What is the “bottom line”?

Quiz

Police PerformanceVia Strategic Management

“The police do not prevent crime. The is one of the best kept secrets of modern life. Experts know it, the police know it, but the public does not know it. Yet the police pretend they are society’s best defense against crime and continually argue that if they are given more resources, especially personnel, they will be able to protect communities against crime. This is a myth.”

-David Bayley

Quote

Declared NYPD would drop crime 10% in 1 year

Did this via COMPSTAT:(1) Focused PD on reducing crime(2) Embraced accountability for achieving this(3) Built internal measurement systems to animate

performance throughout PD

Program brought success: crime dropped significantly in NYC—12% in 1994; 16% in 1995 and 1996.

Bratton: NYPD Commissioner 1994-1996

(1) Philosophical: What do we want the police to do? What are the valuable results of policing? Who gets to decide?

(2) Empirical: How do measurement systems impact organizations? Why do some succeed and others fail?

Both need to be answered so that a performance system is tied to organizational values, and be effective in achieving results

Interesting Questions

Moore wants to address these questions and develop a performance system for PDs

3 Assumptions:(1) Performance must be linked to accountability(2) Varying vantage points must be considered(3) Performance must be strategic, not simply a

technical issue What this means is that there is no best way to

measure performance, but there are probably some general ideas about important dimensions of police performance common to all areas.

Purpose

The “bottom line”. What is this? Financial measure that examines the

difference b/t revenue earned from selling with costs of producing good/services.

If it’s a positive number, it’s profit ; a negative number, it’s loss.

[revenue – cost = profit/loss]Why is profit so important? Indicates company has created something

of value, both public and private.

Taking Cues from Private Sector

Most critical information about performance. Why?(1) They provide a direct measure of value b/c we

know they bought it and what they paid for it(2) Because revenue is measured in currency, it is

possible to compare different products and services(3) Because cost is measured in currency, it can be

compared to revenue (4) Revenue info is gathered cheaply and quickly at

just the right moment.(5) Because revenue is real money, it tends to be very

reliable and accurate. Important because revenue is a measure of value

Revenue

Public sector organizations don’t sell goods or services to turn a profit, so they have no info on revenue; all they know about is cost.

Without revenue info, they don’t know about the value of their products or services

Important question: how does one measure performance without knowledge of revenue?

The “Bottom Line” in the Public Sector

The “bottom line” isn’t the only measure of success in business—nonfinancial measures have been established to ensure profitability over time.

What are these measures?(1) Investments in learning & relationships(2) Nonfinancial values

A Balanced Scorecard

Hurts the present bottom line, but is designed to ensure the company stays profitable in the future

Learning Investments: Process improvements Research & Development Fundamental strategic changeRelationship Investments: Customers, suppliers, employees

Investments

What are these? Purposes & goals companies hope to

achieve that is not captured by financial performance (e.g., environmental protection), but produces some social value

May be related to long-term financial success

Nonfinancial Values

Private companies must plan for future profitability, and they do this via strategic plans around value creation

Underlying this a the theory that making an investment today is will produce value in the future. Goes beyond the “bottom line”

Performance is based on this theory, and it can apply to both public and private endeavors

The Future