Subsystems of Budget Execution
Q: What are the four subsystems?
Subsystems of Budget Execution
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Revenue Administration
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Cash Management
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Procurement
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Risk Management
Strategic Management
57.508-201
The Budget as a Policy, Planning and Information Tool
Meeting 11 – April 13, 2011
Strategic Management
A strategic management system provides the broad
framework that encompasses all of the processes of
an entire organization operating within an agreed
upon set of purposes and interdependent components
Strategic Management
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•
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Ongoing process
Integrates planning into budgeting & managing
Mission, customer & issue focused
Emphasizes decentralization & shared vision
Translates goals into action
Efficiently uses all resources
Makes the tough choices
Evaluates performance & results
Long range view oriented on the future
Strategic Agenda
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Pursuing continuous improvement
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Cutting “red tape”
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Seeing citizens / clients as customers
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Putting customers’ needs before process
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Empowering employees to get results
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Targeting quality & efficiency
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Getting back to essential services
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Evaluating results via customer feedback
Strategic Management
“Strategic management is not a clean, step by step
process. It is not linear, but a messy, iterative process
that requires hard work and dedication from most
people in the organization to move it toward the
future. It represents a new focus for the organization;
a focus on a compelling vision of the future.”
Denise Lindsey Wells
Strategic Management for Senior Leaders
Strategic Management
Six Tasks
1.
2.
3.
4.
5.
6.
Defining the mission & forming the vision
Setting measurable objectives
Outlining the strategy to meet the objectives
Executing the strategy
Evaluating performance
Regularly implementing course corrections
Mission Statement
A mission statement should answer these questions:
1.
What does your organization / program do?
2.
For whom?
3.
Why?
4.
How?
Goals vs. Objectives
Mission:
In partnership with the diverse communities we serve, the
Health Department strives to assure, promote, and protect the
health of the people of Lowell County.
Goals:
• Maintain or decrease levels of reportable diseases
• Contribute to a reduction in incidence and impact of disease
• Improve access to health services for underserved residents
• Contribute to a reduction in the teen pregnancy rate
• Decrease substance abuse and its impact on families
• Improve the percentage of babies born healthy
Goals vs. Objectives
SMART
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Specific – Action oriented and easily understood
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Measurable – Quantifiable and verifiable
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Attainable – Challenging but realistic
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Results Oriented – Focused on outcomes not methods
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Time Bound – Reasonable yet aggressive time frame
Strategic Management
Goal-directed decisions and actions in which
capabilities and resources are matched with the
opportunities and threats in the environment
What’s So Strategic?
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A shift in focus from the inputs that are used to run the
organization to the outputs and outcomes the organization
desires to achieve
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A focus on optimizing organizational performance and
process quality as keys to delivering quality services
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An organizational culture that adapts more easily to change
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Longer range thinking about the present and the future
Strategic Components
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Written strategic plan
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Organizational relationships defined
Inputs and outputs specified
Operational plan
Resource plan (program / performance budget)
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Strategic Planning
Strategic Planning
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SWOT Analysis & Visioning
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Where your organization is
Where you want to take the organization
Goals and objectives
Operational Plan of Execution
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How you intend to get there
Action steps
Program budget
STEP Analysis
A scan of the external environment in which the
organization operates in terms of these factors:
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Social
Technological
Economic
Political
Framework
Set Goals to Guide Decision Making
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Assess community needs, priorities, challenges and opportunities
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Identify opportunities and challenges for services & assets
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Develop and disseminate broad goals
Develop Approaches to Achieve Goals
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Develop financial policies
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Develop programmatic, operating and capital plans
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Develop programs & services consistent with policies and plans
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Develop management strategies
Framework
Develop Budgets Consistent with Approaches
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Develop a process for preparing and adopting a budget
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Develop and evaluate financial options
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Make choices necessary to adopt a budget
Assess Performance & Make Adjustments
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Monitor, measure, and assess performance
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Make adjustments as needed
Three Kinds of Objectives
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Performance
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Financial
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Targets for efficiency and effectiveness
Targets for resources
Strategic
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Targets to strengthen overall position
Crafting the Strategy
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Objectives are measurable results
Strategy is how to achieve these results
Overall strategy is a blend of intended actions as
well as responsiveness to unanticipated developments
within the core values
Executing the Strategic Plan
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Strategy Implementation
– Realistic objectives with appropriate actions
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Control and Evaluation
– Continuous assessment and adjustment
Strategy Implementation
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Organizing
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Communicating
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Culture building
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Motivating
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Budgeting
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Supervising
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Leading
Control and Evaluation
Result or Outcome
Condition of improvement or well-being for client population
Indicator or Benchmark
Standard which helps quantify the achievement of a result
Performance Measure
Measure of how well a program or service system is working
Performance Measures
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Public Works:
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Libraries
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X miles of streets cleaned per Y dollars
X tons of waste collected per Y dollars
X number of books circulated per Y dollars
X number of reference questions answered
Police? Planning? Finance? Education?
Communicating the Vision
Communication, Communication, Communication
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Challenges and motivates workforce
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Arouses strong sense of organizational purpose
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Induces employee buy-in
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Galvanizes people to the organization
Why Shared Vision Matters
When all employees understand and are committed to
the organizations mission and strategic vision, both
daily execution and responses to change and adversity
are greatly improved
Not a Automatic
Ten Major Pitfalls
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Top management assumes that it can be delegated
Top management spends too much time on day-to-day
Failure to set appropriate organizational goals
Failure to involve staff in the planning process
Failure to use plans as standards for performance
Failure to create climate conducive to planning
Assuming that planning is separate from management
Inserting too much complexity and formality
Failure to integrate all departmental plans
Top management making too many seat-of-the-pants decisions
Strategic Management
Q: So, why do we need “strategic management”?
Why Strategic Management
For Your Organization to Succeed in the Face of:
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Increasing demands
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Severe financial constraints
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Growing complexity of public issues
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Growing pressure from the public
Why Strategic Management
For Your Employees
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Gives everyone a clearly defined role
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Makes a difference in performance levels
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Provides systematic approach to uncertainties
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Coordinates and focuses employees
Why Strategic Management
For Your Organization
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Crystallizes long-term direction
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Reduces risk of rudderless decision-making
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Conveys organizational purpose and identity
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Keeps actions of all employees on common path
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Avoids mission creep
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Helps organization prepare for the future
Strategic Management
The process by which the guiding members of
an organization envision its future and put
into place the necessary resources, procedures
and operations to achieve that future
So What Does All This
Have to Do with Budgeting?
It is the strategic plan that drives budget formulation
It allows the organization’s leaders stay on top of
the priorities so they can budget the resources the
organization needs to carry out its strategic agenda
So What Does All This
Have to Do with Budgeting?
If the budget cannot be fully funded to meet all of
the demands, it is the strategic prioritization of the
objectives and action steps that guide the deployment
of the limited resources
So What Does All This
Have to Do with Budgeting?
Sometimes the availability of additional resources is
not always readily apparent, but strategic management
can make them more visible
When the organization establishes what is really
important, it also makes explicit those actions that are
not as important… Eliminating low priorities and
redundancies in assignments can free up additional
resources making them available for strategic actions
Budgets: More Than Numbers
Improved Performance
&
Results Accountability
through
Strategic Management
Regionalization of Services
Strategic Management System
Q: So, what’s a strategic management system?
Strategic Management System
A management system that links strategic
planning and decision making to the day-today business of operational management
More Than Just a Plan
Strategic management goes beyond the development of a
strategic plan to the deployment and implementation of
the plan and the evaluation of its results
Deployment involves communicating the plan to all
employees and getting their buy-in
Implementation involves adequately resourcing the plan,
putting it into action, and managing those actions
Evaluation consists of tracking implementation actions,
assessing how the organization is changing as a result of
those actions and using that information to update the plan
Role of Senior Management
Since strategic management is a continuous process
senior leaders must be facilitators, consensus-builders,
coaches, consultants, and champions of their
organization’s culture
And they must be constantly in tune with their
environments to change their organization as necessary
The Difference?
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Focus shifts from the inputs that are used to run the
organization to the desired outcomes
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Optimizing organizational performance and service
quality within limited resources is the priority
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Actions based on a plan (not a reaction)
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Organization-wide communication and involvement
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The organization can adapt more easily to change
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The organizational boundaries are more flexible
First Step: The Plan
WARNING: Do not bother to go through a
strategic planning exercise unless and until the
leadership team is committed to carrying it out.
If there is no follow-through, confusion will
arise at the operational level, and it will result
in cynicism about any improvement efforts.
Keys to Success… or Failure
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Assign roles and responsibilities
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No accountability for deployment
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Establish priorities
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Too many goals, strategies, or
objectives with no priorities
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Involve mid-level management
as active participants
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Plan in a vacuum
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Think through how to manage
implementation
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No overall strategy to implement
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Charge mid-level management
with aligning action plans
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Make no attempt to link with
day-to-day operations
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Make careful choices about
the form and content of the plan
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Not being thorough - glossing
over the details
Who Does What?
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Senior leadership
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Planning team members
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Development of strategies from goals and objectives
Incorporates feedback from organization input
Program managers
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Reaches consensus on strategic plan
Develops deployment and implementation methods
Shares plan with employees
Collects feedback
Resource managers
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HR, budget, etc., incorporate plan needs
Problem Areas
Caution: Strategic planning is about change that
leads the organization toward a better future;
therefore, don’t ask for feedback on the plan by
sending it out asking for comments
Advice: To foster ownership of the plan, develop
a feedback process that actively involves line
managers and staff
Problem Areas
Caution: The more strategic the plan, the harder it is to
ensure that the workforce feels it is contributing directly to
the organization’s mission
Advice: It is crucial to make the plan a living document
so start by using routine organizational terms and by
continually asking how daily work relates to the plan
Problem Areas
Caution: During deployment, it is important for the
program managers to continue to focus on the good of
the whole organization, not just their own functional
areas
Advice: Encourage open and candid communication
among all program managers so that issues are
brought out and dealt with constructively during
planning phases
Problem Areas
Caution: Sometimes the resources or skills needed to
accomplish an objective are not available and sometimes
more study is needed
Advice: The first step may be to put together a team to
conduct additional study. The results of the study effort
will determine what changes have to be made in staffing
or other resources before the action steps can be
implemented
Problem Areas
Caution: Be careful not to frontload or overload the
strategic plan’s objectives
Advice: The plan may take 5 years or more to fully
implement so no need to begin all of the objectives
in the first year… there are never enough resources
to do that, and it is important not to neglect the
organization’s current mission-sustaining work
Problem Areas
Caution: Union membership participation may not
ensure the buy-in of union leadership.
Advice: Union leaders can participate in the process
by providing feedback on the plan along with the midlevel managers, and be sure that they understand the
benefit to the organization as a whole and to their
membership
Problem Areas
Caution: Some employees may have difficulty
understanding the need for action in a plan that only
describes the organization’s mission, goals and
objectives
Advice: Include detail on the action steps so that the
staff will be able to see how the work will get done, and
use a format that is flexible enough to allow for regular
updates
Keys to Success… or Failure
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Assign roles and responsibilities
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No accountability
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Communicate the plan
constantly and consistently
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Never talk about the plan
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Recognize the difficulties
associated with change
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Ignore the emotional impact of
change
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Help people through the change
process
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Focus only on accomplishments
Problem Areas
Caution: If the organization had a previous negative
experience with strategic planning or employees have
little inherent faith in the concept of strategic planning or
management’s commitment to it, cynicism will result
Advice: The communication of the strategic plan should
be handled as a special event to mark a new beginning and
a focus on the future… and clearly demonstrate to
employees that this plan is real and will be implemented
Problem Areas
Caution: If the leaders of the organization do not
behave in accordance with the plan’s principles, then
the rest of the staff will lose respect for their
commitment to change
Advice: The behavioral aspects necessary to achieve
the vision must be demonstrated daily… live the
principles… be a good role model every day
Problem Areas
Caution: When evaluating how your organization is
doing, be sure that the measures are the right ones. Some
measures may be too aggregated to show change even if
there was progress made. But, if little or no progress is
made, maybe the measures are fine, but the strategies may
be incorrect. Or staff may not be executing properly…
Advice: Always collect several data points over a period of
time before drawing conclusions. Before action is taken,
investigate what’s behind the data.
Measurement
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People at appropriate levels need to be involved in
developing the measurement tools
A variety of measures is necessary to adequately
describe the organization and its processes
You need to measure over time show to show trends
Analysis is required to determine the causes of success
or failure
Measure only what is important
Don’t collect data that you are not going to use
Performance Measurement
Q: What is performance measurement?
Performance Measurement
A: It is a process through which an organization
assesses how well its programs and services are
achieving their desired results
The process must include both the organizational
performance data and a benchmark that creates
framework for analyzing that data
Organizational Performance
The work of an organization’s assets, employees and
equipment in converting inputs into outputs and outcomes
and
The quality of the resulting outputs and outcomes
Uses for Performance Measurement
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To identify areas that have not resulted in positive results
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To identify trends in service needs and delivery
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To delve further into the nature of particular problems
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To set targets for the future
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To motivate staff to improve performance
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To hold managers and staff accountable
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To develop and improve programs and policies.
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To help develop programs and budgets
Outputs / Effects
Your Final Presentations
When Finished = Productivity
Solid Content & Graphics = Quality
Interesting = Customer Satisfaction
Influential = Impact
Why Performance Measurement?
Q: How many of the 8 reason can you name?
Why Performance Measurement?
1. To Budget & adequately and appropriately allocate resources
2. To Evaluate how well is public agency performing.
3. To Control to ensure employees are doing the right thing
4. To Motivate and provide periodic sense of accomplishment
5. To Celebrate accomplishments
6. To Promote the organization and its employees
7. To Learn reasons behind both good & bad performance
8. To Improve and develop processes and approaches
Why Performance Measurement?
If you don’t measure …
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How do you know what or where to improve?
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How do you know where to allocate money and people?
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How do you know how you compare with others?
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How do you know whether you are improving or declining?
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How do you know whether or which programs, methods, or
employees are producing results supporting your strategic
action plan?
Why Not Just Use…
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Managers’ Intuition?
Hunches?
Rumor?
Tradition?
Habits?
Rules of Thumb?
Guesses?
Anecdotes?
Relation to Strategic Management
Measurement Categories
1.
Effectiveness
2.
Efficiency
3.
Quality
4.
Timeliness
5.
Productivity
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Safety, Access, Equity, Impact…
(TBD by the Organization)
Measure All Meaningful Work
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Desired performance outcomes must be established for all
meaningful work
Work that is not measured is deemed worthless regardless of
its outcomes
Work that is not measured cannot be managed because there is
no objective information to determine its value
Outcomes provide the basis for establishing accountability for
results rather than just requiring a minimum level of effort
Desired outcomes are necessary for proper work evaluation
and legitimate performance appraisal
Frequent reporting enables timely corrective action which is
needed for effective management and organizational success
Useless Performance Measures
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Does not provide good information – The measure is not
valid, reliable, responsive... exactly what is being measured
and how the results should be interpreted are not clear
Does not illustrate progress toward achieving goals and
objectives – The measure is not responsive and/or functional
Does not have ownership – The measure is not functional,
credible, and/or understandable and no one is responsible for
this performance
Will never have data available – The measure is not
available… it would be either nearly impossible or costprohibitive to collect the necessary data
Measurement Data Issues
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Collecting not enough data
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Collecting too much data
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Collecting the wrong data
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Heavy reliance on summary data
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Emphasizing averages and discounts outliers
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Heavy reliance on historical patterns
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Heavy reliance on gross aggregates
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Heavy reliance on static (snapshot) analysis
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Little attention to time-based or value-added measures
Attributes of Best Measurement Data
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A way to measure exists
•
May be interpreted easily and uniformly
•
Provide an agreed upon basis for decision making
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Are understandable by everyone
•
Are precise in interpreting the results
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Apply broadly and comparably
•
Are economical to apply
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Reflects the customer’s and organization’s needs
Positive not Punitive
“Performance measurement systems should be
positive, not punitive. The most successful
performance measurement systems are not ‘gotcha’
systems, but learning systems that help the
organization identify what works.”
National Partnership for Reinventing Government