October 10-12, 2006 Washington, D.C.

Government Summit 2006

Balanced Scorecard Collaborative/Palladium • 55 Old Bedford Road • Lincoln, MA 01773 • Tel: 781.259.3737 • Fax: 781.259.3389 • bscol.com

Aligning Agency Resources to Drive Performance

Dennis RichardsonChief Executive Officer

Maria CristalliChief Strategy and Quality OfficerHillside Family of Agencies

Presentation Highlights• Hillside Family of Agencies Overview• Organizational alignment to the strategy using the

Balanced Scorecard• Key Results to Date• Lessons Learned

Hillside Family of Agencies• Founded as an orphanage in 1837• Rochester, NY-based organization is

an umbrella organization that provides administrative and business support to six service affiliates• Four affiliates offer services to

youth and families• Two affiliates provide investment

and fundraising support

Hillside Family of Agencies• Offer more than 120 services across

24 counties in Central and Western NY

• FY 2007 budget of $105 million • Approximately 2,000 staff

Strategic Intent

To be the nationally recognized leader and preferred provider of an integrated system of care for children, youth, parents, and families.

Transformation of ServicesOpportunity for Change

Shifts required to realize our Strategic Intent• Fragmented to systematized services • Decentralized, non-standard business

support processes to centralized administrative functions to create economies of scale

Commitment to change, alignment to strategy

• Agree upon Strategic Intent • Select the Balanced Scorecard to

articulate and execute strategy• Initial implementation – significant

shortcomings with ownership and buy-in

5 Key Principles of Strategy-Focused Organizations

TranslateStrategy

Everyone’s Job

OrganizationAlignment

Translate Strategy

Executive LeadershipExecutive

Leadership

Continual Process

Organization Alignment

Everyone’s Job

Continual Process

2

3

4

5

1

Mobilize Change through Executive Leadership• Balanced Scorecard Development –

Early 2002 • CEO ownership• Core team facilitated the 6 step

development process (Office of Strategy Management)

• Executive Team and Board of Governors engaged

• Clear expectations and accountability

Translate the Strategy to Operational Terms• Developed a strategic architecture • Constructed a strategy map with 19

strategic objectives, 32 strategic measures, and 8 strategic initiatives

• Established annual and stretch targets • Aligned initiatives with strategic

objectives

Strategic Architecture, 3 Key Themes• Service Innovation – create the

System of Care• Operational Efficiency – the use of

effective, standardized work processes

• Customer Intimacy – involve youth, families, and Strategic Partners

Internal Work Processes

Customer- Youth and Families/Strategic Partners

Learning and Growth

Financial

To be the nationally recognized leader and preferred provider of an integrated system of care for children, youth, parents, and families.

F1. Develop new and existing revenue streams F2. Achieve

profitable growth that builds system of care.

W3. Provide care coordinator to manage

relationships.

C1. Youth and families are involved in services.

L4. Retain highly skilled, culturally competent, diverse,

productive staff

L2. Develop a cultureof inclusion that embraces system of care principles

L5. Develop leaders at all levels with management

skills to deliver “system of care”services

L3. Standardize Information Systems

across HFA

W1. Manage internal access to

services

L1. Include youth and familiesas partners in development

of org and staff.

W2. Effectively execute quality services.

S1. HFA’s system of care is validated by the

outcomes produced.Stakeholder

W5. Develop effective service models

W6. Develop service model marketing

strategies.

Operational EfficiencyCustomer Intimacy Service Innovation

S2. HFA is the mosttrusted brand in communities

we serve.

C2. HFA is the preferred provider of services for

youth and families.

W4. Build HFA’s system of care service array.

HFA SOC BSC FY05-06 revised, 6.21.05

Balanced Scorecard Implementation

• Defined and communicated the Hillside Family of Agencies’ strategy

• Balanced Scorecard was rolled out in July 2002

• Broad acceptance of the strategic direction across the business and shared service units

Align the Organization to the Strategy• Developed a common Balanced

Scorecard reporting tool• Focused on 8 key strategic initiatives• Constructed a two year plan to align

the organization to the strategy• Involved Boards of Directors for

each business unit

Align the Organization to the Strategy

• Aligned 6 business and 6 shared service units to the HFA Balanced Scorecard

• Selected a hybrid model for cascading process

• Selected and trained core teams to facilitate each process

• Balanced Scorecards are presented to the Executive Team for final approval

Organizational Alignment HFA SOC Balanced Scorecard

Affiliate Balanced Scorecard

The Executive Team defines HFA System of Care priorities to achieve our Strategic Intent using the Balanced Scorecard.

The Executive Team defines HFA System of Care priorities to achieve our Strategic Intent using the Balanced Scorecard.

Affiliate Balanced Scorecard

Affiliate Balanced Scorecards are the centers of direct value creation that support the achievement of HFA System of Care priorities.

Affiliate Balanced Scorecards are the centers of direct value creation that support the achievement of HFA System of Care priorities.

Motivate to Make Strategy Everyone’s Job• Educated staff about Hillside’s Shared

Vision and Strategic Intent • System of Care training was cascaded

across the organization• Personal scorecards for the Executive

Team members are in place• Piloted an incentive compensation

program

Govern to Make Strategy a Continual Process

• The Balanced Scorecard is the focus of bi-monthly Executive Team meetings

• Annual refresh process combines customer feedback, competitive analysis, and evaluation of strategic performance to drive Balanced Scorecard changes

• Strategy and budgeting are linked to maximize resources

Office of Strategic Management

Functions include:• Strategy Development • Planning • Organizational alignment• Balanced Scorecard management• Strategic Initiative project management• Six Sigma quality coaching

Align short-term CQI plans

Strategic Management

Evaluate progress

Implement and communicate Refresh

Strategy

Overall Strategic Planning ProcessExternal trends Competitive Analysis Market Research

Key Results

Key Results – Customer Intimacy Theme

• % parent and youth seats filled on specific workgroups and boards has doubled from 2002 to 2006

• Parent involvement in service planning has hit or exceeded targets for nine quarters

• Performance on the Customer Satisfaction Index has exceeded targets for three quarters

Key Results – Operational Efficiency• Centralized administrative costs have

yielded big cost savings – 25% decrease in overhead costs for Crestwood Children’s Center in one year

• Cycle time from referral to service initiation has decreased 56%, falling from an average of 6.2 weeks to 2.7 weeks

• The number of standardized work processes in shared service units continues to grow, 6 key processes were completed during FY 2006

• Standardized Information Systems that drive our organization, 27% decrease in non-standard systems

Hillside Family of Agencies, Revenue by Fiscal Year

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

110000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

HFA B alancedScorecard imp lement ed

Revenue Growth for Hillside Famiy of Agencies Fiscal 1990 through Fiscal 2006

F1.1. % of revenues from discrete services less than 3 years old.F1.1. % of Revenues from Discrete Services <3 Years Old

FY 03 - FY 06

12.1% 12.3%14.7%

13.1% 11.9% 12.6%

8.1%6.2%

11.3%8.7%

12.5%13.9%

23.6%21.5%

23.8%26.4%

0%

5%

10%

15%

20%

25%

30%

Q1 02-03

Q2 02-03

Q3 02-03

Q4 02-03

Q1 03-04

Q2 03-04

Q3 03-04

Q4 03-04

Q1 04-05

Q2 04-05

Q3 04-05

Q4 04-05

Q1 05-06

Q2 05-06

Q3 05-06

Q4 05-06

Actual

Target = 11%

Note: This measure has exceeded our target for six consecutive quarters.

Hillside Family of Agencies, New Revenue Streams

Hillside Family of Agencies, Market share.

F1.2 Market Share FY03 - FY06

8.14% 7.94% 7.84%

8.93%

7.00%

7.50%

8.00%

8.50%

9.00%

9.50%

FY03 FY04 FY05 FY06

Actual Market Share Annual Targets

F2.1. # affiliates with problematic bottom line budget variances.F2.1. Number of Affiliates with Problematic Budget Variances

FY 03- FY 06

0

1

2

3

4

5

6

7

Q102-03

Q202-03

Q302-03

Q402-03

Q103-04

Q203-04

Q303-04

Q403-04

Q104-05

Q204-05

Q304-05

Q404-05

Q105-06

Q205-06

Q305-06

Q405-06

Note: This measure met our target for four consecutive quarters.

Hillside Family of Agencies, Budget Variances

Partnership Subsidies FY 03 - FY 06

6

3

10

01234567

FY03 FY04 FY05 FY06

Hillside Family of Agencies, Partnership Subsidies

Hillside Family of Agencies, Three Year Revenue Growth to Target

3-Year Average Revenue Growth vs. Quarterly Revenue Growth (Non-Investment Income)

10.8%14.2%

29.70%

47.50%

40.30%

34.80%

62.30%

48.60%

14.9%

20%

12.20%16.70%

22.0%

16.4%

26.8%

16.2%16.2%

21.5%19.8% 20.3%

18.4% 17.8% 17.3% 17.2% 16.7% 18.2%20.6%

22.6% 23.3%

27.1%29.3%

17.0%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

70%

Q103 Q203 Q303 Q403 Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406

Quarterly values3 year growth to target

Key Results – Stakeholder Perspective

• Youth discharged from Hillside services between July 1, 2002 – June 30, 2004:• Family permanency: 64% • Not living in a mental health facility:

97%• Not in jail or detention: 96%• CAFAS improvement by 20 points

or greater at discharge: 61% • For Hillside Work-Scholarship

Connection students, high school graduation rates have tripled

Key Results – Stakeholder Perspective• Donor loyalty – % repeat donations to

Hillside has met or exceeded targets for the past 4 quarters

• Brand Strength of Hillside Family of Agencies is very strong among Strategic Partners (Departments of Social Services, Office of Mental Health and school districts in Western and Central New York)

Lessons Learned

• Engage all stakeholders in the development process, involvement adds value to the execution (leaders, staff, board members, customers)

• Specify the roles of corporate, business and shared services units

• Empower staff to test assumptions