Sunday, April 03, 2005

Using the Organizational Dashboard to Monitor the Plan

In the previous post, I mentioned that the strategic planning process presents an opportunity for the organization to develop an important tool for ongoing monitoring of the strategic plan. It’s called the organizational dashboard (sometimes referred to as “scorecard”). Using the metaphor of the dashboard in a car, this tool is based on selection of key performance indicators that need to be tracked on a regular basis by the Board of Directors.

Authors Chait, Holland and Taylor describe this tool in Improving the Performance of Governing Boards. The dashboard incorporates key success indicators of the organization – the most essential areas of performance. “ These are the variables that most determine whether the organization will succeed or fail. Once the critical success indicators have been identified, the board and the executive director (and other key staff) can then propose and consider strategic performance indicators – the qualitative and quantitative data that most accurately measure and convey the critical areas of performance.” These critical success indicators should be linked to the organization’s strategic plan. By focusing on these indicators, the board can position itself to place its focus on the priority areas of governance. Here is a process for developing a dashboard.

Step 1: Begin the strategic planning process. Development of the organizational dashboard begins in the strategic planning process. As part of the strategic planning process, the organization initiates discussion of how strategic plan progress will be measured. This can begin during the formulation of goals and strategies. One approach is to generate an initial list of meaningful ways to measure progress for each goal and associated strategies. We refer to this initial list as success or performance indicators. For example, for a revenue goal such as "expand and diversify the revenue base to support anticipated growth", success indicators would include "expansion of revenue base”,"diversification of revenue base", etc. Under this sample goal, one strategy might read "generate more revenue from program fees". Performance indicators for such a strategy might be "dollar amount of program fees generated "or "percentage increase in dollar amount of program fees generated annually". Another strategy might be "reduce reliance on public funding". The performance indicator for this strategy might be "percentage reduction in public funding". The key performance indicators for goals and associated strategies constitutes the strategic planning evaluation framework.

Step 2: Action planning. The process continues as the goals and strategies are translated into the annual plan of action or annual objectives. For the sample strategy "generate more revenue from program fees", an objective might read "The program services department will generate at least $450,000 from program fees by December 31, 2005". For the sample strategy "reduce reliance on public funding", an objective might read "during the life of the strategic plan the percentage of public funding will decrease from the current seventy percent of budget to no more than forty percent of the total budget".

Step 3: Development of Dashboard. The evaluation framework (key performance indicators for each goal and associated strategies) is reviewed by the Board of Directors. The board can also review other key performance measures that have been used in the past. The board then narrows down the list to include those indicators that best reflect the most essential areas of performance for the organization. These key performance indicators become the basis for the dashboard. The board reviews and approves the dashboard.

Step 4: Implementation of Action Plans. Implementation of the action plan then begins. The dashboard is regularly reviewed by the board to measure progress in achieving key outcomes.