According to the Institute of Solidarity in Asia (ISA) and an independent, third-party auditor, the city of San Fernando, Pampanga is leveraging a Balanced Scorecard-based good governance system to successfully transform itself into a dream city. I spoke last week with San Fernando Mayor Oscar Rodriguez and a former city administrator about the Performance Governance System (PGS) project the city began in 2004, the results it has generated, and what it means for local citizens and businesses.
The Balanced Scorecard is a performance measurement system based on the idea that exclusive reliance on financial-performance measures hinders organizations’ abilities to create future economic value, according to business consultant David Norton and Harvard University professor Robert Kaplan. Although it incorporates financial measures, the Balanced Scorecard also promotes “measuring rates of progress in continuous improvement activities.”
Messrs. Norton and Kaplan developed the Balanced Scorecard originally to enable businesses to better track the implementation of business strategy. But the system is used successfully in a wide range of government and non-government organizations as well. Aside from local governments, ISA is working with associations-the Board of Accountancy is an example-and government agencies, such as the Philippine Military Academy.
According to ISA executive director Christian Zaens, San Fernando is the first local government to attain PGS “institutionalized” status, the highest of four levels of PGS implementation. Mr. Rodriguez said the PGS project-which involves a three-way partnership between the local government, the private sector, and other stakeholders-has provided the transparency required to focus public funds on priorities that most impact constituents. (Disclosure: ISA is a client of my firm.)
The “master” Scorecard for San Fernando shows 10 objectives. Among them is “Make LGU (local government unit) basic services accessible to the people in need.” Progress is measured by constituent-“client”-satisfaction. In 2005, a baseline survey showed that 90.3% of the LGU’s constituents were satisfied with the quality of service they were receiving.
Satisfaction dropped the following year, however, and fairly dramatically to 81.5%. By 2007 satisfaction with service delivery had recovered and more, jumping to 95.2%. Last year’s performance yielded 98.6% satisfaction with service delivery, and as of June 15 this year, San Fernando had achieved a 99% level of client satisfaction with service delivery in the view of its constituents.
Achieving that level of satisfaction involved more than living up to an overall PGS Scorecard target according to Sonia Soto. Ms. Soto formerly served as San Fernando City Administrator. Now a local television host and commentator, Ms. Soto worked closely with Mr. Rodriguez to implement the PGS project. Together with ISA, they architected the Multi-Stakeholder Governance Council (MSGC) to provide a mechanism for consensus building and public ownership of the governance process.
Each of the sectors participating in the MSGC-and each LGU employee-develops a PGS Scorecard to measure their performance towards achieving a set of development objectives. Sectors include non-government organizations and local associations representing specific constituencies, such as jeepney operators. For San Fernando to achieve its overall Scorecard targets, each stakeholder organization and individual LGU employee must effectively work towards achieving their individual Scorecard objectives.
Ms. Soto-an activist for 27 years who in her own admission didn’t believe “in change from within”-embraced the PGS project in part because it effectively “addressed the culture of mediocrity” which long characterized LGU service delivery. However, she also acknowledges the impact of Mr. Rodriguez’s leadership: “Leadership enabled us to do something not culturally sensitive,” she told me, suggesting significant resistance to breaking down the culture of mediocrity and transforming it into a results-driven force.
Many of the results of that effort are profound. Mr. Rodriguez told me that the LGU has reduced the time required to obtain a business permit, for example, from six weeks to just two hours. As a result, the number of businesses operating and generating tax revenues has increased dramatically, according to Mr. Zaens, indicating progress towards another objective, to “Develop a dynamic, competitive and sustainable local economy.”
In part to achieve the objective to “Make relevant education and training available to produce competitive graduates,” Mr. Rodriguez told me San Fernando founded a city college. “Eighty percent of high school graduates don’t go to school,” the mayor said, “and only half of those who do complete degrees.” Much of the problem is the cost of an education, which San Fernando can subsidize in part because it has increased revenues as a result of improved revenue collection processes, another Scorecard goal.
A case study focusing on San Fernando’s accomplishments as well as future goals will be featured in an ISA Public Governance Forum August 26-27. It will provide other LGUs and organizations insights into how to emulate San Fernando’s example to become dream cities. The process is proven. Any committed leadership with local stakeholder support can achieve similar results.