1. U.S. Department of Labor Employment and Training Administration 1 What’s with all the numbers? Building an Effective Performance Management System to Improve Outcomes

2. 2 Agenda The need for a different framework for performance managementThe need for a different framework for performance management Characteristics of an ideal frameworkCharacteristics of an ideal framework Balanced Scorecard frameworkBalanced Scorecard framework Corporate Performance Management frameworkCorporate Performance Management framework Core components of a performance management systemCore components of a performance management system Questions?Questions?

3. 3 The Need for a Different Framework for Performance Management

4. 4 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 Performance Management Defined Performance Management Defined

5. 5 The Need for a Different Framework The common measures focus on “bottom line” results, not the driversThe common measures focus on “bottom line” results, not the drivers The need for timely resultsThe 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)There is a need for measures that align with the mission and strategy (i.e., a focus on program business operations and outputs) Common Measures and Performance Management are not the Same

6. 6 The Need for a Different Framework Participant impact measures provide a limited picture of organizational healthParticipant impact measures provide a limited picture of organizational health Participant impact measures alone are insufficient to assess continuous improvementParticipant impact measures alone are insufficient to assess continuous improvement Common Measures and Performance Management are not the Same (Continued)

7. 7 Deploys the agency’s strategic planDeploys the agency’s strategic plan Focuses and aligns agency activities and effortsFocuses and aligns agency activities and efforts Tests cause-and-effect relationships among the program’s activitiesTests cause-and-effect relationships among the program’s activities Family of measurement types reduces risk of not meeting “bottom line” measuresFamily of measurement types reduces risk of not meeting “bottom line” measures Links performance measures to decision makingLinks performance measures to decision making Characteristics of an Ideal Framework

8. 8 Ideal Framework is Mission-Focused “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.” Helping Alice Get Out of Wonderland Your Mission Guides Your Actions…

9. 9 Balanced Scorecard Framework

10. 10 Balanced Scorecard Framework The Balanced Scorecard is a performance management approach that focuses on various overall key performance indicators, including customer perspective, internal- business 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.

11. 11 MISSION CUSTOMER PERSPECTIVE To achieve our mission, how must we satisfy our customers? FINANCIAL PERSPECTIVE If we succeed, how will we look to Congress and the public? INTERNAL PROCESSES PERSPECTIVE To satisfy our customers, Congress, the public, and mission, what businesses processes must we excel at? LEARNING AND GROWTH To achieve our mission, how must our people learn, communicate, and work together? Value, Benefit Source: Public sector Balanced Scorecard from the Balanced Scorecard Collaborative Balanced Scorecard Framework

12. 12 Perspectives are key organizational strategies Perspectives are key organizational strategies Aid to system and operations management Aid to system and operations management Help in diagnosing and troubleshooting Help in diagnosing and troubleshooting Prioritizing Prioritizing An aid to planning An aid to planning Understand improvement Understand improvement Tracking performance Tracking performance External accountability External accountability To be successful, the drivers of performance must be identified PerspectivesObjectivesMeasures Why Use Different Perspectives?

13. 13 Identify strategic themes and group them under the appropriate perspectiveIdentify strategic themes and group them under the appropriate perspective Create a strategy map to visualize the interaction of individual activities in the larger systemCreate 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 faceFor 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 appropriateDevelop measurable objectives that specify numeric target levels, where appropriate Limit objectives to major program elementsLimit objectives to major program elements PerspectivesObjectivesMeasures Use a Strategy Map to Develop Objectives

14. 14 How well did we succeed at providing customer value?How well did we succeed at providing customer value? How well do we do the things which support creating customer value?How well do we do the things which support creating customer value? Each measure should answer one of the following questions: PerspectivesObjectivesMeasures Develop Measures for the Objectives

15. 15 CompareCompare LearnLearn MotivateMotivate Reward and celebrateReward and celebrate Promote and explainPromote and explain PerspectivesObjectivesMeasures Uses of Performance Measures

16. 16 Perspectives Agency Department Team/ Individual Team/ Individual Measures Objectives Strategies Should be Aligned at Different Organizational Levels The Importance of Alignment

17. 17 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 Chase’s Law on Measurement

18. 18 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 Linking Strategy to Measurement

19. 19 Freeware for Creating Strategy Maps This is an Example and not an Endorsement by ETA.

20. 20 Illustration Using the BSC Approach Increasing the Efficiency and Profitability of a Commercial Airline

21. 21

22. 22 Corporate Performance Management An Extension of the BSC Approach

23. 23 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. CPM Framework CPM Mission Refine Review/ Analyze Measure/ Monitor Align/ Execute Define/ Plan CPM includes the whole set of management processes that starts with the mission of the organization.

24. 24 Elements of CPM Mission Define/Plan Align/Execute Measure/Monitor Review/Analyze Refine Organization’s purposeOrganization’s purpose VisionVision Value driversValue drivers Used to align all activities in an organizationUsed to align all activities in an organization

25. 25 Elements of CPM Mission Define/Plan Align/Execute Measure/Monitor Review/Analyze Refine Feedback from implementation of current strategyFeedback from implementation of current strategy Refine organization’s corporate strategy modelRefine organization’s corporate strategy model –Strategic objectives –Key performance measures –Targets –Strategic initiatives Communicate strategy to all organizational levelsCommunicate strategy to all organizational levels

26. 26 Elements of CPM Mission Define/Plan Align/Execute Measure/Monitor Review/Analyze Refine Organizational divisions and units align strategies to corporate strategyOrganizational divisions and units align strategies to corporate strategy –Strategic objectives –Key performance measures –Targets –Operational plans Execute operational plansExecute operational plans

27. 27 Elements of CPM Mission Define/Plan Align/Execute Measure/Monitor Review/Analyze Refine Continuous monitoringContinuous monitoring Track progress on key performance measuresTrack progress on key performance measures Requires the collection and reporting of timely, accurate, and accessible dataRequires the collection and reporting of timely, accurate, and accessible data Create and use performance scorecard to see the entire organizationCreate and use performance scorecard to see the entire organization

28. 28 Elements of CPM Mission Define/Plan Align/Execute Measure/Monitor Review/Analyze Refine Analyze performance gaps on key performance measuresAnalyze performance gaps on key performance measures Use performance data and create a learning feedback loop to educate all levelsUse performance data and create a learning feedback loop to educate all levels –Business insights on performance –Use these insights to understand

29. 29 Elements of CPM Mission Define/Plan Align/Execute Measure/Monitor Review/Analyze Refine Decision makers collaborate, sharing different viewpoints and ideasDecision makers collaborate, sharing different viewpoints and ideas Generate integrated insights from Review/Analyze stepGenerate integrated insights from Review/Analyze step Refine corporate strategy and execution planRefine corporate strategy and execution plan

30. 30 Key Features of CPM Comprehensive and structured planningComprehensive and structured planning Disciplined execution and reviewDisciplined execution and review Information-based decision makingInformation-based decision making Integrated management processesIntegrated management processes Agile management structureAgile management structure

31. 31 Core Components of a Performance Management System Core Components of a Performance Management System

32. 32 Performance Management System Defined A Performance Management System is the continuous use of four practices ( see diagram) that are fully integrated into an organization’s core business operations. Source: Turning Point, From Silos to Systems: Using Performance Management to Improve the Public’s Health, 2003

33. 33 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 bench- marking against similar organizations; based on the public’s or leaders’ expectations; or other methods. Source: Turning Point, From Silos to Systems: Using Performance Management to Improve the Public’s Health, 2003

34. 34 Important Concepts Source: Turning Point, From Silos to Systems: Using Performance Management to Improve the Public’s Health, 2003 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.

35. 35 Important Concepts Source: Turning Point, From Silos to Systems: Using Performance Management to Improve the Public’s Health, 2003 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.

36. 36 Review of Critical Success Factors BSC and CPM Emphasize the Performance Management System Should… Align to the corporate mission and strategyAlign to the corporate mission and strategy Develop meaningful key performance measuresDevelop meaningful key performance measures Increase data availabilityIncrease data availability Maximize data qualityMaximize data quality Enhance performance reportingEnhance performance reporting Improve analysisImprove analysis Achieve performance integrationAchieve performance integration Drive decision makingDrive decision making

37. 37 Questions?