Performance Based Management

Assoc. Prof. Dr. Wongsa Laohasiriwong

Khon Kaen University

Scope of the Module

• Performance based management

• Strategic formulation

• Performance measurement

• Resistance to changes

• Resistance to changes management

Performance

• The results of activities of

an organization or investment

over a given period of time.

Management

• Management in all business and human organization activity is simply the act of getting people together to accomplish desired goals and objectives.

Performance Indicators

• Effectiveness

• Efficiency

• Quality

• Organization Development

Effectiveness VS Efficiency

Effectiveness • Degree to which

objectives are achieved and the extent to which targeted problems are resolved.

• effectiveness is determined without reference to costs

• effectiveness means "doing the right thing."

Efficiency• ability to produce a desir

ed effect, product, etc. with a minimum of effort, expense, or waste;

• quality or fact of being efficient

• the ratio of the effective or useful output to the total input in any system.

• "doing the thing right,"

Business Dictionary. COM

Quality

• Client satisfaction

Organization Development

• Human resource development (HRD)

• IT development of HRD

Why Assess Performance?

• Need for cost containment .• Evidence of variations in use of services

(underuse, overuse, misuse).• Evidence of errors and of inadequacies in the quality of service provisions.• Rising public expectations regarding

accountability and transparency. • Demand of ‘value for money’.• Increasing access to information, rising

awareness of service errors ► increasing willingness to litigate and advocate .

(Source, J. Layburn, “Performance Monitoring/Management of Service Delivery,” RIPA International @www.ripainternational.co.uk)

Public sector challenges• A variety of factors create barriers to the planning and adoption

of performance management in the public sector:

Lack of Vision •Treat planning and budgeting as an annual financial exercise •Rely purely on financial performance measures obtained through delayed month-end reports and shadow reporting systems

Costly Inconsistency •Use a variety of systems, formats, processes, and models to arrive at a consolidated view

Inadequate Technology •Budgeting and financial reporting is still based largely on spreadsheet software

Political Instability •Election cycles and political climate often represent a significant obstacle to planning and executing IPM

Limited Executive Control

•Government executives have limited mandate to adjust internal practices or organizational structures or to fully leverage an IPM framework

Slippery Outcomes and Poor performance Measurement

•Government activities do not always lend themselves to clear performance measures or easy data collection techniques

(Source: M. Bailey and K. Miller, Deloitte Consulting LLP, 2007)

Performance-based management

• Performance-based management is a systematic approach to performance improvement through an ongoing process of establishing:– strategic performance objectives– measuring performance– collecting, analyzing, reviewing– reporting performance data– using that data to drive performance improvement

* Accountability for performance is established at all steps in the framework*

Performance-based management

• It is a way of getting people to do what you want them to do and to like doing it.

• Ensuring employees are focusing their work efforts in ways that contribute to achieving the agency’s mission– setting expectations for employee performance– maintaining a dialogue between supervisor and

employee to keep performance on track, and– measuring actual performance relative to

performance expectations.

(Source: W. Artley, D.J Ellison and B. Kennedy, “The Performance-Based Management Handbook: Volume 1 Establishing and Maintaining a Performance-Based Management Program,” Performance-Based Management Special Interest Group (PBM SIG), September 2001)

Performance-based management

• Performance management at any level in an organisation should demonstrate :– Knowledge of what you are aiming for– Knowledge of what to do to meet your

objectives – Knowledge of how to measure progress

towards your objectives – Knowledge of how to detect problems and

remedy them

(Source, J. Layburn, “Performance Monitoring/Management of Service Delivery,” RIPA International @www.ripainternational.co.uk)

Performance-Based Management: 3 Critical Questions

1. Where do we want to go?

2. How will we get there?

3. How well are we doing

trying to get there?

Performance-Based Management - How

You must

• Align your organization strategically,

• prepare your people, make sure everyone understands the "rules" and their roles.

(Source: A Reeds and S Carter, Acquisition Directions, Advisory, Issues and Answers, May 2004)

Performance-Based Management - How

• Set up good communications processes, recognize that there will be risk to be managed,

Performance-Based Management - How

• Put in place a framework for measuring performance that lets you understand where you've been,

where you are,

where you need to go

--and why.

Strategy Formulation

Strategy Implementation

SWOT

Action PlanAction Plan

Vision

Strategic IssueGoal

(KPI / target)

Strategies

4 year performance plan

Public Administration Plan

Risk Assessment & ManagementRisk Assessment & Management

Structure Process/IT

Rule & Regulation

People/Culture

AlignmentAlignment

Blueprint for ChangeBlueprint for Change

Strategic Control

Strategic Management

Process

New Public Management

How ?

Performance-Based Management - What

• An ongoing dialogue between manager and employee that links expectations, ongoing feedback and coaching, performance evaluations, development planning, and follow-up.

(Source: www.utexas.edu/hr/er/perfeval/index.html)

Characteristics of a Performance Based Management System

*High percentage of performance appraisals completed.

*Clear linkage between employees’ jobs and the organization’s mission.

*Investment of money and time in training and development activities.

*Open sharing of performance measures.

*Reward differentiation between high and low performers.

*Consistent recognition of good performance.

(Source: http://hr.dop.wa.gov/hrreform)

Performance Based Management System: Benefit

• It provides a structured approach to focusing on strategic performance objectives.

• It provides a mechanism for accurately reporting performance to upper management and stakeholders.

• It brings all “interested” parties into the planning and evaluation of performance.

(Source: W. Artley, D.J Ellison and B. Kennedy, “The Performance-Based Management Handbook: Volume 1 Establishing and Maintaining a Performance-Based Management Program,” Performance-Based Management Special Interest Group (PBM SIG), September 2001)

Performance Based Management System: Benefit

• It provides a mechanism for linking performance and budget expenditures.

• It represents a “fair way” of doing business

• It provides an excellent framework for accountability.

• It shares responsibility for performance improvement.

(Source: W. Artley, D.J Ellison and B. Kennedy, “The Performance-Based Management Handbook: Volume 1 Establishing and Maintaining a Performance-Based Management Program,” Performance-Based Management Special Interest Group (PBM SIG), September 2001)

What role do employees have in performance management?

• Performance management must be a shared responsibility of employees and managers.

• Employees are responsible for seeking clarification when needed so they understand what’s expected of them and for performing the work in a way that meets expectations.

• Employees are also responsible for participating in the performance evaluation process and for communicating successes and problems to supervisors so the supervisor can better measure progress and provide assistance where needed.

(Source: http://hr.dop.wa.gov/hrreform)

Six Disciplines of Performance-Based Management

• Cultural Transformation--Proactively manage the organizational and cultural changes integral to the success of the initiative;

• Strategic Linkage--Provide a consistent vision throughout the organization, making sure the desired results reflect organizational strategic goals;

• Governance--Establish roles, responsibilities, and decision-making authorities for project implementation;

Six Disciplines of Performance-Based Management

• Communications--Identify the content, medium, and frequency of information flow to all stakeholders;

• Risk Management--Identify, assess, monitor, and manage risks; and

• Performance Monitoring--Analyze and report status--cost, schedule, and performance--on a regularly scheduled basis during project exe.

(Source: A Reeds and S Carter, Acquisition Directions, Advisory, Issues and Answers, May 2004)

Purpose of Performance-Based Management System

• Purpose of the performance management system is to ensure that:– The work performed by employees

accomplishes the work of the agency;– Employees have a clear understanding of the

quality and quantity of work expected from them;

– Employees receive ongoing information about how effectively they are performing relative to expectations;

Purpose of Performance-Based Management System

– Awards and salary increases based on employee performance are distributed accordingly;

– Opportunities for employee development are identified; and

– Employee performance that does not meet expectations is addressed.

Purpose of Performance-Based Management System

• An operative performance management system shall consist of:– A process for communicating employee

performance expectations, maintaining ongoing performance dialogue, and conducting annual performance appraisals;

– A procedure for addressing employee performance that falls below expectations;

– A procedure for encouraging and facilitating employee development;

– Training in managing performance and administering the system; and

– A procedure for resolving performance pay disputes

(Source: www.osp.state.nc.us/manuals/manual99/pms.pdf)

Performance-Based Management – Common Elements

• Context (who or what is to perform and what is to be accomplished).

• Goals or targets (form & level of accomplishment).

• Information about performance• Collection of information• Modifications/Change possible

(Source: Public Health Performance Management Curriculum Prepared by Center for Public Health Practice, UIC School of Public Health)

Performance-Based Management – SMART Elements

Performance elements must be aligned with organizational goals and should be:

• Specific, clear, and understandable• Measurable, verifiable, and results oriented• Attainable• Relevant to the mission• Time-bound with a schedule and milestones

(Source: G.A. Steinberg and A.I. Wolfrey, “Performance Management Appraisal Program (PMAP),

Government Performance Summit 2008, U.S. Department of Health and Human Services February 26, 2008)

Performance-Based Management – SMART Elements

People should be able to answer the following questions.• What are my roles and responsibilities? [Performance agreement] • What standards are expected of me? [Performance minimums] • Who is going to give me feedback? [Manager, peers, all?] • How often will they give me feedback? [One to one frequency] • How am I doing? [Review process] • Where do I go from here? [Targets for next period] • How do I get there? [Development plan]

(Source: www.owlweb.co.uk/option7/samples/perform.shtm)

Key Components of Performance Management

• Applying Appropriate Standards

• Measuring Key Aspects of Performance

• Reporting and Interpreting Measurements

• Making Changes Based on Measures of Performance

(Source: Silos to Systems: Using Performance Management to Improve the Public’s Health. Turning Point Performance Management National Excellence Collaborative: Seattle WA; Turning Point National Program, 2003)

Performance-Based Management – Pitfalls to Avoid

• Do not rush through the Performance Planning Process (Employee or Supervisor)

• Do not overrate a poor performer as a motivational tool• Do not focus on one specific incident - review the entire

period which the appraisal covers• Do not go solely by memory - base the review on

accurate and factual data• Length of service or an employee’s grade does not

necessarily mean better performance• Avoid bias about an employee based on your personal

feelings for that individual

(Source: G.A. Steinberg and A.I. Wolfrey, “Performance Management Appraisal Program (PMAP),

Government Performance Summit 2008, U.S. Department of Health and Human Services

February 26, 2008)

Critical Components of Performance Based

Management - Applying Appropriate Standards

– Identify and apply relevant standards (what will be measured).

– Standards are one form of performance measure; they are generally objective standards or guidelines that are used to assess performance (“standard” here means a standard way of measuring rather than something specific to achieve).

– Identify appropriate indicators (how it will be measured).

Critical Components of Performance Based Management - Applying Appropriate

Standards

– Indicators are another form of performance measure; they are the data or information that is used to assess progress toward a performance standard.

– Set goals and targets

– The planned or expected level of performance

– Communicate expectations

Critical Components of Performance Based

Management - Measuring Performance• Relies on indicators that document where

performance is in relation to the target established for a standard

• Develop data systems

• Collect data

Critical Components of Performance Based

Management – Reporting Progress

• Analyze data

• Convert data into useable information

• Feedback to managers, staff, policy makers, and constituents

• Develop a regular reporting cycle

Critical Components of Performance Based

Management – Reporting Progress

• Provide context for the report– How do the performance measures relate to

mission and goals

• Create clear, easy to read, report designs– Use simple charts and tables

• Determine Reporting Frequency– When and how often

Critical Components of Performance Based

Management – Improving Quality

• Use data for decisions to improve policies, programs, and outcomes

• Manage change

• Create a learning organization

Critical Components of Performance Based

Management – Improving Quality• Improvement comes only with change; but

change doesn’t always improve results• Smart improvement relies on understanding how

systems work• Systems rely on interdependencies which are as

important as the system’s elements• Change is more difficult than setting goals,

measuring or holding people accountable. “I would rather (measure, complain, blame, accept good enough, fight) than change!”

(Source: Silos to Systems: Using Performance Management to Improve the Public’s Health. Turning Point Performance Management National Excellence Collaborative: Seattle WA; Turning Point National Program, 2003)

For Successful Performance Based Management

*All four Performance Management components should be present! *And they should be integrated into the organization’s or system’s core operations!

(Source: Silos to Systems: Using Performance Management to Improve the Public’s Health. Turning Point Performance Management National Excellence Collaborative: Seattle WA; Turning Point National Program, 2003)

Statutory obligations

Electoral commitments

Avoiding embarrassments

Demonstrate achievements

“Doing more with less”

Sustainable Economy

Quality of Life

Safety Net

Timely and responsive service

Accurate communications

Accessibility

Equity and dignity

Job security and compensation

Workload and morale

Satisfaction

Values

Legislature Taxpayers/ Voters

Customers Employees

Public sector performance management: unique challenges

The notion of “performance” is not an easy one to address in public sector organizations: Where profits or bottom line results are irrelevant

: Performance can be defined differently by different people : If it is not defined, how do we know the organization is performing well?

Public Servants have to balance multiple stakeholder demands and different people define performance differently

(Source: M. Bailey and K. Miller, Deloitte Consulting LLP, 2007)

Performance Based Management -Examples

• Context for “improvement” (is/is not) clear?• Goals or targets for improvement (are/are

not) established?• Appropriate measures of performance

(are/are not) collected?• Reports of measurements (do/do not)

reach the proper parties?• Information from measurements (are/are

not) used to make improvements?(Source: Silos to Systems: Using Performance Management to Improve the Public’s Health. Turning Point Performance Management National Excellence Collaborative: Seattle WA; Turning Point National Program, 2003)

Performance Based Management -Examples

SupervisorContext Worker; job duties

Standards Set annually

Measuring Work products

Reporting Performance appraisal

Improvement New objectives, more $ ?

Performance Based Management -Examples

Program ManagerContext Program; program goals

Standards Approved objectives

Measuring Information on activities

Reporting Quarterly reports

Improvement Revised workplan

What does the Public Sector hope to gain from Performance-Based

Management?• Focus of the top three benefits organizations

hope to realize:– Resource alignment and optimization– Strategic and cross-departmental alignment,

collaboration and accountability– Budgeting and planning process aligned with

strategy• Alignment becomes a concern because these

benefits are too often not realized within organizations, whether private or public

(Source: Becca Goren, Better Management.com)