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Strategic Performance Management in Government and Public Sector Organizations STRATEGIC PERFORMANCE MANAGEMENT IN GOVERNMENT AND PUBLIC SECTOR ORGANIZATIONS A Research Paper by Bernard Marr, Co-Sponsored by Advanced Performance Institute CIPFA Performance Improvement Network and Actuate STRATEGIC PERFORMANCE MANAGEMENT Contents About this survey …………………………………………………………………… 3 Section 1: Survey Results …………………………………………………………… 7 – Introduction – The Performance Management Imperative – From theory to good practice: defining Performance Management – Key Findings Section 2: Best Practices …………………………………………………………… 9 – The 10 principles of Performance Management Conclusions ………………………………………………………………………… 27 2 STRATEGIC PERFORMANCE MANAGEMENT Performance Management in the Public Sector Public sector organizations may have the most ambitious plans for transforming services and delivering against government targets, but if they don’t keep day-to-day activities tightly aligned to what actually matters, they’ll find themselves getting nowhere fast. About This Survey The Advanced Performance Institute (API) research project, Strategic Performance Management in Government and Public Sector Organizations – A Global Survey, is the largest and most comprehensive global study of government and public sector Performance Management to date. The reasons for conducting the survey were two-fold. Firstly, the Advanced Performance Institute noted an increasing number of Performance Management initiatives across the public sector, but found the assessment of the results for these initiatives to be more anecdotal than comprehensive (see Section 1: Survey Results). Secondly, the API intended not just to understand the current state of affairs in public sector Performance Management, but also to glean information on what factors and behaviors contribute to Performance Management success (see Section 2: Best Practices). The extensive international study surveyed a wide cross-section of government and public sector organizations, including central or federal government agencies, state and local government bodies, as well as national health organizations, police forces, fire and rescue organizations, courts and education institutions. 3 STRATEGIC PERFORMANCE MANAGEMENT Respondents by Country Figure 1 12% 15% 36% Australia (12%) Canada (15%) 37% United States (37%) United Kingdom (36%) Figure 2: UK Respondents Health care (12%) 7% 12% Education organization (7%) 28% Police, fire, emergency services (22%) 22% Regional/local government organization (31%) 31% State/provincial government organization (0%) Central/federal government organization (28%) 4 STRATEGIC PERFORMANCE MANAGEMENT Figure 3: US Respondents 8% Health care (0%) Education organization (8%) 20% 28% Police, fire, emergency services (20%) Regional/local government organization (19%) 19% 25% State/provincial government organization (25%) Central/federal government organization (28%) Figure 4: Canada Respondents Health care (13%) 7% 13% 21% Education organization (7%) Police, fire, emergency 14% services (23%) 23% Regional/local government organization (22%) 22% State/provincial government organization (14%) Central/federal government organization (21%) Figure 5: Australia Respondents Health care (14%) 7% 14% 22% Education organization (7%) Police, fire, emergency services (22%) 11% 22% Regional/local government organization (24%) 24% State/provincial government organization (11%) Central/federal government organization (22%) 5 STRATEGIC PERFORMANCE MANAGEMENT This research was conducted by the Advanced Performance ap-institute.com). In various cases, surveys were followed up Institute in collaboration with the CIPFA (The Chartered Institute with phone calls, especially in cases where only one response of Public Finance and Accountancy) Performance Improvement was received. Network, and Actuate Corporation. The research took place at the end of 2007 and early 2008, In each of the organizations, the chief executive (or equivalent) targeting more than 1,500 government and public sector as well as the performance manager (or equivalent) were employees and producing 1,104 substantial responses from approached in order to get both an executive view and the 507 organizations. This response rate of 33% is notably higher view of the person responsible for Performance Management. than the industry average, lending even greater credibility All respondents were asked to reply for the organization as a to the findings. Equally noteworthy is that the findings were whole and not for any particular subsidiary or division. consistent across the four participating countries, indicating that the issues raised are endemic to public sector Performance The data was collected through an online survey tool which is a Management, regardless of the geographical region. feature of the Advanced Performance Institute web site (www. 6 STRATEGIC PERFORMANCE MANAGEMENT Section 1: Survey Results It is astonishing, given the blood, sweat and tears spent by public sector decision-makers as they try to come up with winning new strategies to meet government targets, that so little attention is paid to ensuring that operational activities measure up and deliver against their own top-level goals. Yet this is the stark reality among public sector organizations across the globe, according to shocking new findings from the Advanced Performance Institute. Delving deeper into the phenomenon in a comprehensive 2007-08 market study, the API, in collaboration with the CIPFA and Actuate Corporation, has come up with 10 principles for effective Performance Management, which pressurized public service organizations would do well to abide by if they want to bring everyday operations back in line with top-level strategy. The Performance Management What most of these initiatives have in common is that they Imperative provide frameworks for managing and measuring performance; many prescribe performance indicators with targets; and Performance Management has never been more critical in the several make the measurement data publicly available, for public sector than it is today. Governments around the world example via league tables or performance scorecards. now take this extremely seriously and many have introduced Yet as worthy as these intentions and processes are, many public legislations and frameworks for this specific purpose in the sector organizations approach Performance Management very organizations that report to them. mechanistically, with an emphasis on collecting and reporting In the US, for example, successive presidents have made data, often simply to keep regulators happy. Many appear to Strategic Performance Management part of their management have lost sight of the value of the exercise and the benefits agenda. Back in 1993, the US passed the Government that they, as budget-managing, public-serving enterprises, Performance and Results Act which forces the head of each could glean from the results. government agency to submit to the Office of Management The research set out to investigate the problem in detail, and and the Congress a strategic plan detailing the strategic aims identify and test some of the principles that make Performance and performance indicators. The key performance results Management work and that allow organizations to move are then aggregated into an executive branch management beyond ‘measuring everything that is easy to count’ towards scorecard, which is published for everybody to see. true strategic Performance Management, leading to enhanced In Canada, the government has introduced a management learning, better decision-making and real performance framework for departments and agencies that includes improvement. a commitment to measurable improvements in client From Theory to Good Practice: satisfaction. In Australia, all government departments, agencies and business enterprises that deal with the public Defining Performance Management are required to develop customer service charters. In the Strategic Performance Management is about defining, UK, the government has created a set of 90 so-called Best assessing, implementing and continuously refining an Value Performance Indicators to measure Local Authority organization’s overall ‘business’ strategy. performance, assessed annually by the UK Audit Commission. This goes far beyond the narrow definition of Performance This system is now being replaced by a Comprehensive Area Management, which is often used simply to describe the Assessment with 198 National Targets at its core. act of performance measurement and reporting, or simply There are similar initiatives in China, Sweden, the Netherlands, people management. Strategic Performance Management as well as other, performance measurement initiatives focusing is about identifying what matters, measuring this and then more specifically on the police forces, health services, schools, managing it to improve the effectiveness, efficiency and universities, cities, etc. overall performance of an organization. 7 STRATEGIC PERFORMANCE MANAGEMENT It does not measure performance for measurement’s sake, performance with perverse and dysfunctional behaviors such but in a way that’s relevant to what the organization is trying as sub-optimization, target fixation, and juggling data. In the to achieve on a broader scale, and in a way that can then be survey, 68% of organizations believed that some performance fed back into every employee’s daily working life, enabling data had been fabricated. This means that some systems can’t transformational change to produce real results. be trusted and that they
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