PERFORMANCE MANAGEMENTPERFORMANCE MANAGEMENT

A methodology for assessing and reporting A methodology for assessing and reporting progress, management and governance progress, management and governance

impactimpact

YAKUBU, EMMANUEL O.

It would be nice if all of the data [we] require could be enumerated because then we could run them through

[computers] and draw charts…

However, not everything that can be counted counts, and not everything that counts can be counted

William Bruce Cameron instead of Albert Einstein. Cameron’s 1963 text “Informal Sociology: A Casual Introduction to Sociological Thinking”

The Paradox in performance ManagementWhat are you counting and reporting...?

“…chart a course for every endeavour that we take the people’s money for, see how well we are progressing, tell the public how we are doing, stop the things that don’t

work, and never stop improving the things that we think are worth investing in.”

President Bill Clinton, on signing theGovernment Performance and Results Act of 1993

The US Government established the National Performance Review (NPR) to reinvent government…with initiatives to foster collaborative, systematic benchmarking of ‘best-in-class organisations’ - public and private - to identify best practices in a wide range of areas vital to the success of organisations in providing high-quality products and services to the American people.

Performance Management…in Governance…

Performance Management System is….

1. An overall management system aimed at achieving

organisational objectives to meet the needs of customers

[local citizens’]

2. Process optimization to attain increased efficiency and

effectiveness ...in a continuous cycle, allowing options for

improvement.

3. Managing outcome...to reduce or eliminate variation

[waste] with the goal to arrive at sound decisions about

actions affecting the organisations’ processes and output.

What Are Performance Measures?a. Qualitative & Quantitative measures of

the value of our projects/services, and the processes that produce them.

b. Provide us with the information necessary to make intelligent decisions about what we do.

c. Tools to help us understand, manage, and improve what our organisations do. They let us know:

• how well we are doing

• if we are meeting our goals

• if our [citizens] stakeholders are satisfied

• if our processes are under control

• if and where improvements are necessary

Why measure performance?1. Control: If you cannot measure an activity, you cannot control it. If you

cannot control it, you cannot manage it. Without dependable measurements,

intelligent decisions cannot be made.

2. To reduce variation, detect deviations from

plans and restore performance to the planned levels.

3. Self-Assessment: to assess how well a process

is doing, including improvements that have been made.

4. Continuous Improvement: to identify defect sources, process trends,

and defect prevention, and to determine process efficiency and effectiveness,

as well as opportunities for improvement.

5. Management Assessment: to ensure we are meeting value-added

objectives

Methods of Evaluating Performance Management Systems

1. SMART-ER Test

2. Quality Check Test

3. The 3 Criteria Test

Evaluation SystemMethod 1: SMART-ER TEST

• S = Specific: Is the measure clear and focused to avoid misinterpretation? It should have clear definitions and be easy to interpret.

• M = Measurable: Can the measure be quantified and compared to other data? Avoid “yes/no” measures, if you can

• A = Attainable: Is the measure achievable, reasonable, and credible under conditions expected?

• R = Relevant…Does the measure fit into the organisation’s constraints? Is it cost-effective?

• T= Timely: Is measurement doable within the time frame given?

• E= Evaluated: Can it be evaluated?

• R= Risk: What is the level of risk?

Evaluation SystemMethod 2: Quality Check

• Is the measurement objectively measurable?

• Does the measurement include a clear statement of the end results expected?

• Does the measure support [stakeholder] requirements, including compliance issues where appropriate?

• Does the measure focus on the effectiveness and/or efficiency of the system being measured?

• Does the measure allow for meaningful trend or statistical analysis?

• Has appropriate industry or other external standards been applied?

• Does the measure include milestones and or indicators to express qualitative criteria?

• Are the measures challenging, and at the same time, attainable?

• Are assumptions and definitions specified for what constitutes satisfactory performance?

• Are those who are responsible for the performance being measured been fully involved in the development of this measure?

• Has the measure been mutually agreed upon by you and your stakeholders?

Evaluation SystemMethod 3: The 3 Criteria Test

1. Strategic Criteria - Do the measures enable strategic planning and then drive the deployment of the actions required to achieve objectives and strategies? Do the measures align behavior and initiatives with strategy, and focus the organisation on its priorities?

2. Quantitative Criteria - Do the measures provide a clear understanding of progress toward objectives and strategy as well as the current status, rate of improvement, and probability of achievement? Do the measures identify gaps between current status and performance aspirations, thereby highlighting improvement opportunities?

3. Qualitative Criteria - Are the measures perceived as valuable by the organisation and the people involved with the metrics?

Models of Performance Management Systems

1. Balance Score Card

2. The “Critical Few” Model

3. Performance Dashboards

Some Models…

Balance Score Card [Robert Kaplan and David

Norton, 1992] - looks at four interconnected business perspectives, takes a systematic

approach to assessing internal results while probing the external environment

Balance Score Card…an example of a Health

Management System

Some Models…

The “Critical Few” Model selects a few critical factors that drive strategic success and helps sharpen understanding of the strategic plan

and objectives, noting a balance between internal and external requirements, as well

as financial and nonfinancial measures

The “Critical Few”…

This involves selecting a few element of the

business operations as areas of/for strategic focus

The selected ‘critical few’ must have…

Some Models…

Performance Dashboards pilots the organisation by identifying key success

factors, especially those that can be measured as physical variables

HEALTH WARNINGS! What the Executive Dash-Board won’t tell you

• The cause and effect of outcomes – are not easily established

• Poor results do not necessarily point to poor execution

• Numerical quotas do not fix defective processes

• Measurements only approximate the actual system

• Performance measures do not ensure compliance with laws, regulations and policy

Top 10 “Good Practice” Indicators in Performance Management

1. Define clearly who your stakeholders are

2. Adapt, don’t adopt, make the system work for you

3. Don’t stop at the top, cascade throughout the organisation

4. Listen to your stakeholders and employees and define what measures mean the most to them, create an easily recognised body of measures

5. Try to achieve a balanced set of performance measures i.e. a family of measures

6. Establish Results-Oriented Set of Measures - that balance Business, Stakeholders and Employee

7. Commit to initial change, make the system clear and concise.

8. Be flexible, recognise that performance systems are living processes, maintain a balance between financial and nonfinancial measures.

9. Establish accountability at ALL levels of the organisation

10. Connect the Dots - performance management system must be linked to your strategy and plan

ConclusionTo achieve good performance management…

Provide people with increased autonomy—pushing the responsibility for making the necessary business trade-offs as close to the front line as possibleEncourage building capabilities of people and teams, not just evaluating themBe a more open and collaborative process that truly leverages the collective intelligence of the company and de-politicizes decision-makingFeature ongoing, consistent dialog and feedback that enables real-time adjustments based on a broad set of inputs and metricsApply these principles in how you design and execute several important management processes, like when setting goals, allocating resources, forecasting, and providing rewards and incentivesThe processes should be as self-regulating as possible…the less we need to manage the better.