Refresh, manage and communicate

In part two of a three-part series, Bob Paladino uses the City of Coral Springs as an example to demonstrate how business strategies are achieved using Principles 2 and 3 of the Five Key Principles of corporate performance management

By Bob Paladino, CPA

A new book entitled Five Key Principles of Corporate Performance Management presents best practice research from globally recognized enterprises and offers guidance to enable companies to implement strategy through integrated corporate performance management (CPM).

During the course of the research, study, and many successive client projects, a winning company DNA started to emerge — true winners follow a discernable pattern.  These organizations follow a pattern referred to as the Five Key Principles  of CPM — best practices that include:

Principle 1: Establish and Deploy a CPM Office and Officer
Principle 2: Refresh and Communicate Strategy
Principle 3: Cascade and Manage Strategy
Principle 4: Improve Performance
Principle 5: Manage and Leverage Knowledge

Part two will explore Principles 2 and 3 through the City of Coral Springs book case.  The City of Coral Springs, Florida, is a high-performing municipal corporation — a city government following a corporate management model.

Principle 2: Refresh and Communicate Strategy

Strategic and operational planning

The City of Coral Springs has robust integrated CPM processes at the strategic, operational and team levels as illustrated in diagram one.

The city commission began a strategic planning process to achieve its corporate mission. Reviewed and updated biennially, the strategic plan creates a shared vision for the future of the community. These long-range policy issues or “strategic priorities” emphasize the values of the community:

• Customer-involved government
• Neighbourhood and environmental vitality
• Excellence in education
• Family, youth, and community values
• Financial health and economic development
• Ethnic and religious diversity

For each priority, an action plan is developed for implementing policy and operating measures. Through this process, the business plan is developed:

• Commission priority — identify vital issues.
• Key intended outcomes — identify desired results.
• Initiatives — allocate activities, resources, personnel, investment, and time planned for the year to achieve key intended outcomes (KIO).
• Performance measures — specific and measurable data indicating the effectiveness of processes designed to support the KIOs.

With the priorities and indicators set, the operations of the city are reviewed and redirected to bring the strategic vision to life. Specific actions, programs, capital purchases, staffing requirements, and funding levels are developed in response to the needs identified in the strategic plan. Known as the business plan, the resulting document is an outgrowth of the strategic priorities, capturing the city’s vision in a quantifiable form, improving decision making and resource allocation. A benefit of using a business plan is the direct link between strategic priorities and costs and activities.

Individual staff member’s objectives and performance measures are linked to the program objectives. Each employee knows what the end result should be and how it contributes to the strategic plan. In this way, the budget becomes a tool for monitoring and controlling operating performance.

Strategic planning process calendar and detailed content

The strategic planning process begins in January of even-numbered years, when staff begin collecting data for the environmental scan, which includes input from various customer feedback sources as well as management and policy analysis of emerging issues, demographic trends, and financial conditions. A strategic planning workshop is convened in the spring where staff and the commission discuss issues in a workbook that consists of these sections:

• Financial health
• Environmental scan
• Customer requirements analysis
• SWOT (strengths-weaknesses-opportunities-threats) results
• Performance analysis
• Mission, core values, and strategic priorities
• Benchmarking
• Current initiative update

Over the two-day workshop, the commission outlines the direction the strategic plan will take and makes specific changes as they respond to the data presented. Staff then develop proposed changes to the slate of KIOs designed to take into account requested changes, which are discussed and approved during later business plan workshops. An emphasis is placed on selecting leading indicators, rather than lagging, to facilitate the evaluation of progress during the year. Even in odd-numbered years, a strategic planning workshop is held to review the plan and performance measures and make proactive midcourse corrections as necessary and appropriate. With the strategic priorities and KIOs in hand, staff begin to develop the business plan for the following year. A senior management team staff retreat is held in May to discuss proposed business plan initiatives. Each initiative is discussed, analyzed, and weighed against the others until a slate of initiatives is reached through consensus.

Immediately following this retreat, the city manager meets with each department director to go over performance agreements and resource needs to negotiate and lock in specific budget requests. A business planning workshop is held in June with the city commission to present the proposed business plan initiatives, including major capital projects and new programs, to solicit feedback and input. A second workshop is held in July to present the refined plan, with associated budget projections, to the commission. Both workshops are televised and open to the public. Once the business plan is approved, departments use it as their action plan for the next year. Supervisors further deploy the business plan by linking individual work plans and employee’s incentive pay system review objectives to it during the October review period.

The bulk of the strategic deployment planning is done at this point, so staff spend the rest of July and August preparing the proposed budget for public hearings in September. Because the city has assiduously sought input all along, there is very little discussion at budget hearings, which typically last less than an hour. Resolutions and ordinances are voted into place and the new fiscal year begins October 1. Budget staff prepare the adopted budget and planning documents and the cycle starts over again.

This system has been steadily improved and refined year after year and is now widely considered to be a best-in-class benchmark by many organizations. The system has been featured as a “best practice” in the National Performance Review, Government Finance Officers Association publications, the Florida Institute of Government programs, and Fitch’s recommended practices for cities seeking bond-rating upgrades, and is presented in numerous universities’ graduate programs in public administration as a case study. To ensure continuous improvement and test the soundness of the system, an annual review of the system is made in January. Management and budget office staff gather feedback from departments, the commission, and other end users on the ease of use and outcomes of the system. A standing business SWOT team for business planning analysis meets to discuss recommendations and results of the process review, as well as feedback from senior management team retreats and individual staff efforts in evaluating the strategic planning process.

Best practice highlights

• Strategic planning. CPM personnel conducted strategic planning including internal and external analyses, SWOT analyses, strategic scenarios, and strategic options.
• Core services. The process focused on providing core services.
• Strategic plan. The city produces a comprehensive strategic plan that provides direction to and cascades into business plans and team and individual goals.
• Link strategic planning and budgeting processes. The city provides a clear line of sight between strategic objectives and its planning and budgeting process outcomes.
• Communications plan. The strategic direction and supporting plans are effectively communicated throughout the city departments and to the citizenry.

Principle 3: Cascade and Manage Strategy

Cascading the strategic priorities into KIOs

The strategic plan and key intended outcomes are the basis for the development of the City’s business plan and individual departmental work plans that constitute the action plan for meeting strategic objectives. The city manager often says that the business plan “operationalizes” the strategic plan and then, in turn, drives resource allocation through the performance-based budget. Performance measures relative to the action plans are selected by departments based on how well the KIOs, business plan initiatives, and the successful delivery of core services.

The exhibit lists the initiatives of the fiscal year business plan. Each initiative is an example of changes in operations that are strategy driven. Any changes, including new, updated, or discontinued services must be formulated as an initiative. All staffing and capital requests are linked to initiatives as well. One of the benefits of this is that all staffing decisions are tied to the business plan to ensure strategic alignment. Some business plan initiatives are implemented over a multi-year time frame. An example of a long-term project currently in its third year is the Downtown Coral Springs Initiative, which will continue to be updated in each business plan for the next five years, due to the long-term nature of the project. Key human resource plans are directly linked to short- and long-term plans.

In addition to performance measures developed by the departments, the City also uses a composite index, the financial trend monitoring system, an early warning system, benchmarking, and individual performance measures to monitor performance.

Cascading measures to employees

Employees are motivated to develop and utilize their full potential through the City’s incentive pay system. Based on the results at the end of year incentive pay system review, an employee is eligible for awards ranging from 0 to 7 per cent, depending on ratings received. Motivation is also provided through the City’s Instant Recognition Program, recognition of teams at the weekly senior management team meetings, and recognition at city commission public hearings. In addition, the City provides extensive training opportunities to employees through both in-house and outside offerings. A generous tuition reimbursement program is also available to help employees meet developmental goals.

Employee performance is managed through a set of systems that were designed to specifically link the attainment of stated City goals to individual employee work plans and to reinforce the City’s core values and priority areas:

• Incentive pay system
• Employee excellence awards
• Applause cards
• Safety rewards program
• Scorecard automation

In 2006, the City began the process of automating the balanced scorecard (BSC) by purchasing active strategy software and deploying it on the City’s intranet. Individualized scorecards and data is available to department directors and key staff at first and is rolled out to the team level at a later time. The system is also used to manage and track business plan initiatives, using milestones. Users will be prompted to update data and initiative progress with automatic email reminders.

Best practice highlights

• Partner with business owners. Partner with line and staff leadership team members to gain support and influence as partners to help them achieve results.
• Develop corporate level 1 BSC. Translated strategy into highest level BSC in the organization.
• Leverage proven BSC or comparable methods. The KIOs leveraged proven BSC methods, however, are heavily weighted toward customers/constituents, an interesting variation on the traditional four perspectives. The KIOs contain a very manageable number of measures at 25.
• Cascade BSC to lower levels. Cascaded the KIO/BSC to the lowest levels of the organization including to the individual employee level.
• Align support services. Aligned support services to the corporate BSC objectives and measures.
• Link compensation. Linked compensation to the objectives and measures in the BSC.
• Manage using measurement. Effectively managed the business using BSC meeting management techniques focused on exception- based management.
• Automate measurement. Started the automation process to formalize the BSC throughout the organization.

Bob Paladino, CPA, and executive advisor, (bobpaladino@paladinoassociates.com) is the founder of Bob Paladino & Associates. He is a regular speaker and published writer in leading journals.

Author’s note: Content has been adapted in part from the recently published book “Five Key Principles of Corporate Performance Management” from Wiley Publishing 2007. The first article of the trilogy focused on Principle 1; the second article focuses on Principles 2 and 3; and the final article will focus on Principles 4 and 5. 

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