Learning to Act Instead of React
Even though it took place 12 years ago, Dennis Richardson vividly recalls a specific conversation he had with board members of the organization he leads as president and CEO. He remembers because it was a conversation that altered the future of their organization, Alliance member Hillside Family of Agencies, Rochester, N.Y.
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The agency’s leaders were asked a simple question: How is the organization doing? They responded with financial performance measures.
“We were struck by the narrowness of our answer,” Richardson says. “Financial measures are only part of the story; they do not reflect the actions that galvanize the organization to achieve its strategy.”
To compete in these tough economic times, a strategy must be reviewed regularly to understand how well the organization is performing relative to its goals, he adds. This assessment goes beyond financial performance.
A strategy must answer a variety of key questions: How is the organization doing operationally? What skills are needed in the organization? How does the organization motivate staff to realize the strategy? Do the agency’s services make a real difference in the lives of consumers?
The answers to these questions were the true indicators of how the organization was doing.
“Hillside had been doing strategic planning for years, but we needed a more purposeful way to define our future intent, as well as a plan for working daily toward achieving that intent,” Richardson says.
“Creating a plan is just the beginning,” agrees Mitch Kohls, president of Kohls Consulting Group, a member of the Alliance’s Executive Consultant Select Group. “You must execute it operationally on a day-to-day basis at every level of the organization.” Continue reading.
Make Strategic Planning More Meaningful by Shifting it From Annual Exercise to Daily Operation
After extensive research, the Hillside Board of Directors decided to use the balanced scorecard method, developed by Robert S. Kaplan of Harvard Business School and David P. Norton of Palladium professional services firm. In addition to financial metrics, this management tool helps an organization define and link other measures of performance that are integral to achieving its strategy.
While typical strategic plans define a set of unrelated goals, the balanced scorecard recognizes cause-effect relationships across perspectives by linking people, processes, and outcomes.
“The balanced scorecard aligns all our activities with the strategic intent. It is our roadmap,” Richardson says. “It moves us from the theoretical to how we actually run the business.”
Hillside learned quickly that the value of the balanced scorecard is demonstrated only when the method is properly implemented. “On our first try we overcomplicated the process,” Richardson says. “We weren’t applying the discipline properly. For example, we did not involve leadership and staff in the development process.”
Hillside decided to invest in formal training. They received consulting and implementation assistance from the Balanced Scorecard Collaborative and built their balanced scorecard using the six-step process developed by Norton and Kaplan. That made all the difference, Richardson says.
The agency also designated a staff member to oversee the process: Maria Cristalli, chief strategy and quality officer.
Strategic Intent Sets the Course
One of the first steps in implementing the balanced scorecard was for the executive leaders to define Hillside’s strategic intent. The strategic intent is central to charting organizational future, as it defines what the agency intends to accomplish in the next decade to achieve a competitive advantage.
“The strategic intent involves more than the organization’s vision for the future,” Kohls says. “It defines what the agency will do to realize that vision.”
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The strategic intent should be a big stretch, advises Richardson. “But it should also be very concise and measurable. We ask ourselves, ‘What can we carry out that will have a significant impact on the people we serve and the human service industry overall?’”
Hillside’s current strategic intent, which was created with the input and buy-in of the executive team, board members, key staff members, and other vital constituents, is “to be the leader in translating research into effective practice solutions.”
As prescribed by the balanced scorecard method, Hillside articulates clear goals and objectives for achieving this intent. Activities, which describe how Hillside will accomplish the goals, are aligned with four themes that are deemed by the executive team as central to achieving the agency’s strategic intent. The themes are: learning and growth, customer relationships, innovation, and operational excellence.
The scorecard that is created defines objectives, measures, short-term and long-term targets, and the initiatives needed to close the performance gap.
Kohls recommends that organizations also develop a strategic calendar with timelines for all goals and objectives. This keeps staff at all levels of the organization on track and continuously thinking about and working toward the agency’s strategic intent.
Real-Life Application
A key difference between Hillside’s past and current strategic planning efforts is that the new method places a high value on linking the agency’s strategy to the daily operations of the organization and its six affiliates.
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“Nine out of 10 organizations fail in the execution,” Cristalli says. “You can have a great plan, but successful implementation is a competitive differentiator.”
Each affiliate agency and support departments have their own scorecards. These scorecards are linked to annual operational plans. Even staff members have personal scorecards.
A strategy map provides the framework for translating the strategy into objectives that are linked by cause-and-effect relationships. Executive team members and staff responsible for measures and initiatives meet regularly as “theme teams.” The primary purpose of the theme team is to monitor performance data and discuss the problems, barriers, and challenges in implementing the strategy.
“The theme teams extend strategy implementation to staff beyond the executive team,” Cristalli explains. “Middle and executive leadership work collaboratively to gain insights into the factors that contribute to overall performance. Strategy is a team sport.”
Theme team discussions are brought back to the executive team, which meets monthly to address strategy. Board directors and staff members review the scorecard quarterly and make operational adjustments as needed.
“Be rigorous about not spending time or money on activities that don’t support the strategic goal,” Kohls advises. “If it’s not leading toward attainment of the strategic intent, don’t do it.”
Hillside uses an annual retreat to thoroughly reassess its strategic planning efforts. The retreat includes an environmental scan, and subject matter experts are brought in to share their perspectives using tools such as SWOT (strengths, weaknesses, opportunities, and threats) or PESTEL (political, economic, social, technological, environmental, and legal) analyses.
During the retreat, board members and agency leaders also separate into small groups to take a “deep dive” into specific issues.
Building a Future
Richardson and Cristalli emphasize that an agency doesn’t need to be large in size or budget to implement this strategy. It must, however, be prepared for culture change and have an unwavering commitment, at every level of the agency, to step beyond the present and decide what the organization will become.
“Every organization has to decide: Are we future oriented, or are we only worried about keeping the lights on?” Richardson says. “If we are concerned about more than survival then we have to create our own future.”
When Hillside first implemented the balanced scorecard method more than a decade ago, its strategic intent was, “to create a system of care.” That intent was achieved, and it has dramatically strengthened the organization’s ability to integrate services and attract multiple funding streams.
“The balanced scorecard method has enabled Hillside to transform its organization into an integrated system of care in an industry dominated by a fragmented service delivery system,” Richardson says. “By managing our nonprofit organization strategically through use of the balanced scorecard, we are able to position Hillside as a premier provider of integrated care for youth and families.”
For questions about Hillside’s experience with the balanced scorecard method, contact Maria Cristalli, chief strategy and quality officer, at 585-654-1510.
Comprehensive Services Provided Through Six Affiliates
Alliance member Hillside Family of Agencies, Rochester, N.Y., is one of the largest nonprofit agencies in New York. It has been a cornerstone of the community for more than 170 years.
The agency has six affiliates, including four that provide services and two foundations that support the service affiliates. The four service affiliates are:
- Crestwood Children’s Center, which provides day treatment education, outpatient treatment, and residential treatment to children from birth through 21 years old;
- Hillside Children’s Center, which provides therapeutic foster care, adoption, residential, day treatment, juvenile justice, developmental disabilities, preventative, independent living, and school-based services for youth;
- Hillside Work-Scholarship Connection, which provides support to middle and high school students at risk of dropping out of school; and
- Snell Farm Children’s Center, which provides specialized residential treatment for adolescent boys who have sexually abusive behaviors.
With more than 2,000 staff, Hillside is one of the largest employers in its county. It serves more than 7,100 families annually.