Performance Based Contracting The Do’s OR Don’ts Bill Phillips, Director Center for Outcomes The Rensselaerville Institute National Alliance To End Homelessness Hatty Regence Hotel Washington D.C. July 17, 2006

The think tank with muddy boots

Our Mission Enable communities to harness their own resources to improve people’s lives. Show organizations how to set targets, measure their progress and change their behavior to achieve quantum leaps in performance Demonstrate for foundation, government agencies and other donors how to act as investors.

QUICK SURVEY PUBLIC AGENCIES WHO FUND PROGRAMS PUBLIC AGENCIES WHO DELIVER SERVICES TO HOMELESS FOLKS PRIVATE FUNDERS (PHILANTROPY, CORPORATE,ETC) PRIVATE NON PROFIT SERVICE DELIVERERS OTHERS USING PERFORMANCE BASED CONTRACTING WOKE UP THIS MORNING WANTING TO BE HELD MORE ACCOUNTABLE?

Do’s OR Don’ts of PBC Start with standards, regulations, systems and procedures Immediately tie money to performance Emphasize the core of PBC in Outcome Thinking Think collaboration more than competition Think of PBC first and foremost as a reporting/payment system Give everyone a chance to succeed Do it to save money Demand learning from all involved Mandate it all at once everywhere Scrap the role of funder Celebrate big and small successes—big time! Compare Apples and Oranges “Be the change you seek in the world.”

The Problem Approach…

The Activity Mindset…

Close your eyes; take a deep breath You are now in a future place at a future time Imagine the ideal situation, how your work should end Now open your eyes and answer these questions Outcome Thinking

Close your eyes; take a deep breath You are now in a future place at a future time Imagine the ideal situation, how your work should end Now open your eyes and answer these questions Outcome Thinking

LAHSA Project (Los Angeles Homeless Services Authority) Biggest Homeless Consortium in the Nation Rensselaerville institute Outcome Framework and Adsystech’s Enginuity Software Ultimately about 100 projects representing 280 contracts will use outcomes 20 supportive housing programs 3 contracts each now on outcome management

Results “Outcomes have helped LAHSA staff learn much more about the agencies and how they operate in particular getting beyond the grant writers to the front line staff.” “Helped the agencies function better by having a clearer understanding of the outcomes LAHSA wants to buy particularly through the milestone management approach.” (Based on telephone interview with LAHSA staff members Carlotta Woods and Elena Fialllo who work under leadership of Christine Merasy-Glasco)

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Core Outcome Principles Proactive partnership design rather reactive. Focus on managing for program success not accountability. Centers on direct benefits from those being served rather than longer term impacts. Flexible range of strategies and approaches A learning while doing approach that encourages open and honest feedback and change.

Our Target To have each of you take one step further down the outcome path based on what we discuss here.

Write down your reason for being here

Experiencing Outcome Thinking

Three Thinking Options Problem Approach Activity Mindset Outcome Thinking

The Problem Approach…

Problem Stimulated Questions… 1.Why do we have this problem? 2.What or who caused it? 3.What obstacles exist to solving it?

Typical Responses Not enough money. Regulations too restrictive. The City messed up. The State messed it up. The Feds messed it up. Clients messed it up. We’ve always done it this way.

Benefits Answers the Why question Gives historical understanding Motivates and Engages Provides a baseline

Traps Analysis paralysis…ready, ready, not quite ready Over time can depress and de-motivate Focuses on what was/is not what could be Keeps us in the blame game And angry

The Activity Mindset…

Activity Stimulated Questions 1.What should we do? 2.When can we start? 3.Who can do it?

1.What are we hearing, seeing, feeling, experiencing once we succeed? 2.What is in place that wasn’t before? 3.What has been gained for us and those we serve? Outcome Thinking Starts with Different Questions:

Close your eyes; take a deep breath You are now in a future place at a future time Imagine the ideal situation, how your work should end Now open your eyes and answer these questions Outcome Thinking

Close your eyes; take a deep breath You are now in a future place at a future time Imagine the ideal situation, how your work should end Now open your eyes and answer these questions Outcome Thinking

Benefits Forces the use of all senses Reinforces strength based clinical approach Winner not victim Compels and engages in tough times Stimulates hope and energy “The BHAG Effect” Builds expectation of success Opens up new ways

Traps Aim, aim, aim, keep aiming-little more to the left Pie in the sky Can cross the vision/hallucination line Must be lived to be believed Must be “almost” attainable—possible if….

How outcome thinking can help: Increased clarity on: –What success looks like –What we have accomplished –The gap Enables learning and innovation Puts meaning to mission Assists with staff orientation and training Builds staff energy Helps structure follow function

How They Fit Together Seek the right balance; It’s not either/or but rather both/and Outcomes interact with the why Problems are then assessed against Outcomes for opportunities and activity relevance Activity is launched and assessed against both problems and outcomes

Typical Responses: Let’s form a committee. And then write a plan. Assign the busiest person Hire a consultant Launch a pilot project. Mandate everyone to comply. Get somebody to fund it.

Benefits Fire, fire, fire Gets us moving/Tires us out We feel productive Can lead to learning and success

Traps Seductive Burn out Re-enforces reactive/crises management Equates activity with results Skips reflection and learning All start no finish

Let’s Try It For Families First Imagine that it is May 22, 2010 and we are celebrating that outstanding success of The FF program. Think about your staff, the clients, employers, partners in your agency and community. What are you hearing, seeing, feeling, experiencing that demonstrates evidence of this wild success?

FF Success Work part rate is 75% statewide Our former clients are sharing success stories Clients are getting degrees Community thinks DHS is great place to get a job New participants are eager to come in the program due to the success rates Lower case loads 50 per worker 70% Clients become home owners More good paying and challenging jobs opportunities for Lower functioning people FF participants paid a livable wage$12/hour-$25,000 A larger tax base for the federal government and state Increase in intact families from 3% to %15 entrepreneurs 5% More community involved by clients who give back 20% volunteer Child support establishments increased by 50%

“Highly effective people invest little energy on their existing problem situations. Instead they focus attention and energy on what they want instead of these problems!!! “A key to high performance is the ability to develop, articulate and stay focused on a compelling outcome.” »Clawson and Bostrom

“We cannot solve our problems with the same thinking we used when we created them." - -- Albert Einstein

“All indicators are flawed…test scores are flawed, mammograms are flawed, crime data are flawed, customer service data are flawed, patient outcome date are flawed. What matters is not finding the perfect indicator, but settling upon a consistent and intelligent method of assessing your results, and then tracking your trajectory with rigor. Jim Collins, Good to Great and the Social Sector

“Beginning with success in mind… and keeping it there.”

What is Outcome Management? The application of outcome thinking in program, staff and organizational management as a way to improve organizational results and return on investment.

Let’s Try It!! Think about a project or activity you are currently engaged in. Jot down on the PAOT sheet how you are now thinking about it—i.e. –as a problem to be solved; –activity to complete, –outcome to achieve. Now envision what success looks like and as clearly as possible describe that success in sensory terms — What would you see, hear, feel, experience when you succeed?

Investor Questions What are we buying? What are the changes we will be successful? Is it the best use of resources?

Investor Considerations Mission/Vision Givens Success Assumptions Metrics and Targets Grantee Targets Portfolio Considerations

Our Success Assumptions –Outcome Thinking is a powerful and underused way of thinking! –Try it; you’ll like it! –Learning is doing; doing is learning. –Ownership is essential. –Bias for success (avoid Missouri) –It takes time to evolve –There are no experts

Key Outcome Terms Inputs: what goes in Program: the products and services created from inputs and which add value (hopefully) Outputs: what comes out; what programs produce Outcomes: the direct intended beneficial effect on those being served Impacts: long term or indirect effects of outcomes on communities or individuals

Outputs vs. Outcomes Outputs Reduce length of placement Complete training/Get a job Renovate dilapidated apartments Graduates from School One month Exhibition is offered to the public Symphony breaks even; all events are presented as planned Meals delivered Outcomes Successfully Live in the community (attend school, follow rules at home, be nurtured and supported, avoid crime) Maintain employment for one year at $12/hour with benefits Achieve stable housing (1 year in code meeting units at no more than 60% GMI) Able to read and calculate at 10 th grade level. Attendance is at high level and community buzz is strongly positive Critical acclaim strong; invitations to prestigious festivals Food eaten; health, social benefits

Outcomes v Impacts Outcomes BACKS Measures Achievable by the end of year or project Must be Verifiable Within the purview of the program to achieve May include “vaccination” outputs The near term manifestation of and demonstrates progress toward impact achievement Impacts Overall individual or community well being Ambitious compelling, visionary, not readily achievable (BHAG) May not be verifiable Not clearly connected with one program or agency Never about outputs Potentially the cumulative effect of outcomes achieved by many programs over time

A Health Example: Program: smoking cessation workshops; curricula; interactive approach (with horror films) Outputs: people who attend one or more sessions; stop smoking plans created Outcomes: the number/percent completing who stop smoking for at least one year. Impacts: reduced health care costs; improved air quality, reduced effects of second hand smoke.

Outcome Score Card 1.Human Gain: What difference are we making in the lives of those we serve? 2.Customer Satisfaction: How do they experience our services? 3.Stakeholder/Staff Engagement: How connected are our partners? 4.Financial Viability: 1.Is our cost/result ratio in line (or better)? 2.Are we making ends meet overall (or better)? 5.Investor Commitment: Will they support us again?

Human Gain Metrics Number/proportion achieving success Get as close to outcomes as possible Be sure they operationalize Mission/Vision Have evidence in support of any vaccination outputs Be sure you can verify Set targets as soon as possible They won’t be perfect

“All indicators are flawed…test scores are flawed, mammograms are flawed, crime data are flawed, customer service data are flawed, patient outcome date are flawed. What matters is not finding the perfect indicator, but settling upon a consistent and intelligent method of assessing your results, and then tracking your trajectory with rigor. Jim Collins, Good to Great and the Social Sector

What makes a great Scorecard? Transparent Outcome Related Practical Simple You can use it to learn and improve!!

Developing Your Scorecard Start with Human Gain –Vision: what we aim to accomplish –Mission: what we do –Metrics: how we track our progress

Human Gain Scorecard What’s your Mission And your Vision What does success look like for those you serve? Describe in terms of –Behavior –Attitude –Condition –Knowledge –Status/Satisfaction

Examples Cleveland Symphony-Tom Morris Vision: to be recognized as one of the three greatest orchestras in the world. Metrics: –numbers of standing ovations, –expanding the range of what we play with perfection, –invitations to the most prestigious festivals in Europe, –tickets are in in greater demand –Growth in the endowment Rensselaerville Institute’s Center for Outcomes Mission: to develop and implement field ready outcome-oriented tools that help organizations and communities learn and improve Vision: to recognized as the best at what we do Metrics: the number of individuals and agencies that use our tools and verify that it helps them improve effectiveness or efficiency

Guidelines Outcomes, are about client change not agency actions. –(getting a job, not offering job training) Almost always they are about direct effects in –Behavior, –Attitude –Condition –Knowledge –Status or Satisfaction Visions are generally about indirect effects –In clients –Other people –The community –Visions answer Why the program exists—To improve the health of the community

Your Turn Take a few minutes and identify the key human gain metrics for your organization. Be sure these go beyond outputs, to outcomes and stay away from impacts.

10+ ways to ask “So what?” What does success look like? What are you trying to achieve? What’s the purpose of your program? What is the desirable effect you want to have on those you serve? How are you doing for the community? What benefits do those you serve gain? Help me understand, what are you trying to accomplish? Think back over the year: what strikes you as most rewarding in terms of your accomplishments? Does it pass the “So What?” Test? How do you measure success? How do you know you are making a difference?

10 Ways Outcome Thinking Can Help You Succeed 1.Communicate the difference you are making in people’s lives. 2.Facilitate learning and make an even bigger difference. 3.Tell a result story to Board Members and other stakeholders. 4.Make meetings more effective, efficient (or unnecessary). 5.Get the right folks on the bus. 6.Keep staff on track. 7.Go beyond the three typical “C” s to Collaboration. 8.Get new funds and funders. 9.Tell funders about meaningful achievements, not just that we’re busy. 10.Explain to family members what you really do!!