission and vision statements. Council had already articulated their vision for the city so the team only needed to develop a citywide mission statement. All members of the team were asked to participate in a brainstorming exercise that provided the raw material needed for developing a mission statement. A sub-team was then formed and given the task of drafting the mission statement. The draft mission 4 statement was then presented to the broader group and after numerous edits a final version was agreed upon. The city's mission, values, and vision are presente, d below. Our Mission We are committed to making our community a better place to live, work, and play through services that promote PRIDE. · Public Parmerships & Involvement · Reliable Infrastructure & Well-Maintained Facilities · Inviting, Healthy, & Safe Environments · Diverse Cultural, Educational & Recreational Opportunities · Economic Growth Our Values Professionalism I Accountability ] Respect I Teamwork I Integhty Our Vision The City Of Chula Vista is committed to build and nurture a progressive and cohesive community, which values our diversity, respects our citizens, honors our legacy and embraces the opportunities of the future. The Pride at Work program has been designed to increase employee awareness of the city's mission, values, and vision and to encourage all employees to practice these values in their daily work activities. Some of the employee awareness activities already undertaken include the posting of Pride at Work posters at various locations across the city and a Pride at Work booth at last years Employee Benefit Faire. Future implementation plans include incorporating Pride at Work training as pan of new employee orientations, a rewards program to recognize employees that exemplify one or more of the five values, and internal surveying of employees in order to quantify how tightly these values are woven into the fabric of our organization. Department and Program Level Missions, Values, and Visions The Pride at Work program will serve as the foundation for all other mission, value, and vision statements across the city. All lower level mission, values, and vision statements should be consistent with the citywide statements and should demonstrate how the activities of these lower level units influence the desired outcomes of the higher-level units. 5 Strategy Strategy describes the city's "game plan" for achieving its vision. Strategic planning assumes that the city must be responsive to Mission an environment that is dynamic. Possessing strategies means the city is v~,l,,c~ I focused on the future and equipped to :ision make broad, overall decisions to successfully respond to the dynamic [ Business PlanningCvclt, I environment. Strategic planning requires ' making assumptions about the future ~ ~ ~[ environment, making choices among [ Strategic Results [ possible events projected in the future environment, and, in turn, making decisions in the present regarding what to accomplish over the next 3-5 years and how to go about it. The impetus for strategic planning is based on the city's vision of the future. The focus of strategic planning is on strategic management - the application of particular strategies to the various management tasks that allow the city to strive to meet its mission. Strategic planning also involves choosing priorities. Consensus on priorities must be reached at many levels, from the philosophical to the operational. While strategic planning stops short of the level of detail needed for business planning, it will, if successful, articulate the major, prioritized strategic goals of each department and of the city as a whole. Citywide Strategic Themes Strategic themes are defined as complimentary and enduring classes of action that an organization must perform well in order to fulfill its mission and achieve its vision. They are generally very broad in nature, cut across departmental lines and functional silos, and tend to take a much longer planning horizon than lower level strategies (typically 10-20 years as opposed to 3-5 years). Therefore, strategic themes are only articulated at the citywide level of the performance management framework. When properly constructed, strategic themes can provide a powerful tool for council to develop consensus, set priorities, and communicate to staff and the public what they feel is most critical to the future success of the city. Charlotte, North Carolina, provides a good public sector example of how strategic themes can be used to bring focus to what is important. Prior to 1990, Charlotte's City Council held annual retreats to set goals and priorities for the coming year. However, these goals were generally short-term in nature and provided very little insight into their long-term plans for the city. In 1990 they decided to tweak their model by instead providing staff with five areas in which they most wanted staff to focus their attention and effort. These five focus areas, or strategic themes, are still in use today and help guide all strategic planning and budgeting at the departmental and program levels. The five strategic themes used by Charlotte are: · Community Safety: Provide public safety services to ensure that citizens feel safe; support programs which work to solve the root cause of crime and drug problems, such as housing, .jobs, etc.; and elicit the support of other organizations to reduce crime and the influence of drugs. · City Within a City: Provide leadership and resources to make individuals and families self-reliant; and strengthen and revitalize deteriorated neighborhoods. · Transportation: Address the city's road and intersection improvement needs, develop a local and regional mass transit system, and promote alternative methods of transportation such as walking and biking. ·Restructuring Government: Manage for results by providing the best service at the lowest cost and meeting customer expectations. · Economic Development: Support formation, retention, and expansion of business and initiatives that provide quality jobs. · Departmental & Program Level Strategic Plans At the departmental and program level strategic planning involves 1) reviewing and if necessary revising mission, values, and vision statements, 2) conducting an analysis of the departments current situation (i.e. identifying strengths, weaknesses, opportunities, and threats), 3) reaching agreement on broad strategic initiatives, and 4) developing and prioritizing long-term strategic goals (typically with a planning horizon of 3-5 years). City departments with existing strategic plans include the Library, Police Department, Planning and Building, and Economic Development. In the near future additional plans will be developed for Recreation (in progress), Community Development (to be developed starting mid-2003) and Fire Department (to be developed starting late 2003). 7 Business Planning Cycle The business planning cycle picks up immediately where strategic planning leaves off by systematically "translating" x~i~i,,, I long-range strategies into short-range operational priorities and budgets. The business-planning portion of the performance management framework is composed of two interrelated parts: performance measurement and budgeting. After considering a number of different performance measurement models, the [ St,'alegicResults J performance management team identified the Balanced Scorecard model as 1) being the best suited to meeting the city's goals for performance management and 2) being the most compatible with existing citywide and departmental management systems. The Balanced Scorecard has the additional benefit of being the only model that explicitly incorporates and measures the contributions of support departments (such as Human Resources, Finance, and MIS) to overall citywide performance. Performance Measurement / Balanced Scorecard The Balanced Scorecard was created in the early 1990's by Drs. Robert Kaplan and David Norton to correct for what they perceived as a shortcoming of other measurement models; an over reliance on financial indicators of organizational success. The Balanced Scorecard supplements measures of financial success with measures from three non- fmancial perspectives: customer, internal business processes, and learning and growth. This balance of financial and non-financial measures of performance makes the scorecard particularly well suited to implementing, communicating, and measuring an organization's strategy because it not only measures the end results an organization hopes to achieve but also the means for achieving those results. For example in the private sector a typical desired "end result" might be increased profitability, which would be a financial perspective of performance. However, there are a number of ways that an organization might choose to go about increasing profitability. One strategy might be to improve the customers shopping experience, in which case the organization would include some measure of customer shopping experience in the customer perspective of its Balanced Scorecard. The strategy for improving the customers shopping experience might in turn involve increasing the percentage of items in stock at any given time, so the organization would include a measure of this in the internal process perspective of its Balanced Scorecard. Finally, the strategy for improving the customers shopping experience might also involve enhancing the knowledge of sales staff so a measure of employee skills would be included in the lyaming and growth perspective. In this manner, the Balanced Scorecard not only 8 measures an organizations success at achieving its desired end results but also articulates and measures the strategy an organization has adopted for achieving those desired results. A generic Balanced Scorecard template for the public sector is presented in Exhibit 2. The financial perspective is placed at the bottom of the framework because, in the public sector, this perspective captures the basic "enablers" of success: fiscal capacity and stability. The learning and growth and internal business process perspectives come next and reflect the human resources, information technology, and business processes that an organization must develop in order to convert its financial capacity into value for its customers and stakeholders. The customer perspective is placed at the top of the framework because, for the public sector, this perspective captures the desired end results of the organization. The "nuts and bolts" of the Balanced Scorecard are objectives, measures, targets and initiatives. As with mission, values, and vision, the definitions of these terms vary considerably from one organization to the next. In definitions used by the City of Chula Vista are listed below. Ob]ectives: Concise statements that describe the specific things you must perform well if you are to successfully implement your strategy and achieve your vision. Performance Measures: Quantifiable standards used to evaluate and communicate performance against expected results. Targets: A quantitative representation of desired performance at some point in the future. Initiatives: The specific programs, activities, projects, or actions you will embark on to help ensure that you meet or exceed your performance targets. Exhibit 3 provides an example of each of these concepts taken fi-om the citywide scorecard used by Charlotte, North Carolina. In the Community Safety theme one of Charlotte's objectives is to reduce crime. The measure they have chosen for the reduce crime objective is homicide rate and they have targeted a 10% reduction per 100,000 population. Finally, one of the initiatives Charlotte has identified for meeting this target is their Community Policing program. Note that reducing crime is just one of many citywide objectives Charlotte has identified for its citywide Balanced Scorecard and for every objective there is a corresponding measure, target, and list of initiatives. An important component of the Balanced Scorecard model of performance measurement is the idea of cascading, which simply describes a process for driving the objectives, measures, targets, and initiatives of higher-level scorecards down to lower levels of the 9 Exhibit 2: Four Perspectives of the Balanced Scorecard Vision and Strategy "To be successful, Customer Perspective what stakeholder Objectives Measures Targets Initiatives needs must we serve?" "To satisfy our Internal Process Perspective stakeholders, in Objectives Measures Targets Initiatives which internal business processes must we excel?" "To achieve our Learning and Growth Perspective internal process Objectives Measures Targets I Initiatives and customer objectives, how must we learn and innovate?" "To meet the needs Financial Perspective of our customers, Objectives Measures Targets Initiatives what financial constraints must we overcome?" 10 £xhibit 3: Sample Objective, Measure, Target, and Initiative from Charlotte's Corporate Scorecard What is our What must we How will we What level of What are the plan for perform well to track our performance or key programs achieving our successfully progress ? rate of required to vision? implement our improvement achieve our strategy? do we hope to objectives? achieve? Community Reduce Crime Homicide Rate Reduction of Community Safety ] 0% per Policing l O0, O00 population during 2002- 2003 11 organization. In so doing lower level units are able to demonstrate how their day-to-day activities and performance contribute to overall success, which in turn provides a strong basis for making budgetary decisions. In this manner, the Balanced Scorecard serves a critical function in the performance management framework. If we think of strategy as the direction in which council wants to move the city and the human and financial resources of the organization as the vehicle for taking us there, then the Balanced Scorecard serves as the compass for guiding the day-to-day activities of our employees. It provides the information we need in order to better focus our efforts and resources on what's important - achieving results for our citizens. Budgeting The city's biennial budget process is the important final link in the performance management framework. It is used to link what the city wants to accomplish for the community (as articulated in its strategy) with the resources necessary to do so. Research has shown that approximately 60% of organizations do not manage to effectively link budgets to strategy. Chula Vista's performance management fi-amework avoids this pitfall by providing a context for making meaningful budget decisions based upon an analysis of individual initiatives and their contribution to the organization's overall strategic goals as measured through departmental and program level Balanced Scorecards (see Exhibit 4). 12 Becoming a Strategy Focused Organization When fully implemented, Chula Vista's performance management framework will provide the city with a systematic ] Mb;sion approach to developing and implementing ] v:,~.~,s a cohesive organizational strategy in order to produce better results for our vision stakeholders and customers. However, ] s.'ate~oy [ research has shown that between 70 and I ~.~i.~.~ vl~.,i.~ C:y~ [ 90 percent of all corporate strategies fail. I1 What happens from the time when a ? strategy is finished to the time when I::~ !~'~:J initiatives are prioritized and resources allocated that results in this low success rate? In his book, The Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results, Paul Niven defines four common barriers to successful strategy implementation, namely vision, people, management, and resources (see Exhibit 5). The vision barrier results from a lack of understanding of the organization's strategy by the workforce. If people are not aware of the strategy they certainly can't be held accountable for its implementation. The people barrier results from employee evaluations, recognition, and/or compensation plans being tied solely to short-term financial gains. The fastest way to truly focus employees on achieving long-term strategic results is to base some portion of their compensation on meeting certain performance targets. The management barrier results from a failure by upper management to make strategy a systematic part of its decision making process. Lastly, the resource barrier results from a failure to properly link operational and capital budgets to the organization's strategy. Each of these barriers can be overcome by adhering to what Kaplan and Norton refer to as the "five principles of a strategy focused organization." The Five Principles of Strategy Focused Organizations Principle #1: Translate the Strategy to Operational Terms This principle entails developing objectives, measures, targets, and initiatives for each department and/or program that are consistent with councils overarching strategic themes. Strategies are translated into operational terms through the process of developing objectives, measures, targets, and initiatives in each of the four Balanced Scorecard perspectives, which ensure that the "enablers" of success are measured in addition to the final results. 14 Exhibit 5: Four Barriers to Strategy. Execution Mission Values Vision Strategy Objectives, Measures, Targets, Initiatives Budget Results 15 Principle #2: Align the Organization to the Strategy. Alignment is largely created through the process of cascading higher-level scorecards to lower levels of the organization. The goal here is not only ensure everybody in the organization is pulling the rope in the same direction but also in the correct direction. Principle #3: Make Strategy Everyone's Everyday dob The easiest way to achieve this principle is through workforce education and communication efforts. An alternative approach is to develop individual performance plans for employees and to link employee evaluations, recognition, and/or compensation to the achievement of specific performance targets. Principle #4: Make Strategy a Continual Process This is accomplished developing a process for managing strategy. This process might include explicitly linking strategy to budgets through the Balanced Scorecard, implementing regular management meetings for the purpose of reviewing strategy, and developing a systematic process for adapting strategies, objectives, and targets to current situations. Principle #5: Mobilize Change through Executive Leadership This is accomplished by placing executive management at the forefront of the change process. Research has shown that the single most important factor in becoming a strategy-focused, results-oriented organization is commitment from executive management. Kaplan and Norton are clear on this point, "If those at the top area not energetic leaders of the process, change will not take place, strategy will not be implemented, and the opportunity for breakthrough performance will be missed." 16 Appendix A: Glossary of Performance Management Terms Budget - A spending plan and policy guide comprised of a summary of the City's authorized expenditures and estimated revenues for a given time period. Business Planning Cycle - A process for detailing and prioritizing the specific activities an organization must undertake in order to achieve its strategic goals. Cascading - The process of developing a cohesive, consistent, and aligned set of strategic plans, business plans, and performance measures at all levels of an organization. General Plan - A blueprint for the physical development of the city. Initiatives - The specific programs, activities, projects, or actions you will embark on to help ensure that you meet or exceed your performance targets. Lag Indicators - Measures focusing on results at the end of a time period. Normally characterizing historical performance. Lead Indicators - Measures that "drive" or lead to the performance of lag measures. Normally measure intermediate processes and activities. Mission - The core purpose of the organization, why it exists. Objectives - Concise statements that describe the specific things you must perform well if you are to successfully .implement your strategy and achieve your vision. Performance Management - An integrated system of management processes used to ensure an organization's activities and resources remain aligned with its nfission, vision, values, and strategy. Performance Measures - Quantifiable standards used to evaluate and cormnunicate performance against expected results. Performance Measurement - The process of using quantitative indicators to monitor results against pre-determined standards. Priority Setting - A process of ranking policies, programs, and/or actions among a competing set of alternatives, given finite resources. Public Input - A process for soliciting and considering the opinions of stakeholders regarding the priorities and effectiveness of a public sector's operations. Stakeholders - The residents of the community as well as property owners, business o~vners, and other constituents who have a stake in the progress of the community. 17 Strategic Goals - Broad, overall priorities within each strategic theme that are considered critical to an organization achieving its vision. Strategic Plan - A "living" document that clearly outlines the priorities essential to an organization's mission. Strategic Themes - The complimentary and enduring classes of action that an organization must perform well in order to fulfill its mission and achieve its vision. Targets - A quantitative representation of desired performance at some point in the futllre. Values - The deeply held beliefs within an organization that are demonstrated through the day-to-day behaviors of its employees. Vision- A word picture of what the cormnunity intends to become in the future. 18 Appendix B: Strategic Planning Process Strategic planning follows a process that is both focused and productive. The process raises a sequence of questions that help planners examine past experiences and results, test old assumptions, examine current issues, gather and incorporate new information about the present, and anticipate the environment in which the city and its departments will be working in the future. The process also guides planners in continually looking at how the component programs and strategies fit with the city's overall mission, vision and values. Strategic Planning is conducted in five phases: Phase I: Getting Ready · Identifying reasons for planning · Identifying prospective planning participants · Defining committees and sub-committees · Summarizing departmental histo~ and community profile · Reviewing departmental structure · Reviewing management effectiveness · Reviewing current program goals, objectives, measurements and costs Phase II: Articulating Mission, Vision and Values · Reviewing/rewriting the Mission statement · Reviewing/rewriting the Vision statement · Agreeing on Statement of Values Phase III: Situationa! Analysis and Committee Recruitment · Review previous and ctu-rent strategies · Gather/review input from stakeholders · Gather/review input regarding program effectiveness · Conduct SWOT analysis for each program area · Identify primary issues to be addressed in planning process · Identify/review generally accepted service standards (if applicable) · Recruit Committees and Sub-committee participants for analysis of Programs, Finances, Staff/Volunteers, Facilities/Technology, and Marketing/Communications Phase IV: Reaching Agreement on Broad Strategic Initiatives · Analyze SWOT analyses · Analyze opportunities for collaboration · Address issues raised in Phase III · Debate future core strategies · Draft Broad Strategic Direction/Initiative Statements 19 Phase V: Developing Goals - Writing the Strategic Plan · Draft Management, Program, Finance, Staff/Volunteers, Facilities/Technology, and Marketing/Communications goals in response to recommended Broad Strategic Initiatives · Agree on criteria for prioritizing goals · Prioritize all goals · Compile into Draft Strategic Plan document · Present draft for Committee review · Adopt the Draft Strategic Plan, recommend to Board/Commission (as applicable) · Recommend adoption to City Council 20 Appendix C: General Plan Update Summary The City of Chula Vista is currently conducting a comprehensive update of its General Plan, for the first time since 1989. Every city and county is required by state law to adopt and maintain a "general plan." This plan is intended to guide the physical development of the city, and any land outside the city which bears relationship to its planning. The general plan articulates the community's economic, environmental and social goals, and sets forth policies relative to distribution of future land uses, both public and private, in furtherance of those goals. The general plan takes a long-range (typically 15 to 20 years) and geographically broad perspective, taking into account applicable federal, state and regional plans and policies. The general plan also is comprehensive, with mandatory elements addressing land use, circulation, housing, open space, conservation, safety, and noise. When completed, the city's updated general plan (with a planning horizon of 2020) will include each of these mandatory elements, along with other optional elements, and will be organized into the following sections: · Vision and Goals · Land Use · Transportation · Housing · Community Facilities and Services · Environmental Management · Economic Development · Growth Management and Plan Implementation In addition, the city's general plan will include "area plans" for smaller distinct geographic areas within the city, including Northwest, Southwest, Bayfi-ont, Northeast, and Southeast (Otay Ranch and East Otay Mesa) areas. These area plans will provide specific policies for the future development and/or redevelopment of these smaller areas. In developing this plan, the city has placed a strong emphasis on public participation. The city has already conducted a citywide town hall meeting and "visioneering" process to obtain public input on issues that should be addressed in the updated General Plan. City staff is now working with a steering committee and three subcommittees to review this input, and develop a preliminary vision and goals statement for the plan. Over the next year, staff will obtain further input fi.om these committees in the formulation of the drafi plan, and will also conduct formal public heatings before the Planning Commission and City Council prior to adoption of the final plan. The current schedule calls for completion of the draft plan in late 2003, with adoption of the final plan during the first quarter of 2004. 21