What’s with all the numbers?

Building an Effective Performance Management System to Improve Outcomes

U.S. Department of Labor Employment and Training Administration

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Agenda
• The need for a different framework for performance management • Characteristics of an ideal framework • Balanced Scorecard framework • Corporate Performance Management framework • Core components of a performance management system • Questions?
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The Need for a Different Framework for Performance Management

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Performance Management Defined
Performance management is the practice of actively using performance data to improve desired outcomes.
Source: Turning Point, From Silos to Systems: Using Performance Management to Improve the Public’s Health, 2003

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The Need for a Different Framework
Common Measures and Performance Management are not the Same
• The common measures focus on “bottom line” results, not the drivers • The need for timely results • There is a need for measures that align with the mission and strategy (i.e., a focus on program business operations and outputs)

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The Need for a Different Framework
Common Measures and Performance Management are not the Same (Continued)
• Participant impact measures provide a limited picture of organizational health • Participant impact measures alone are insufficient to assess continuous improvement

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Characteristics of an Ideal Framework
• Deploys the agency’s strategic plan • Focuses and aligns agency activities and efforts • Tests cause-and-effect relationships among the program’s activities • Family of measurement types reduces risk of not meeting “bottom line” measures • Links performance measures to decision making

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Ideal Framework is Mission-Focused
Helping Alice Get Out of Wonderland
“Would you tell me, please, which way I ought to go from here?” “That depends a good deal on where you want to get to,” said the Cat. “I don’t much care where --,” said Alice. “Then it doesn’t matter which way you go,” said the Cat. “So long as I get somewhere,” Alice added as an explanation. “Oh, you’re sure to do that,” said the Cat, “if you only walk long enough.”
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Your Mission Guides Your Actions…

Balanced Scorecard Framework

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Balanced Scorecard Framework
The Balanced Scorecard is a performance management approach that focuses on various overall key performance indicators, including customer perspective, internalbusiness processes, learning and growth and financials, to monitor progress toward organization's strategic goals. Each major unit throughout the organization often establishes its own scorecard which, in turn, is integrated with the scorecards of other units to achieve the scorecard of the overall organization.
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Balanced Scorecard Framework
MISSION
Value, Value, Benefit Benefit Value, Benefit

FINANCIAL PERSPECTIVE
If we succeed, how will we look to Congress and the public?

CUSTOMER PERSPECTIVE

INTERNAL PROCESSES PERSPECTIVE

To achieve our mission, how must we satisfy our customers?

To satisfy our customers, Congress, the public, and mission, what businesses processes must we excel LEARNING AND GROWTH at? To achieve our mission, how must our people learn, communicate, and work together?

Source: Public sector Balanced Scorecard from the Balanced Scorecard Collaborative

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Why Use Different Perspectives?
Perspectives Objectives Measures • Perspectives are key organizational strategies • Aid to system and operations management • Help in diagnosing and troubleshooting • Prioritizing • An aid to planning • Understand improvement To be successful, the • Tracking performance drivers of performance must be identified • External accountability
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Use a Strategy Map to Develop Objectives
Perspectives Objectives Measures • Identify strategic themes and group them under the appropriate perspective • Create a strategy map to visualize the interaction of individual activities in the larger system • For each identified strategic theme, identify what you are trying to achieve and the obstacles you face • Develop measurable objectives that specify numeric target levels, where appropriate • Limit objectives to major program elements

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Develop Measures for the Objectives
Measur es Each measure should answer one of the following questions: Perspectives • How well did we succeed at providing customer value? • How well do we do the things which support creating customer value? Objectives

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Uses of Performance Measures
Perspectives • Compare • Learn • Motivate • Reward and celebrate • Promote and explain Objectives Measur es

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The Importance of Alignment
Strategies Should be Aligned at Different Organizational Levels
Perspectives Agency Departm ent Team/ Individual Objectives Measures

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Chase’s Law on Measurement
Wherever the product of a public organization has not been monitored in a way that ties performance to reward, the introduction of an effective monitoring system will yield a fifty percent improvement in the product in the short run.

In other words… What gets measured gets done

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Linking Strategy to Measurement
Customer Perspective Example
Initiative: Implement an expanded supportive services strategy to increase the percent of program completers from the current rate of 83% Rationale: Successful completions highly correlated with increased employment and earnings

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Freeware for Creating Strategy Maps
This is an Example and not an Endorsement by ETA.

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Illustration Using the BSC Approach
Increasing the Efficiency and Profitability of a Commercial Airline

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Corporate Performance Management
An Extension of the BSC Approach

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CPM Framework
Corporate Performance Management is defined as the processes, methodologies, metrics and systems needed to measure and manage business performance. In the five years since CPM was introduced, this approach to management has been credited with many success stories and turnarounds. CPM builds on the core features of the BSC.
Mission Refine
Define/ Plan

Review/ Analyze

CPM
Align/ Execute Measure/ Monitor

CPM includes the whole set of management processes that starts with the mission of the organization.
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Elements of CPM
Mission Define/Plan Align/Execute Measure/Monitor Review/Analyze Refine
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• Organization’s purpose • Vision • Value drivers • Used to align all activities in an organization

Elements of CPM
Mission Define/Plan Align/Execute Measure/Monitor Review/Analyze Refine
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• Feedback from implementation of current strategy • Refine organization’s corporate strategy model
– – – – Strategic objectives Key performance measures Targets Strategic initiatives

• Communicate strategy to all organizational levels

Elements of CPM
Mission Define/Plan Align/Execute Measure/Monitor Review/Analyze Refine
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• Organizational divisions and units align strategies to corporate strategy
– – – – Strategic objectives Key performance measures Targets Operational plans

• Execute operational plans

Elements of CPM
Mission Define/Plan Align/Execute Measure/Monitor Review/Analyze Refine
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• Continuous monitoring • Track progress on key performance measures • Requires the collection and reporting of timely, accurate, and accessible data • Create and use performance scorecard to see the entire organization

Elements of CPM
Mission Define/Plan Align/Execute Measure/Monitor Review/Analyze Refine
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• Analyze performance gaps on key performance measures • Use performance data and create a learning feedback loop to educate all levels
– Business insights on performance – Use these insights to understand

Elements of CPM
Mission Define/Plan Align/Execute Measure/Monitor Review/Analyze Refine
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• Decision makers collaborate, sharing different viewpoints and ideas • Generate integrated insights from Review/Analyze step • Refine corporate strategy and execution plan

Key Features of CPM
• Comprehensive and structured planning • Disciplined execution and review • Information-based decision making • Integrated management processes • Agile management structure

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Core Components of a Performance Management System

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Performance Management System Defined
A Performance Management System is the continuous use of four practices (see diagram) that are fully integrated into an Source: Turning Point, From Silos to Systems: Using Performance organization’s core Public’s Health, 2003 Management to Improve the business
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Important Concepts
Performance Standards are objective standards or guidelines that are used to assess an organization’s performance (e.g., 80 percent entered employment rate). Standards may be set based on national, state, or scientific guidelines; by benchmarking against similar organizations; based on the Source: Turning Point, From Silos to Systems: Using Performance public’s or leaders’ expectations; or other methods. Management to Improve the Public’s Health, 2003
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Important Concepts
Performance Indicators summarize the focus (e.g., talent development, customer service) of performance goals and measures, often used for communication purposes and preceding the development of specific measures. Performance Measures are quantitative measures of capacities, processes, or outcomes relevant to the assessment of a performance indicator.

Source: Turning Point, From Silos to Systems: Using Performance Management to Improve the Public’s Health, 2003
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Important Concepts
Performance Targets set specific and measurable goals related to agency or system performance. Where a relevant performance standard is available, the target may be the same as, exceed, or be an intermediate step toward that standard.

Source: Turning Point, From Silos to Systems: Using Performance Management to Improve the Public’s Health, 2003
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Review of Critical Success Factors
BSC and CPM Emphasize the Performance Management System Should…
• Align to the corporate mission and strategy • Develop meaningful key performance measures • Increase data availability • Maximize data quality • Enhance performance reporting • Improve analysis • Achieve performance integration • Drive decision making
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Questions?

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