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.