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