perf ormance management

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Performance Management

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The very essence of performance management is to drive improvement in a targeted area and usually performance measures will be identified which monitor progress towards the selected target levels.

Fundamental Performance Management Principles

The Improvement Imperative

CriticalSuccessFactors

CurrentPerformanceStandards

EmergingPerformanceStandards

AvailableResourceMeasures

TargetedPerformance

Improvements

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The heart of effective performance management is an infrastructure of "fit for purpose" performance measures.

The quality criteria which will be used to ensure fitness for purpose of these measures take the form of the "10 Point Test" as recommended by Neely, Adams and Kennerley in their definitive work on performance management "The Performance Prism" published in 2002.


The 10 Point Test

Fit for PurposePerformance Measures

TRUTHFOCUS

RELEVANCE

CONSISTENCY

ACCESS

CLARITY

SO WHAT

TIMELINESSCOST

GAMING

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The PMI should be regularly reviewed & judgement formed on the deployment signature of each performance measure reviewed, thus identifying the performance measure categories clearly.

This will assist the understanding of the performance measure mix in the current Performance Management Infrastructure (PMI) and enable strategic judgements to be made on the desired future shape of the performance measure category mix.


Regular Analysis of Performance MeasureDeployment Signatures

The Performance Management Infrastructure

analysed by deployment signature

81 28 18 17 11

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The quality criteria discussed previously are designed to ensure that individual performance measures are fit for purpose. However, if the Performance

Management System is to function properly, then performance measures need to be collected and interpreted in coherent groupings.


Coherent Groupings of Performance MeasuresPMPPMP

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Performance Perspectivesshould be balanced within the PMI

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"So they [Baldwin's Government] go on in strange paradox, decided only to be undecided, resolved to be irresolute, adamant for drift, solid for fluidity, all-powerful to be impotent".

Sir Winston Churchill (1874 - 1965)


a Declared StrategicPerformance Management Focus

Focus on Aspirations

Focus on Targets

Focus on Improvements

Focus on Exceptions

“Acting on Facts” published in May 2002, by the Audit Commission, reinforces Churchill’s quotation and gives Stanley Baldwin a few belated clues as to how his team’s performance could have been improved

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The imperative to formulate targets, if performance management is to occur, places significant demands on the Performance Management System.The central issue being - On what basis should targets be set?

"Ah, but a person's reach should exceed their grasp, Or what is heaven for?”

Robert Browning (1812- 1889)


Browning wrote more poetry than almost any other English poet, all wonderfully

intense and original and of an uncompromisingly high standard.

a Deliberate & Determined Setting of Targets

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Sometimes less is moreException Reporting is the order of the day

""We now had an accounting department full of people who only stopped cranking out numbers to pick up their pay checks. We had so many damn numbers, inside so many damn folders, that no one was looking at them. But no one would admit it. Everyone just bluffed their way through meetings, pretending to be familiar with every detail". Ricardo Semler, CEO of Semco, in his book "Maverick!"


” Maverick” was published in 1994 and is the story of Ricardo Semler and his

extraordinary company.

Staff set their own wages, production levels, purchases and all have access to

the financial books.

It may sound ridiculous, but the staff are happy, production is high and staff

turnover very small.

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Performance Managementis not an Annual Event


ACCOUNTABILITY MANAGEMENT

MONTHLYReport

WEEKLYReport

BIANNUALReport

QUARTERLYReport

ANNUALReport

Reporting Frequency & Audience

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""Without tradition, art is a flock of sheep without a shepherd. Without innovation it is a corpse.” Sir Winston Churchill (1874 - 1965)


Innovation delivers Step Change

Driving Improvement

Whilst performance management provides an infrastructure which initiates, nurtures and realises improvements the driving force behind the improvement potential of an organisation is dependent on a number of factors which are independent of the performance management infrastructure itself namely: -

· Innovative capacity

· Appetite for change

· Risk Appetite

· Bias for Action

The first three of these factors heavily shape the target setting function that in turn defines the degree of improvement being attempted.The last factor, a bias for action, significantly influences the distance of the improvement horizon and the ability to implement improvement action plans.

Benchmarking, with external bodies and with oneself over time, is a tangible activity which promotes improvements in all four of these factors since it allows access to what others do and how they have made it work.

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Quantitative NOT QualitativeApproach

"When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers your knowledge is of a meagre and unsatisfactory kind." William Thomson (Lord Kelvin)1824-1907


Lord Kelvin was one of the founders of modern

physics, probably the greatest applied scientist of

the Victorian era.

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Be choosey about your Performance Measures

"Not everything that can be counted counts, and not everything that counts can be counted."

Albert Einstein 1879-1955


Albert Einstein's pithy comment is probably the most popular quotation used in Performance Management today

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Focus on what matters

The Hawthorne EffectMayo discovered that in the main when some activity or performance measure was first measured it improved, just because it was getting some focus.

These studies were conducted at the Hawthorne Works of Western General Electric and therefore this automatic improvement which usually follows the initial measurement of an aspect of performance has been known as the "Hawthorne Effect" ever since.


In the late 1920's and early 1930's Elton Mayo conducted a series of now famous studies that examined the human, social,

motivational and emotional factors affecting industrial employees'

performance.

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"Art does not reproduce the visible; rather, it makes visible.”

Paul Klee, Swiss Artist (1879 - 1940)


14Making the Facts Visible

is no mean feat

Paul Klee was born in Munchenbuchsee, Switzerland in

1879. He studied art at the Munich Academy of Fine Art (1898-1901) and

later became associated with the Blaue Reiter group. Artists in the group believed that they had a responsibility

to "heal the gaping wound that separates man from his environment”.

Making the Facts Visible

The principle of exception reporting is key, if the important facts are to be made visible in performance management reporting.

According to Audit Commission research a number of approaches to exception reporting have been adopted by Local Authorities, e.g.: -

• Only including performance measures in reports if they are off target by a certain amount

• Producing separate schedules (such as beating targets, close to targets and not achieving targets)

• Using visual differentiators such as traffic lights, smiley faces or stars.

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BVPP’s17% pf LA’s

Had reservation expressedre missing or inaccurate PI’s

CorporateApproach

50% of LA’sFind it difficult to develop one or to set meaningful

targets

PerformanceManagement

Auditor made recommendations

In 60% of LA’s

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The State of the Art is Poor

Extracted from “Acting on Facts” published in May 2002 by the Audit Commission.

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ABSENCE of a PERFORMANCE CULTURE

Need an ENLARGED PI BASKET

Poor DATA QUALITY

Collection NOT an end in itself

Need EXCEPTION Reporting

Poor TIMING & PRESENTATION


Extracted from “Acting on Facts” published in May 2002 by the Audit

Commission.

Perceived Failings 161616

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use informationthroughout the year

a balancedset of Indicators

a clear audit trailfrom raw data to PI

performance manage projects

17Key Success Factors


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TOO AMBITIOUSno connection

withcurrent performance

Demotivating

TOO TIMIDfocused onmonitoringstatus quo

Incremental Change

FOCUS on key prioritiesto Achieve Deep & Durable Change

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Setting Ambitious but Realistic targets is an essential balancing act


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19


Generatethe RIGHT

Info

DoThe RIGHT

Things

AC

TIO

N F

OC

US T

IMIN

G F

OC

US

PEOPLE FOCUS

COLLECTION FOCUS

Give it tothe RIGHT

People

Atthe RIGHT

Time

Monitoring & Actingupon performance management information 1919

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the Building Blocks ofeffective performance management

Source: - Public Services Productivity Panel compiled from a body of research conducted in 2000.


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21the Importance – Performance Matrix


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Focus on what is ImportantFocus on what is ImportantThe Important / Performance MatrixThe Important / Performance Matrix

WORKS MANAGEMENT

Complaints Appeals

DE

LIV

ER

Y B

AY

RENEWALS

NEW CLAIMS

MAIL

RAW MATERIALSSTORE

RAW MATERIALSINSPECTION

RENEWALS

MAIL

NEW CLAIMS

CUSTOMERS

CU

ST

OM

ER

SNE W CLAIMSPRODUCTION UNIT

RENEWAL CLAIMSPRODUCTION UNIT

CUSTOMERSERVICES

QUALITYCONTROL

TRAINING

RESEARCH &DEVELOPMENT

ENGINEERING& MAINTENANCE

AUTOMATED PRODUCTION& INFORMATION SYSTEM

ACCOUNTING & AUDIT

SALES &MARKETING

LANDLORDSTHE COUNCIL

CENTRAL GOVERNMENT

COMPREHENSIVE PERFORMANCE

ASSESSMENT

BENEFITS FRAUD

INSPECTION

BEST VALUE

INSPECTION

EXTERNAL

AUDIT

1 2 3 4Benefits …?

1 2 3 4The Council …?

Report & Action Plan Reports on Specific Reviews Interim & Final Audit Reports

The BENEFITS Works

RAW MATERIAL DELIVERY SYSTEM

£

£

New Claims Renewals

Further Information

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