Strategy maps in government sector
The concept of strategy maps is based on the assumption that financial indicators do not always give a full picture of the company activity. That’s why this model better suits companies and commercial organizations that have the primary goal of making profits. It also concerns government sector. This article focuses on approaches to implementation of strategy maps in government and nonprofit organizations, and changes which need to be introduced to the strategy maps concept as compared to their commercial counterparts.
Use of strategy maps in public organizations
Strategy maps complement financial information on the performed actions. Consequently, companies that have the primary goal of making short-term profits have no urgent need in implementation of strategy maps. But it would be interesting to know what information the company needs and what systems of gathering information are used in such companies. Strategic maps are mostly helpful for description of those operations the result which will be visible in future, and advantages (such as profits increase) will not be immediate. Such operations are performed by support and development departments, although their final goal is to increase profits for the company.
This is especially true for central and local government bodies. As a service supplier, the government sector has almost the same requirements to administrative management as commercial organizations. Since the early 1950s the U.S. and other countries have been arguing on success criteria which determine efficiency of government bodies and methods of analysis performed when choosing economic policy.
Currently, strategic maps are being tested in some departments and bodies of central and local governments. Unfortunately, there are no real cases of a full implementation of strategy maps and Balanced Scorecard.
Strategy maps and local government
Regional and municipal government of Sweden has been using different performance evaluation tools with a set of key performance indicators. Recently a “customer – supplier” model has been gaining popularity. Local government purchases or orders necessary services and pays for them with the taxpayers’ money. In order to review the volume of supplied services and even change the supplier, local government is freed from any responsibility as a service supplier. This responsibility goes to municipal departments that render services. For example, healthcare department may be divided into several sub-departments, one of which renders services. The customer goal is to get the best services for taxpayers’ money. It is very important to introduce indicators related to customer satisfaction. Thus, introduction of non-financial indicators is very helpful. If customers are not satisfied, the results cannot be viewed as positive. Strategic maps can be used both by different service administrators (local government, school councils, hospital management) and service suppliers that are directly responsible to taxpayers and local governments for rendering high quality services.
In fact, a number of municipal bodies in Sweden are using different modifications of strategy maps. Some local governments have been using key performance indicators which can be easily represented in the form of strategy maps. It is believed that the key advantage of using strategy maps is related to comparative analysis or benchmarking which is easy to be introduced in municipal bodies, as compared to private companies. Indicators used by Swedish authorities are related to resources, activity types and perception of government policy and actions by taxpayers. Moreover, some indicators characterize public attitude towards actions/decisions of the local government. Some municipal departments even go further by introduction of strategy maps in schools and hospitals. The local authorities want to know answers to such questions: are students satisfied with curriculum, do patients like their stay in the hospital etc?
Of course, the bulk of indicators are related to financial issues. Thus, indicators describe the number of real estate objects, equipment units, expenses for maintenance of real estate and production facilities, total length of roads and highways, traffic lights units, of street lights etc. Through measurement of maintenance expenses it is possible to optimize them (average maintenance costs per one light post, meter of track etc.) The choice of such indicators depends on the way they will be used in decision making.
Distinctive features of strategy maps in government sector
Methods of using and implementation of strategy maps by local governments look almost the same as the methods used by commercial organizations. However, certain changes and amendments must be introduced to strategy maps to bring them into full conformity with the demands to government organizations.
First and foremost, the concept of strategy maps is based on balance between different activity aspects and criteria. Moreover, such balance should promote long-term profitability for the company. Organizations referring to local and central government bodies are pursuing different goals. Obviously, a substitute for financial category must be found.
Secondly, the four categories of Balanced Scorecard should also undergo certain changes. At the same time, this model is quite universal and thus can be used in government sector. Both government and commercial business sector uses strategy map model of the type “yesterday-today-tomorrow.” In other words, it is believed that financial category includes indicators which mostly refer to the past (“yesterday”). Other Balanced Scorecard categories include indicators and measures related to something that will happen. But instead of financial aspect government organization should rather describe results of their work in a broader sense in accordance to the model “expenses-results.” The owner of such organization will be the entire society representatives of which form legislative bodies and the government. For example, when implementing strategy maps in schools the following indicators may be used: number of graduates, number of job positions occupied by graduates in future etc. These categories are used from the service provider perspective. As to the customer perspective, graduates themselves can evaluate quality of received education. From social perspective, the schools should provide society with a certain number of graduates possessing certain knowledge.
Customer perspective can be substituted by focus on relations. Customers are supreme value for a commercial organization. In case of government bodies customers are citizens, city inhabitants, taxpayers. Through substitution of customer relations by focus on relations changes in municipal environment can be easily tracked.
Learning and growth perspective is something that needs no changes when government organization implements strategy maps. Learning and growth perspective should give answer to the question: “What will happen in future?” What will city infrastructure look like? What did the architect concept for the city? What is the progress with renovation of schools and other educational establishments?
Summary
Although advantages of using strategy maps in government sector are obvious and moreover tested by local governments in different countries, it would be wrong to talk about full scale use of strategy maps and Balanced Scorecard by government bodies. Politics is very subtle and complex thing. Sometimes something that is said to be done is not done in fact. Political decisions may bring effect of Balanced Scorecard and strategy map to naught. Relations of taxpayers and government bodies are sometimes very complicated. If the information obtained with the help of strategy maps appears in newspapers headlines it will be rather discouraging for the society. Voters remember promises of politicians, but these promises are often forgotten. However, it doesn’t mean that the concept of Balanced Scorecard has no chances for survival in the government sector. Just to the contrary strategy maps appeared to be quite ineffective tool for state governance.
Use of Balanced Scorecard is rather recommended for local governments that will describe their accomplishments with the help of strategy maps. It would be great if a taxpayer can visit Internet page and look at that the development strategy of his native city and check how his money is used. Of course, Balanced Scorecard and strategy map concept should be adapted to specific character of the government sector. This is something that can be really done, although no one is claiming then this will be an easy task.
