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Advice on developing a strategic balanced scorecard for a Hospice or other charity

Strategic Balanced Scorecard in Hospices: Some advice from experience

This article will help you if you are considering the design, implementation and use of a strategic balanced scorecard, or strategy maps, for a hospice, or indeed for any similar charity.

Help the Hospices, Balanced Scorecard guidelines

Help the Hospices, Balanced Scorecard guidelines (Click to go to their paper)

I was delighted to find that the Hospice Sector’s umbrella body ‘Help the Hospices“, had recommended Excitant as a the source of useful information when developing a balanced scorecard for a charity or hospice [ref].

The first I heard about it, ironically, was when the Chief Executive from a Hospice rang me up and asked for some help with their Strategic Balanced Scorecard.   Despite the surprise about how he had heard of me, I was still delighted to speak to him and we did work together on their Strategic Balanced Scorecard and their strategy.

That Chief Executive was Mike Keel of Keech Hospice Care.  (He has given us permission to refer to our work with them, so it will help other hospices).  A case study on the Hospice Balanced Scorecard we created at Keech Hospice Care, will follow soon.  If you want some more immediate advice on charity or Hospice strategy maps and strategic balanced scorecards, just contact me.

First, I want to say a little about the paper that Help the Hospices have published.  It is quite a good paper, with a few examples and some good advice.

The paper references Excitant and the work we did ages ago for the Diana, Princess of Wales Memorial Fund, so it must be good.   Since then, we have done various charity balanced scorecards for a Christian Childrens’ Charity, Two Student Unions (which are charities and membership organisations), an organisation associated with RNIB, a large (£100m ) Learning Disability services provider, a research and lobbying organisation for literacy and numeracy, a fund looking to create social change in education, a Credit Union, worked with the National Trust (a quite large charity) and a few others  besides.  This list does not include our work on balanced scorecards in government owned not for profit organisations.  Strategic Balanced Scorecards for charities and other third sector organisations have become a bit of a speciality.

Returning to the Help the Hospices practice guide, in general it is a good paper and worth reading (click on the image opposite and you will find it).  You may find the examples a little light as they are rather simplified, but that is the nature of such examples in such papers.

However, you do need to be aware of some mis-understandings that might send you into difficulties if you try to implement its recommendations.  The purpose of this blog is to warn you of these and what to do about them, so their practice guide is more useful.

The most critical mistake mistake: Confusing the purpose of the customer/patient/stakeholder perspective

First, there is a common, major and glaring error on page 7.    It is describing the typical (we’ll come back to that) perspectives of a strategy map or balanced scorecard.  It describes the “Patient or stakeholder” perspective saying:

“Patient and other stakeholder perspective: what do we need to do and improve to meet patient and other stakeholders’ expectations as we deliver on the mission?”

This looks sensible, but is one of the biggest mistakes you can make in strategic balanced scorecard design.  It suggests that the contents of the Patient and stakeholder perspective contains “what do we need to do!”.

The problem with this is that the process perspective should contain what “we need to do”.  The customer perspective (in this case called the “patient and stakeholder” perspective, should contain statements and objectives, from the perspective of those patients and stakeholders.  It should contain “what they want”.  It should not contain what you are planning to do to deliver what they want, but should clearly state their needs from their perspectives.The customer perspective (in this case called the “patient and stakeholder” perspective), should contain statements and objectives, from the perspective of those patients and stakeholders.

This is a common mistake.  The clue to recognising the mistake, is in the name.  Being the patient or stakeholder perspective, it should contain their perspective on things, NOT the perspective of what the organisation wants or plans to do.

Please, if you follow the advice in this paper, do not make this mistake.  make sure you get the perspective of your patients and stakeholders.  In fact you should consider who those wider stakeholders actually are….

The patient and stakeholder perspective needs expanding

Whilst we are on the subject of this external perspective, the name misses two key groups.  Sure they might be amongst stakeholders, but that word hides a multitude of things. It is important to recognise immediate beneficiaries, (in this case the patients), but also the secondary beneficiaries, (in this case their families).

When dealing with strategy maps and balanced scorecards for third sector organisations, such as charities,  it is important to recognise the immediate beneficiaries, (in this case the patients), but also the secondary beneficiaries, (in this case their families).

To fully develop the operating or service delivery model of the charity or hospice, there are other external perspectives that also need to be explicitly named and included.

We need to include, for most charities and hospices, the funders and donors.  In most cases (as in the hospice I worked with) there are donors that shop in their retail outlets, others that buy lottery tickets or donate to campaigns, while others give legacies in their wills and some might be large donors funding specific projects.  The donor landscape is rich and diverse.

Other hospice income might come, in this case did come, from working with the local NHS and commissioning bodies.  Helping them to free up hospital beds and even training their staff and teams, and receiving a contracted income stream in return.

To fully develop the operating or service delivery model of the charity or hospice, there are other external perspectives that also need to be explicitly named and included.

Most charities use volunteers.  So, there is a need for the volunteer’s perspective to be included in the top half of the strategy map, even though later you may include aspects of their needs in the various objectives within the process and learning and growth perspectives. Recognising that your diverse population of volunteers have needs, is a part of your strategy.

There is also the regulator’s perspective.  The charity commission will set requirements on the organisation’s charitable status, and the DoH and other medical bodies will regulate the organisations palliative medical activities.

So, it is great to call the “Customer” perspective, the “Patient and stakeholder” perspective, but the story is actually much richer than that.  That is why we created the fourth generation strategic balanced scorecard framework for charities and third sector organisations.  You can find out more about in my book, “Strategy Mapping for learning organizations” and in articles referenced at the bottom of this article (or give us a call).

What is this “Resource perspective”?

Another curiosity on page 7 is the Resource perspective.  This is listed last and suggests it is about the resources that provide the capacity for the hospice to function.

The financial perspective should contain outcome statements about the costs, revenues (income) and surplus created whilst delivering the strategy.

This is a typical assumption (usually by finance people) that the scorecard or strategy map should define resources (finances) needed to deliver things, not the financial outcomes.  However, this is not how the strategic balanced scorecard perspectives work.

What there should be is an outcome statement about the costs and revenues (incomes) and surplus created whilst delivering the strategy.  These are statements of the financial outcomes as a CONSEQUENCE of delivering the strategy.  There is a separate part of the strategy mapping and strategic balanced scorecard process that looks at the resources provided.  How you handle budgets and the budgeting process is detailed in chapter 18 of Strategy Mapping for learning organizations.

The full balanced scorecard set of components

Also in the Help the Hospices article, they refer to three components of the balanced scorecard: the strategy map, the strategy matrix and the scorecard.

Yes, there is a strategy map.  Yes, there is a scorecard.  What the authors seem to have done is taken the wider scorecard that normally exists: the one that includes objectives, and initiatives and responsibilities and decided to call that a ‘Strategy Matrix’.  Meanwhile they have degenerated the scorecard component of the balanced scorecard just to contain the measures and targets.

Use the full, detailed balanced scorecard supported by any further detailed dashboards of measures over time.

I can see why they have done that.  What they are really doing is creating a simpler, measures only, scorecard, or rather, simply they have created a dashboard of measures and called it the scorecard.  Of course you can do that, but I am not sure that this promotes the fuller balanced scorecard with initiatives and objectives to be a strategy matrix.  I find it is better to use the strategy map and refer to the full, detailed balanced scorecard and then any detailed dashboards of measures.  Ho hum, whatever works.

I suspect this is an artifact of using an approach that contains “Key performance questions” or areas.  In this case they have put these under each objective.  I prefer an approach where you develop strategic themes and identify the objectives and cause and effect model within those themes).  Then you can ask what the key performance questions are within each theme and how they will be achieved.  Each to his own, but I know people who have tried adding “Key performance questions” after objectives and got into difficulty.  They end up duplicating the objective and other components.  Try it for yourself and you will discover what I mean.

They have missed out the Tangible future

There is a third, missing component.  The missing component is actually the Tangible Future.  This is a statement in two parts: of how the external environment will evolve; and how the organisation will change, tangibly, over time.

The Tangible Future describes how the external environment will change and how the organisation will evolve, over time.

We look at how the external environment will change to identify forces, risks, changes and assumptions in the external landscape.  These act to test the logic of the strategy as a response to changing forces.  It also means that you create a list of issues for the external perspective [ref] so that, as an executive team, you are monitoring the external environment in case something changes, or causes you to need to refine and change your strategy.  This is a key component of the strategic learning model at the heart of fourth generation strategic balanced scorecards.

In the case of Keech Hospice, we looked at the economy, the changing population demographics, the donor population, the competitive space (yes charities are competitors for funds and services with one another), the changing NHS landscape and topics of volunteers and the charitable sector.

We also look at the tangible future internally, for two reasons.  First, to test it against the rate of external change and validate the strategy.  Secondly, to set a pace of change for the ambition to be embedded in any targets associated with the various measures that will track your charity or hospice strategy.   In the case of Keech Hospice Care we looked at funding, volunteers, the services provided for different classes of patients and different services,  the communications, the staff, the nursing and medical capability and staff, amongst other dimensions.

Both parts of this tangible future should be developed before you start to develop your strategy map, as there may be aspects of your strategy that it reveals and that need to be incorporated into your hospice’s strategy map.

Using strategic themes in a hospice strategy

Whilst I don’t find “Key Performance Questions” that helpful, what I find is that clients like the idea of strategic themes extremely helpful.

Strategic themes are usually vertical slices across down the strategy map. They help to tell the story of your strategy.

Strategic themes are usually vertical slices across down the strategy map.  For instance, with the Hospice I worked with, we identified four strategic themes:

  1. “Fund well”: making sure the hospice was funded well from all sources and that the money was managed well.  This included the sources of volunteers as a resource for the charity.
  2.  “Educate and communicate” About educating the wider population about Palliative care and the day care they provided, as well as educating the NHS and commissioners in how the hospice would help them.
  3.  “Excellent Care” about the Palliative and day care they provided for both those near the end of life and those with terminal illnesses.
  4. “Good Governance” about ensuring the organisation was able to demonstrate to its Board that its strategy was successful and ensuring prudent operations.

Sometimes these strategic themes are aspects across the strategy map.  For instance we could have included themes of

  1. Communication and engagement, or
  2. Information needs, or
  3. being a specialist

that explained aspects of their strategy that transcended their whole Hospice strategy map.

These strategic themes (which themselves could be broken down into further sub-themes) provided the overall structure of the strategy. So, for instance there might be sub-themes and strategies for each funding source of stream, namely: shops and charitable donations, wider donor community, large donors and legacies, volunteers and NHS contracts.  the choice would depend on the emphasis in your charity and its strategy across various funding sources.

There are a couple of neat things that happen as a consequence of getting the strategic themes right.

One neat piece is creating decision areas where people have to come together from across the organisation to support the strategy.  For instance the theme, Educate and communicate involved, in this case, both the fund-raising team and the medical team in designing and communicating the message about the Hospice movement as well as the hospice itself.  In effect good choices about strategic themes helps to break down any silo working that might exist.

The other advantage of well-chosen strategic themes is that it helps with the cascade of the strategy maps and the strategy to a second level within the charity or hospice.   For instance the fund-raising team were able to look separately at the retail strategy and the donor strategy, recognising their common elements but necessary distinctions.  The medical team was able to consider the separate, but similar, care pathways for both children with life limiting diseases and adults close to death needing palliative care.  This structured cascading of the strategy helps to detail and explain the strategy through the organisation so people can relate to their part.  It helps to create the golden thread and line of sight.

You can read more about strategic themes and how they work [ref] and more on cascading strategy maps, in Strategy Mapping for learning organizations.

A social tool, not a technical tool

If there is one final point I would make about the design, implementation and use of a balanced scorecard in any organisation, but especially a charity, it is this.  The approach is NOT a technical tool, it is a social tool.

The whole point of the tools and techniques used during design, implementation and use is to create conversations and inform decisions.  These techniques are social tools designed to promote these conversations.  The hard physical manifestations that people talk about most, the scorecard, the strategy map, the measures, are just he result of these conversations.

The ownership, understanding and commitment to making these things happen, comes NOT from these hard, right brained pieces, but from the social conversations that created the things.

This shift in emphasis from technical to social tool, is at the heart of the Excitant Fourth Generation Strategic Balanced Scorecard approach.  You can read more about the 4G BSC approach as a social tool here.

In conclusion

The team at Keech Hospice Care have done a good job with their 4th Generation Strategic balanced scorecard.  They found the whole process useful.

The Help for Hospices good practice guide. “Developing a balanced scorecard for your hospice” is a useful document.   The purpose of this post was to alert you to a couple of the wrinkles that exist in the way it has been written and its suggested approach: problems you would only discover once you had started.  Fortunately, having done so many strategic balanced scorecards over the years, many with other charities and third sector organizations, it was easy for me to spot the wrinkles and ensure they did not trip us up.

The Chief Executive of Keech Hospice Care, Mike Keel, will not mind me saying that he and his team at Keech Hospice Care, have done a good job with their 4th Generation Strategic balanced scorecard.   We did the work on a relatively small budget with limited  interventions through intense workshops and setting homework for the team between sessions.   They have found it useful to improve their thinking about their strategy, and to help their Board understand and appreciate their strategic challenges.  Keech are using it to ensure their strategy is understood through and across their organisation.  It is a good example of a Hospice Strategic balanced scorecard, if you want to talk to them.  If you embark on a Hospice or Charity Balanced scorecard, I hope this note will help you.   If you want a chat, just drop me a line.

A small thank you must also go to the authors of the practice guide for finding and referring the sector to me.  I was delighted to be contacted by Mike, even though I was completely unaware that the Help for Hospices’ balanced scorecard practice guide even referred to me.    Sometime you get nice surprises like that.

If you embark on a Hospice or Charity Balanced scorecard, I hope this note will help you.   If you want a chat, just drop me a line using the template below, or give me a call.  I’ll be happy to talk you through some more of the issues you might face.

Phil Jones, Strategic Balanced Scorecard Expert for hospices (apparently)

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