What gets measured sometimes gets managed.
One of the commonly invoked adages among those who work with performance information and performance management is the classic "what gets measured gets managed." This aphorism, coined by management guru Peter Drucker, reflects the commonly held belief that the act of measuring performance is sufficient to provoke a managerial response--a response that will, it is strongly implied, improve performance.
This pattern of stimulus and response is often taken as a given--if you have a problem, you can effectively use one or more performance measurements to help fix it. Our daily routine and experience tend to reinforce this idea; most of us adjust our pressure on the gas pedal as we notice the speedometer creeping up, for example, and do so without thinking much about it. But as with so many adages, there is more to it. It is probably more accurate to say "what gets measured probably gets noticed--and therefore may get some response," although this version is not as much fun to say and is far less reassuring.
Indeed, the assumption of causality breaks down pretty quickly for organizations, especially large, complex ones like governments. Decision makers, whatever their level in the organizational chart, fail to use performance information to improve their performance for a whole raft of reasons. They may not understand what the data does or does not mean. They may lack incentives to respond. The proper response may not be clear. There may be incentives or political pressures not to respond. And in the absence of an aligned management framework, even well-intended efforts are likely to be divided and not lead to desired results, or possibly even work against one another.
MOVE TO THE NEXT LEVEL
It is this gap--the realization that introducing performance information does not automatically drive more effective management--that defines the real difference between performance reporting and performance management. Performance reporting in government presents performance data for a wide variety of purposes: compliance with statutory requirements, demonstration of transparency to stakeholders, showing accountability to citizens, etc. There is certainly nothing wrong with these purposes, and more governments would do well to subscribe to them. Indeed, an encouraging trend is the increased emphasis on state and local governments providing the public with performance reports that are timely and useful. A number of governments, especially local governments, are more aggressively seeking citizen input on what performance information they want to see and how they want to see it.
But performance management takes the benefits that performance reporting brings and carries them further, reaping significant additional value. Performance management does not take a sound managerial response to performance data for granted. Instead, it deliberately and systematically supports the use of performance data as an essential part of management processes at all levels to drive more informed, and better, decisions. Moving beyond a reporting culture to one that is focused on delivering results for customers is not always easy, but it is a critical success factor--perhaps the critical success factor--in delivering better performance from gov ernment.The rewards are real and significant, and performance management is widely recognized as a primary hallmark of a well-managed government.
THE MARICOPA COUNTY EXPERIENCE
Maricopa County, Arizona, provides an example of what can be achieved when performance management is incorporated into an organization. Since 1982, the County Department of Medical Eligibility (DOME) had been responsible for determining the Medicaid eligibility for indigent persons admitted to 35 hospitals within the boundaries of the jurisdiction. A state statute mandated that Arizona counties had to determine Medicaid eligibility within 48 hours of hospital admission to be eligible for state and federal Medicaid funds to pay the costs of treatment. The 48-hour timeframe was difficult to meet, and sometimes impossible, when patients were too ill to help the hospitals in determining eligibility. But failure to meet the standard was costing the county between $1 million and $2 million each month, plus additional fines and fees.
To deal with this problem, DOME established a hospital claim risk-prioritization system that focused on performance management. First, the department established the following specific, measurable goals:
* reduce processing errors to less than 3 percent
* establish Medicaid eligibility within 48 hours in 90 percent of cases
* improve the relations between private hospital relations
and the county
* improve private hospital cash flow
* reduce litigation
* enhance the county's image in the community with major indigent healthcare stakeholders
The agency used the goals to re-engineer its business processes and focus the entire agency on the state-mandated timeframe. In redeveloping its mission, the agency redefined its customer as county taxpayers, rather than the indigent patients. The new focus--ensuring that federal and state Medicaid funds would be used to support the costs of medical care--would allow the county to stop diverting taxpayer dollars from other critical needs such as prosecutors, law enforcement, courts, jails, and other services.
DOME established statements of purpose and results, output, demand, and efficiency performance measures for all operational activities. This step, combined with the goals, clarified the agency's operational purpose for DOME staff. In addition, the agency developed a financial gain-sharing incentive program to increase commitment, which helped push the operational improvements forward. One of those improvements--a personal and real-time electronic communication with the area hospitals- led to cooperative agreements and timely sharing of information, which were critical to achieving the agency's goals.
Ultimately, the county's improvements led to savings of $25 million in less than one year. (The state now handles eligibility operations.)
ACHIEVING DESIRED OUTCOMES
Rather than simply generating performance data, effective performance management requires that the data must be embedded in a managing-for-results structure that aligns the measures with a clear mission, goal, or priority Being clear about the desired result from the outset increases the probability of success. Employees are unlikely to be effective in advancing a department's goals if they do not understand how the measures for which they are responsible align with those goals. Without this framework, employees are also more likely to focus on performance measures in an unbalanced or counterproductive manner. The value of this "power of purpose" has been demonstrated time and again--indeed, in many situations where employees have created the measures themselves, aligning a clear purpose, goal, or priority within a broader managing-for-results framework has led stronger performance measures and a greater commitment to using them. A managing-for-results framework also provides support for employees at all levels to focus more clearly on the desired results for the customer--which also leads to better results.
An example is the effort Metro Nashville/Davidson County, Tennessee, undertook to improve the quality of its emergency medical service (EMS) care. One of the fire department's largest programs is Basic Life Support, which provides urgent medical care and transport. The department measures the success of this program in part by looking at the quality of the medical care provided--specifically, how well the responders followed the department's established medical protocols. Using performance management tools, key fire department and EMS employees took it upon themselves to lead a campaign with 800 fellow employees to make sure they were paying attention to their medical protocols and were accurately tracking their compliance. This initiative led to changes in long-standing operating procedures, and as a result, the department can now report on the quality of care it provides, and that the quality of care has improved.
The county also worked on its 911 emergency call center. The center had long measured its response time to incoming calls, but as part of a managing-for-results performance management effort, Metro Nashville/Davidson County began to monitor response times more closely, with a clear focus on making improvements. It discovered periodic, significant short-term increases in call response times, which turned out to be the result of regular occurrences such as breaks and shift changes. Changing the way these minor staff disruptions were handled eliminated the spikes--and allowed emergency calls to be answered more quickly--at no additional cost to taxpayers.
Performance management frequently leads to improvements in customer service. The City of Long Beach, California, in another example, used the tools of performance management to cut its wait time for building permits in half. It did so by first clearly stating its desired results in a strategic business plan, closely watching performance information, and amending service delivery processes to improve results.
STEPS FOR SUCCESS
A systematic effort is required to ensure that performance management becomes an essential process at all levels, allowing for better and more informed decisions. Effective performance management is done within a larger managing-for-results framework to assure alignment of purposes, goals, or priorities. Creating and supporting an effective performance management system requires organizations to follow several important principles:
* Pay attention to change management. W. Edwards Deming, father of the modern quality movement, said the first rule of any improvement effort is to "drive out fear." Change--especially in large bureaucratic organizations like governments--creates conditions that are ripe for fear, misunderstanding, distrust, and resistance. Failure to recognize this reality and to address it in the beginning will lead to a less successful effort and thus a lower return on investment. What does this mean, in practical terms? Ensure that communication is frequent and widespread so the "information vacuum" is not as filled with distortions and rumors. Enlist trusted leaders to speak on behalf of the effort, and be clear about the benefits everyone will gain. Emphasize that this is how the organization will do business going forward, not a "flavor of the month" initiative that folks can just wait out.
* Build internal capacity and reinforce its use. Recognize that employees and managers at all levels don't walk in the door knowing how to use performance information to manage any more than they walk in the door knowing how to read financial statements. They need training and consistent reinforcement in how to use performance information to manage--that is, to communicate, to evaluate subordinates, to shape the use of resources, and to inform decision making. Employees and managers are also rational people, and they will therefore concentrate on the things that they see getting rewarded--so make sure there are incentives supporting the right behaviors.
* Be prepared for the care and feeding. Changing the way an organization manages and works is a significant challenge--and not one that is likely to be overcome with one or two busy folks adding this task to their already long to-do lists. A deployment of any size and scope will need resources in place to support it, and a newly deployed management system will require ongoing resources to sustain and develop it. Treating performance management like a one-time event almost guarantees poor results.
* One size does not fit all in performance measures. When elected officials want information on the financial status of a local government, it does not make sense to send them a list of every dollar spent for every item--a higher-level summary will better meet their needs. Likewise, performance management depends on making the appropriate performance information available at the appropriate levels, and the same set of performance measures is not likely to meet all needs at all levels.
* Ensure that data are correct, consistent, valid, and available. Doing so will require that standards be set for the collection and reporting of performance information, and also that officials make a real effort to ensure that systems are in place to make that data available as needed.
Performance management is important because the chief performance indicators too many government managers have long used--Have I spent my budget yet? Have I stayed off the front page of the local paper?--are now utterly insufficient, if they were ever enough. Governments face rapidly escalating and well-known pressures to improve efficiency and effectiveness and to demonstrate that they are doing so. A continuing failure to address this challenge fosters distrust of government and further erodes faith in government's ability to be effective. And as much of the workforce at all levels of government nears retirement age and the challenge of attracting and retaining talented employees for government becomes more acute, performance management is a key factor in creating working environments where good people thrive and stay.
Mission Accomplished in Franklin County
Franklin County, Ohio, used performance management to restructure its budget. In the first fiscal year of the restructuring, 13 agencies submitted budgets that were lower than the previous year's budget. The change occurred not because the agencies had been directed to make cuts, but because of the new process. The departmental budget conversations began in a new way, informed by a performance management approach that defined who the customer was, what results the departments wanted them to experience, what services would deliver that result--and how much those services cost. This approach also positioned the county to respond to a recession without making drastic cutbacks in services.
Franklin County also used performance management to effect improvements within its Alcohol, Drug and Mental Health (ADAMH) board. The board used managing for results as a tool to change its culture to one that consistently focused on performance and results, instead of operating in an environment of perpetual continuation funding. The board contracts out 95 percent of its annual $135 million budget to local organizations that provide preventive services to 112,000 people and treatment services to 40,000 people. Over the past eight years, the agency has used its performance management system to focus its management attention, and that of its providers, on consumer recovery from often chronic and recurring illnesses, and on improvements in consumer care and community support.
Extraordinary community support has indeed been one of the benefits of this management culture. In late 2005, Franklin County residents voted by more than 60 percent to support a levy increase on their property taxes to support 10 years of funding for ADAMH services. An editorial the Columbus Dispatch ran in support of the levy increase described ADAMH as "an agency that is run with an efficiency not always found in government organizations."
Editor's note: This article is adapted from an issue paper written for the National Performance Management Advisory Commission.
WILLIAM AARON is chief of consulting services and innovation at Weidner, Inc.
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|Publication:||Government Finance Review|
|Date:||Aug 1, 2008|
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