Wednesday, March 25, 2015

City of Charlotte and Balanced Scorecard

Through this case I’ve been pleasantly surprised by the City of Charlotte as a cutting-edge government institution. Charlotte’s Vision and Mission truly contain its core ideology (values and purposes) and envisioned future, as described by Collins & Porras.  

In addition, this case exemplifies what these authors mean when explaining that the core ideology is the organization’s timeless character and it should never change (despite the external and internal contexts), whereas practices and strategies should change continually. Hence, in the 90’s the city manager, Pam Syfert, had to downsize the organization—due to a decrease in tax revenues— and change the organizational structure. 27 departments were consolidated into 9 key “business” units, 4 support “business” units, and 4 administrative functions. In addition, she decided to define 5 strategic focus areas. However, the Management by Objectives (MBO) program used since the 70’s no longer served to these new practices, so the city needed a new system to enhance planning and not control. The Balanced Scorecard (BSC) was the system they needed. Despite all these changes the city remained true to its vision of being a model of excellence that puts the citizens first.

Moreover, this story is consistent with Porter’s definition of Strategy, which is the “creation of a unique and valuable position, involving a different set of activities, and creating fit among those activities." The uniqueness and valuable position of this city is that it is managed with strategic business planning, hence like a business. This is clearly stated in its main value: “Public Service is Our Business.” Moreover, by implementing the BSC the city found an efficient way to create fit among its activities.    

According to Kaplan and Norton, BSC puts vision and strategy, not control, at the center. That was exactly what Charlotte was looking for. While giving managers information from 4 different perspectives, it minimizes information overload by limiting the numbers of measures used, as opposed to the 70’s MBO. This measures are in fact goals to achieve. Hence, it allows managers and staff to focus only in a few most critical goals. In addition, it enforces equilibria by allowing to see if an improvement in one unit has been achieved at the expense of other.

The beauty of the BSC is that it is a system applicable to any type of organization, and suitable to what they want to become. The ultimate target of any type of organization is to create value. For instance, a company will have at the top line (customer perspective) the satisfaction of its customers, whereas Charlotte’s customers and clients are its citizens. Serving the community is its aim. The type of city and community the council wants to deliver is reflected in its 21 BSC objectives, which are also linked to the vision and mission. Another remarkable issue is that Syfert wanted to publicize the annual and semi-annual BSC’s reports. She saw the value of accountability to its customers (citizens). Not only council members should be updated on the progresses, but the whole community.

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