Audit Division
Audit Summary
Strategic Planning Process
Report LA00-18
Taxpayers expect more than ever that
government will manage and spend tax dollars wisely. To help meet these expectations, many governments have shifted
the focus of decision-making from a preoccupation with the activities performed
to the results achieved. A key element
in results-oriented management is an organization’s strategic planning efforts. Because of this emphasis, many governments
have increased their strategic planning efforts in recent years.
Although Nevada law requires agencies to develop some elements of strategic planning, there is no requirement to prepare complete strategic plans. Consequently, agencies have conducted strategic planning for a variety of reasons. This has led to a number of different formats being used and a wide variation in the quality of agencies’ plans. Recent reports issued by the Legislative Auditor illustrate how inadequate strategic planning has resulted in ineffective management of state programs. Therefore, legislation is needed to provide direction and to help ensure the state’s strategic planning efforts are an ongoing priority.
State agencies have done some strategic planning in recent years, but improvements are needed. For instance, the plans we reviewed lacked basic elements of a strategic plan, such as goals or objectives. Without these basic elements, the benefits of strategic planning may not be fully realized. The state’s strategic planning can be enhanced by providing additional guidance and oversight to agencies on the preparation and benefits of strategic plans.
Principal
Finding
· The Council of State Governments (CSG) recently identified strategic planning as one of the most effective tools to enable state governments to deliver more value for the tax dollar. The CSG indicated states performing strategic planning have achieved many benefits. These benefits include establishing management direction, clarifying agency priorities, and setting guidance for policy decisions. (page 9 )
· The Federal Government and most of the states we surveyed have statutory requirements for agencies to prepare a strategic plan. However, similar require-ments do not exist for Nevada state agencies. Although various statutes require some elements of strategic planning, agencies are not required to prepare a strategic plan. Consequently, strategic planning efforts by state agencies have been initiated for several reasons. This has resulted in wide variation in the quality and format of state agencies’ strategic plans. (page 10)
· Recent Legislative Auditor reports have cited inadequate strategic planning as a contributing cause of significant problems. Programs affected include group health insurance for state employees, information systems development by the Department of Information Technology, and inmate medical services. Better strategic planning in these programs may have avoided or lessened the extent of the problems identified. (page 12)
· Executive branch agencies have been requested to prepare strategic plans since 1994; however, the Director of the Department of Administration indicated some uncertainty regarding future efforts. Although the administration has discussed the need for long-term planning, a statutory requirement for agencies to prepare complete strategic plans will help ensure strategic planning continues. (page 13)
· Agencies’ strategic plans often lacked basic elements of a strategic plan. Basic elements include a mission, philosophy, external and internal assessment, goals, objectives, performance measures, and strategies. However, all five of the plans we reviewed lacked at least one of these elements. Since the parts of a strategic plan are linked, the lack of any element can reduce the overall effectiveness of the plan. (page 14)
· Even when agencies’ plans had some of the basic elements, we noted other weaknesses. For instance, in the three plans that included goals, the goals were not always client-focused or results-oriented. Therefore, the agency may not be directing its efforts in areas of primary importance to it’s stakeholders. Also, in the four plans that included objectives, many objectives were not time-based or measurable. When objectives are not time-based or measurable, it is difficult to assess the degree to which they have been achieved. (page 15)
· Strategic plans are often not communicated to staff. Only one of the five agencies whose plans we evaluated had made considerable effort to communicate its strategic plan to staff. Since a strategic plan focuses an agency’s efforts towards what agency management and stakeholders value, communicating it to staff helps focus all of an agency’s efforts toward the same ends. (page 16)
· Since statewide strategic planning was initiated in 1994, the Department of Administration has provided limited guidance and oversight of department-level planning efforts. For instance, the Department pro-vided only one brief training session on preparing strategic plans. Furthermore, the Department did not review the agencies’ plans when they were revised in 1996 and 1998. As a result, the Department had limited assurance the strategic plans addressed key planning elements. Officials from other states indicate that training and central oversight are key factors to successful planning. (page 16)
Strategic Planning Process
to Audit Recommendations
|
Recommendation Number |
|
Accepted |
Rejected |
|
1 |
Legislation be requested requiring state agencies to prepare comprehensive strategic plans |
|
X |
|
2 |
Provide additional guidance to state agencies on preparing strategic plans and fully utilizing plans as a management tool to aid decision-making |
X |
|
|
3 |
Provide additional oversight of state agencies’ strategic planning efforts, including review of plans to ensure basic elements are addressed |
X |
|
|
TOTALS |
|
2 |
1 |
The Department of Administration and the Office of the Governor, in their response, do not agree with certain of our conclusions and recommendations. The following identifies those sections of the report where they have taken exception to our position. We have provided our comments on the issues raised in their response to assure the reader that we believe our conclusions and recommendations as stated in the report, are appropriate.
1. The Department of Administration and the Office of the Governor have rejected our recommendation that legislation be requested requiring state agencies to prepare comprehensive strategic plans. Their response states that they do not dispute that strategic planning can be a useful managerial tool. Done half-heartedly, however, because someone else said it had to be done, then put on a shelf and ignored, strategic planning – or any other management tool – pulls state employees’ valuable and limited time away from providing services to Nevada taxpayers. (See page 23)
Legislative Auditor Comments
We agree strategic planning should not be done half-heartedly. Our audit addresses the need to provide additional guidance to state agencies on preparing strategic plans and fully utilizing plans as a management tool to aid decision-making. As stated on page 16, the Department has provided limited guidance to agencies. All agency officials whose plans we evaluated stated additional training would be beneficial.
We also agreed that strategic plans should not be put on a shelf and ignored. As stated on page 16, effective communication of an agency’s plan can boost morale by making it clear to all employees how their work helps the agency achieve its mission. Consequently, it is important for employees to have this understanding so they can seek ways to perform their work more efficiently and effectively. However, only one of the five agencies whose plans we evaluated has made considerable effort to communicate its strategic plan to its staff. Plans have not been communicated to staff, in part, because agencies may not be fully aware of the benefits of strategic planning. Training could help emphasize the benefits of strategic planning to agency managers, including establishing management direction and clarifying agency priorities.
2. The Department of Administration and the Office of the Governor accepted our other two recommendations; however, they urge recognition of the associated costs or additional personnel required. They disagree that oversight of strategic planning can be done with existing staff. (See page 24) They also estimate that mandatory strategic planning would require as many as 22 new positions, depending on the scope of the legislation (departments only or all agencies).
(See page 25)
Legislative Auditor Comments
As stated on page 17, some additional resources may be needed initially to provide strategic planning training. However, we believe the oversight of agencies’ strategic plans can be done with existing resources. The State has a Planning Section in the Budget and Planning Division that is responsible for coordinating the state’s strategic planning efforts. Moreover, most of the states we surveyed provided oversight with a central planning office ranging from about one-half to two full-time equivalent positions. Furthermore, Nevada state agencies have prepared strategic plans with existing resources. Departments prepared strategic plans in 1994, and updated them in 1996 and 1998. Although improving the state’s strategic planning efforts may require some additional resources, the benefits achieved should far outweigh the incremental cost.