Improved Performance Measurement: A Prerequisite for Better Service Delivery
Bryan Shane
There are few holistic approaches to measuring the performance of programs and services in federal departments.
The federal government is committed to the review and renewal of its programs and services to ensure that they are affordable, accessible and responsive to the needs of Canadians. However, there are important challenges in meeting this commitment:
- High-quality programs and services must be provided to all Canadians despite an environment of ongoing fiscal restraint. Programs and services across all business lines will continue to be streamlined. Constant change in the areas of structure, staff reductions and cost savings has produced an organizational culture across many federal departments in which staff are barely able to cope with workloads and morale is very poor.
- There is a need for more effective leadership and management structures that permit long-term, viable alternative approaches for delivering programs and services at reduced costs based on new forms of collaboration across branch and department lines.
- There is a lack of means to facilitate the sharing of best practices related to the delivery of programs and services.
These problems are compounded by ineffective performance measurement practices in the federal public service. At present, the only established standard for performance reporting uses a financial perspective, which fails to provide performance information related to client satisfaction, internal business processes and innovation/learning. Many performance measurement systems
- provide information that is ineffective in determining whether objectives and strategies are being effectively implemented
- generate reactive instead of proactive performance information
- do not recognize outstanding group or individual performance, which tends to undermine motivation and morale within an organization.
There are few holistic approaches to measuring the performance of programs and services in federal departments. Existing methods tend to be based on a single dimension, so the development and implementation of more balanced and effective practices would be beneficial for many reasons:
- to provide public sector managers with multidimensional sources of information to make decisions on improving, modifying or continuing programs or services
- to facilitate proactive identification of issues that should be considered by public sector managers in order to provide effective service to clients
- to provide information on future program and service enhancements arising from changing client, employee or technology needs
- to help provide a business case that supports the creation, continued existence or enhancement of a specific program or service
- to facilitate improved communication and collaboration between the client and the department by addressing issues related to client satisfaction and changing technology innovations, etc.
- to help identify the problems of employees in the performance of their daily functions, such as lack of knowledge, motivation, training or environmental concerns, and then to rectify them
- to provide a means of translating the mission and vision of the organization into concrete strategies and plans that can be monitored and adjusted continually in response to ongoing changes to client , employee, technology, and fiscal requirements and constraints
- to provide a frame of reference in which management and staff can work together, using a common language, to adjust their operations (through ongoing and balanced feedback) to sustain and enhance excellence in program and service delivery to the public.
What is performance measurement?
Performance measurement can be defined from three aspects:
- It is a philosophy of continuous learning in which feedback is used to make ongoing adjustments to the course of the organization toward its vision. The information derived from financial, client satisfaction, pro- grams/services and innovation/learning, for example, provides the feedback needed to assess the effectiveness of an organization from multiple viewpoints. This facilitates ongoing adjustment to ensure continued excellence of programs and services in response to changes arising from both the internal and external environment.
- It is an ongoing process that begins with the setting of objectives and the development of strategies/plans to achieve these objectives, followed by the development of performance measures to assess progress.
- It is a structure in which strategic, tactical and operational plans are linked through a feedback process. Feedback provided by performance measurement systems provides the information needed to determine whether top management strategies have been effectively translated into operational decisions. It also provides the information needed to intervene and/or improve the program or service on a systematic basis.
Performance measurement is a management system – an ongoing process that provides a balanced, methodical attempt to assess the effectiveness of an organization’s operations from multiple vantage points - financial, client satisfaction, internal business and innovation/learning. It is used to provide feedback at all levels – strategic, tactical or operational – on how well strategies and plans are being met. This performance information is necessary to improve decision making within the organization, to enable proactive problem correction and to promote continuous improvement.
A suggested framework for performance measurement
The “balanced scorecard” approach to measuring organizational performance was developed by Robert S. Kaplan and David P. Norton at Harvard Business School. *1 This approach to performance measurement enhances the traditional focus on financial measures in the federal public service by emphasizing client satisfaction, internal business processes and innovation/learning.
Financial component
This component deals with the measurement of the level of financial performance provided by programs and services. Examples of the financial impact of programs and services in the public service can be measured through such indicators as actual versus planned revenue; actual versus planned expenditures; revenue generated in relation to full-time employees, expenses or costs; and achieving/exceeding revenue projections.
Client satisfaction component
This concerns the effectiveness of the organization’s products and services in satisfying client needs. Generic examples of client satisfaction performance indicators in the public service include degree of interaction with clients on requests for service; ease of access to service providers; degree of service availability; timely response to service requests; degree of on-time service delivery; and degree of client compliance and redress.
Internal business processes component
This relates to the quality of internal business processes needed to provide programs and services that satisfy client needs. Generic internal business performance indicators for the federal public service may include projects completed successfully, on time and on budget; competitiveness of fees; setting/meeting targets; and error/rework rates.
Innovation and learning component
This component pertains to the ability of an organization to sustain innovation and growth through continually improving its human resources, technology, programs and services. Generic innovation and learning performance indicators applicable to the public service include the number of employee suggestions for program and service innovations/improvements; staff motivation; level of staff consultation/involvement in decision making; degree of staff recognition; degree of improvement in key operational business processes; percentage of revenue derived from new programs and services; and number of new products and services introduced each year.
This framework for measuring organizational performance is based on an organization’s mission and strategic objectives. It provides information on past performance by using traditional financial measures and on current operations by focusing on internal business processes and the level of client satisfaction. Further, it provides input on future requirements that may arise from changing technology, client needs or staff needs. Such an approach to performance measurement provides feedback across all the dimensions of a public sector organization for effective decision making.
To explain more fully the value of this approach to performance measurement, it is applied to an informatics function in a public sector organization in the following section.
Application of the balanced scorecard approach to an informatics function
Informatics technology (IT) plays a number of important roles in most organizations. It provides the applications necessary to process many transactions related to finance, human resources and specific programs/services, and the office system tools necessary to ensure personal productivity. It facilitates the effective collaboration/coordination of programs, services and projects for staff members, suppliers and clients and permits the development of unique business strategies, programs and services. As well, investments in IT hardware, software and communications are estimated to consume 50 percent of all current capital resources in most large organizations. As a result, IT is intrinsic to most organizations’ ability to allocate resources, provide information for decision making and deliver programs and services.
It is estimated that only one in ten IT organizations has a formal measurement program. A balanced approach to IT performance measurement facilitates the assessment, development and implementation of improved information and practices in the public service to ensure that investment in information technology supports the business objectives and employees, or that spending is focused on the most appropriate areas within the organization.
To develop and implement a balanced approach to measuring informatics performance or any other public sector program or service effectively, there are a number of prerequisites:
- The development of a performance measurement framework can only be carried out from the top down. Business objectives must be established, then informatics goals, plans and strategies can be developed to support the business directions. Performance measures can then be determined for the informatics function.
- This approach to informatics performance measurement uses both qualitative/quantitative information and formal approaches to data gathering. It does not require expensive or awkward methods of data gathering and reporting.
- The performance measures developed must be objective, quantifiable and output oriented.
- This approach is based on an organizational culture that supports balanced and comprehensive feedback as an essential element in both examining the issues and providing the information necessary for effective decision making.
- This method of performance measurement requires time, effort and skill to implement effectively.
- The unit of measurement of this approach to performance measurement is the whole or a discrete portion of the informatics program. However, to apply this framework effectively, the same approach must also be applied to each major informatics service area, such as application development, telecommunications and client support.
Even with these prerequisites satisfied, the balanced scorecard approach must be effectively tailored to fit each public sector IT environment. There are several steps necessary to its development and implementation:
- An impact analysis should be conducted to determine the level of readiness of the IT organization to adopt such an approach to informatics performance measurement and to determine the cultural, functional, technical and cost implications of adopting such a regime.
- Based on the results of the impact analysis, a pilot project should be launched within one of the service lines. The pilot project should adopt this approach as the basis for improving performance measurement practices within that service line. There are several steps in establishing a measurement system for the pilot:
- Build consensus on the long-term objectives of the pilot organizational unit.
- Develop performance measurement architecture to assess the performance of the        organizational unit from the four perspectives discussed earlier.
- Develop an implementation strategy to make the transition to a new performance measurement environment.
- The lessons learned from the pilot can be used to justify and adapt this approach to the full informatics program.
Figure I provides a generic adaptation of this approach to performance measurement to a public sector IT organization. In this example, suggested goals are provided for each of the four components of a balanced performance measurement system – financial, client satisfaction, internal business processes and innovation/learning. As well, sample performance indicators are provided for each component.
Conclusion
The delivery of programs and services that are afford- able, accessible and responsive to the needs of Canadians can be achieved only if public sector managers obtain effective feedback through a balanced approach to performance measurement. Such feedback provides the information needed to steer the organization toward excellence in program and service delivery to the public.
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*1 Robert S. Kaplan and David P Norton. The Balanced Scorecard (Boston: Harvard Business School Press, 1996). “Using the Balanced Scorecard as a Strategic Management System, ” Harvard Business Review, (January-February 1996), pp. 75-85.
Bryan Shane is senior partner of BPC Management Consultants in Ottawa. Since 1981 be has provided change management consulting services to both public and private sector organizations. Mr. Shane has a BA in Political Science from Carleton University and a BEd and MEd from the University of Ottawa. He also completed postgraduate studies in statistics and evaluation.