The Uses of Performance Measurement in Government
copyright: John R. Allen
61 Gilmour Avenue
article first appeared in the August 1996 issue of Government Finance
Review, the journal of the Government Finance Officers=
Association of Canada and the United States, which also has a copyright.
pressures for improved accountability and greater value for money performance
have prompted governments at all levels to recognize the need for program
performance measurement. Many jurisdictions, particularly in the United
States, have even legislated performance measurement, but performance
measurement is still at an early stage of development. While many governments
are developing formal performance information, there are not many that have
implemented it to the point that it is used as a regular feature of management
and decision making.
measurement is still greeted with skepticism by some program managers. For
some, it is just a "bean counting" exercise, offering little in
terms of program planning and performance improvement. The skeptics might have
a point if performance measurement is implemented as a stand alone information
system, used primarily for accountability reporting of past performance.
be successful, performance measurement must be more than score keeping. It
must be used and supported by a large number of program managers. Managers are
the ones who know their programs best and thus what the best measures will be.
Managers will be responsible for timely and accurate data collection and
reporting, and they will be the ones with the greatest potential to use the
measures to improve program effectiveness and efficiency. Performance
measurement must therefore become an integral part of managing government
programs, and it ought to be used in as many decision making applications as
article provides government officials with guidance on how to use performance
measurement. First a simple framework for developing meaningful and useful
performance information is described. Next, the article discusses general
principles of results planning, monitoring and evaluation. Then it shows how
performance measurement can be used in a variety of management processes
including strategic planning, operational planning and control, program
evaluation, manager's performance appraisal, resource allocation, and
accountability reporting to the public and elected officials.
DEVELOPING USEFUL MEASUREMENTS
need to be clear about what constitutes meaningful performance information
before they can use it. If performance measurements are to help to achieve
results, they must relate directly to the program's mission and its key
results. Developing meaningful and useful performance measurements is a three
step process which is used to define the program mission, to identify its key
results and finally to select measures for the key results. An example appears
in Exhibit 1 on the next page.
methodology can be applied successfully to any government and any level of an
organization, and it is relevant to any kind of program - direct service,
regulatory, transfer payment, and internal support programs. It follows a
program's logic, and thus it is simple for managers to understand and apply.
There are three steps:
Define the Program Mission.
program or service exists for a purpose. It must be clear about what that
purpose, or MISSION, is because performance measurement must contribute
to achieving the mission. An effective mission statement is succinct and
responds to the following three questions:
Identify the Key Results of the Program.
results are statements describing what the program wishes to achieve in
support of the mission. Thus, they can be classified into three groups
relating directly to the three
questions of the mission:
work process outputs (WHAT?) - the direct outputs and efficiency
of the activities undertaken
of these kinds of results is important and useful for different decisions and
processes. But the critical category is client benefits/impacts. Information
on the extent to which a program delivers benefits to its clients or the
influence it has on its target group is important in every program decision.
Just as the customer is the most important person to a business, the client is
central to any government program.
measures are the means by which results can be planned, monitored and
evaluated. Measurement is easier for work process outputs, more difficult for
client benefits/impacts and most difficult for strategic outcomes. Also
managers can forecast and control performance of work process outputs more
than they can for client benefits/impacts and strategic outcomes. But measures
should be developed for all three categories because they provide an objective
and verifiable method of planning and assessing performance, managers need
measures to relate results to resources, and measures provide a means of
comparison and prediction.
all results can be feasibly measured, of course. Sometimes proxy indicators
must be used as indirect measures of performance. For example, it might be
possible to survey client satisfaction, but perhaps the program cannot afford
a survey. Instead, measuring client behavior or demand for service might be
used as a proxy for satisfaction. The measures of strategic outcome shown on
Exhibit 1 are proxy indicators. Care must be taken in setting targets for
proxy indicators, and a tolerance for variances must be shown in monitoring
and evaluating performance. Often it is more appropriate to analyze proxy
indicators in terms of the trend of performance over time rather than planned
to actual performance in a single year.
development of performance measures is not "rocket science". Most
managers, using the three step method described above, can develop meaningful
and useful performance measures quickly, Similarly, the use of performance
measurement is not especially complicated. Planning, monitoring and evaluating
performance measures is, in principle, exactly like using financial
performance can be difficult if performance measures have not been collected
previously, because there are no trends, baselines or standards to guide
planning. Many governments discover, however, that they already have most of
the data they need for performance measurement, and those data are largely
accessible on computerized data bases. All of the data needed for the measures
shown on Exhibit 1, for instance, were available from existing data bases -
some maintained by the county and some by the state. The existence of such
data makes it possible to reconstruct performance data for prior years, and
the resulting time series of data can be used for planning.
performance is only one way to estimate future performance. Other ways include
comparison to other government organizations, standards established through work
engineering, private and public sector association data, and research into
client needs (eg. surveys or focus groups)
does not mean that a program will always be able to achieve its results to 100%
of potential. Performance targets will have to be realistically set. In planning
performance one must take into account what direction the strategic plan gives,
what the policy priorities are, how much demand for service there is, how much
money is allocated, and other environmental variables.
Monitoring and Evaluation
monitoring and evaluating results, performance measurements are no different
from financial data. By themselves, measurements do not tell the whole story
about program performance, but variances of actual performance from planned
performance, or trends over time, do raise red
about problems or opportunities. Such variances do not per se constitute value judgments
about whether the program or its managers performed well or poorly.
The important point when examining variances
is to understand why they occurred and what the program can do to about them.
Performance can be monitored not only during the year, but over time as well. Consider Exhibit 2. A program that spends within its allocation, typically attracts little if any scrutiny. It is only when it proposes to spend more, that budget agencies raise a funding issue with the program. But what if the results the program achieves are declining? That Aresults issue@ is every bit as important as a funding issue. Without performance measurement, results issues might not be detected.
performance often changes only a little year by year; but a small negative
variance compounded over several years can develop into a serious problem. Such
situations do occur, and might be avoided if results are monitored as well as
results through performance measurement helps to achieve optimum performance
from programs. Management often
consists of trade offs among competing priorities, and results management is no
different. In managing results, managers are faced with situations such as:
- a drive to reduce cost may cause a decline in results,
- a set standard of quality may restrict the quantity of service that can
- a priority placed on one result may mean that another result must be
Performance measurement will not make these decisions for us but it will make the trade offs clearer.
PERFORMANCE MEASUREMENT IN MANAGEMENT PROCESSES
measurement will become stronger as it is used more often it is used and for
more different purposes. Some applications of performance measurement are
externally initiated, and some are management processes internal to the program
or department. A major advantage of the
framework presented in this article is that the information can be used in a
variety of management processes. This notion is illustrated by Exhibit 3 below. Note that all applications require information about client
benefits/impacts. These are the results most critical to program success, and of
interest to managers, politicians and the public alike. Features of the external
and internal applications are discussed below, beginning with the internal
planning is the process which determines the basic mission of an organization,
its long term goals, the contribution of each part of the organization and the
action that must be taken. The three step process for developing performance
measurement contains the main elements of strategic planning, in particular
defining the mission and identifying the strategic outcomes. Strategic
planning in government, however, often lacks performance measures and, hence,
offers weak and general guidance to operating programs. Performance
measurement will assist strategic planning by:
- ensuring that programs fit within the strategic plan
- structuring each program along its own strategic lines
- more rigorous planning, monitoring and evaluating of strategic
outcomes, and thus
- allowing better deployment of resources and management attention
Operational Planning and Control
planning and control is probably the most frequent and important use of
performance measurement. The shorter term operational planning and control
horizon (eg. 1 year) means that the focus is on the ongoing efficiency and
effectiveness of program delivery rather than on strategic outcomes. Therefore
the relevant results are those which managers and staff can influence over the
shorter term: work process outputs and client benefits/impacts.
is worth stressing again the importance of results from the clients' point of
view. It is possible to have a very busy year without making any difference to
clients. If a government organization has any kind of performance
measurements, they are usually about work process outputs. Indicators about
client benefits or impact are too rare. But consider the following situation
where the operational targets are being achieved or exceeded but client
benefits are not.
program is meeting its work plan targets, but it is not effective in
delivering value to the clients. Perhaps the "wrong" work processes
are being emphasized. Without client oriented performance measures this
program might have no indication that it should change.
main uses of results information in operational planning and control are:
budgeting - if the use of additional resources is
proposed, the request must be justified in terms
of additional results, or if resources are reduced the impact on
results must be shown;
in-year monitoring -
to keep the program on course and to avoid nasty surprises;
year-end review -
to evaluate performance and to set future direction.
evaluation is a more formal and rigorous assessment of a program than is
operational planning and control, and it takes place at much longer intervals.
Program evaluation is broader in scope than operational planning and control,
questioning the usefulness of and need for programs. Thus strategic outcome
and client benefit information is more relevant that work process outputs.
measures for use by managers in program planning and control are no substitute
for program evaluation. But the method described in this article for
developing performance measures will supply much of the data needed for a
typical program evaluation. Performance measures
developed for program management can be of great value in program
evaluation because they will:
establish a framework for analyzing the program, getting evaluations started
earlier and fostering an evaluation mind set among managers and staff;
Manager's Performance Appraisal
is a difference between holding a program accountable and holding a manager
accountable. The distinction is that while the program must ultimately be seen
in light of its strategic outcomes, these results are influenced by more than
one government program and therefore are by definition beyond the manager's
is fair to hold the manager accountable for client benefits/impacts and work
process outputs because even though control may not be absolute, it is still
the manager's job to organize the work processes so that the benefits or
impacts are delivered to the clients. But strategic outcomes are subject to
too many outside influences. So for the purposes of a program manager's
performance appraisal, strategic outcomes are not relevant.
contracting is receiving renewed attention today as a means of strengthening
accountability and increasing managers' motivation to improve program
performance. Performance contracting is impossible without performance
measures. Performance measures, particularly if they include measures of
client benefit/impact as well as work process outputs and efficiency, can
facilitate performance contracting by allowing targets to be set and
objectively assessed, and by focusing individual effort on organizational
Accountability to Political Governing Bodies
governments adopt performance measurement precisely because the political
governing body has demanded it as a means to strengthen accountability. The
problems facing government today, and the programs we use to address them, are
many and complex. Politicians cannot possibly have personal and detailed
knowledge about all of them, yet they are required to make decisions about
them. It seems eminently reasonable that a political decision maker should be
able to ask from any program, and receive immediately:
- a statement of the mission of the program
- statements describing the results the program is striving to
are elected to make policy decisions. So in providing performance information
to them, it is not enough simply to report work process output and efficiency
data. Politicians are rightly and legitimately interested in the benefits
programs provide to clients and in the greater good those programs are doing
for the community or society.
6. Resource Allocation
performance measurement will help to bring more rationality and analysis to
the resource allocation process, resource allocation will never be a wholly
rational, analytical process. In government there is no common denominator for
comparing alternative investments. Also, in most governments, the size of the
discretionary budget is quite small; ninety percent of the budget or more is
allocated before the budget making process even begins because of legal
obligations (eg. debt service), legislated entitlements, and tradition. In
government resource allocation is a competition for limited funds among
non-comparable demands. Funds are allocated by means of pressure that
advocacy groups bring to bear on the politicians.
government department has an advocacy role to play because it has a mandate to
affect a certain segment of society's activities. Thus, a department can apply
pressure. Pressure can take many forms, and not all forms are legitimately
available to the department. But the source of pressure or influence that the
department can deploy is information, because the government department
probably has more information about a given issue than any other group.
is unfortunate most funding requests from government departments are made in
operational terms ("More money is needed to do more work"), as this
argument rarely impresses politicians today. There is much work that can be
done and little money with which to do it.
making a funding request or disputing a budget cut, the program must provide
information that makes sense to politicians. The money will be spent on work
process outputs, to be sure. But the funding request must be justified in
terms of the delivery of benefits to the client and the outcomes the program
will produce for the community or society. This is way to ensure politicians
listen to and understand a funding request.
factors contribute to a political resource allocation decision, and results
information is just one of those factors. So there is no guarantee that a
request for funds justified in terms of results will be successful. The
chances are better, however, if politicians
are provided a results oriented business plan, which in turn can be justified
to the voters and which can be used to monitor progress and achieve success.
Communication with the Public
It is commonplace to observe that the public is cynical about the performance of government programs. Yet, in the experience of the author of this article, performance measures will reveal that the majority of government programs already are performing well. For those that are not, performance indicators will be instrumental in bringing about improved results. Like politicians, the public not be too interested in the amount and type of work programs do; work process output information is useful to program managers, but it is not meaningful to the public. Citizens want to know how programs are affecting their lives and the quality of life of society. Client benefit/impact and strategic outcome information are more important to them.
public pays good money to fund government programs. Those programs are
achieving results. Without performance indicators, governments do not have an
effective means of conveying this to the public. Performance indicators should
be used in public communications because citizens deserve to know that they are
being served well.
measurement can be very useful in a wide variety of management processes.
Different kinds of performance information is useful for different kinds of
decisions. Performance measurement cannot make the decisions. It will not
replace managers' or politicians' experience, training and judgement, but it
will give a new dimension to the decision making process.
programs exist in order to improve or maintain some aspect of life. Government
employees are entrusted with resources so that they can produce program results.
Thus, the fundamental reason for developing performance measures is to help
governments to produce results.
measurement must therefore not be seen as an score keeping system isolated from
the mainstream of government management. Rather, it must be a tool serving a
variety of management processes. Strategic planning, operational planning and
control, program evaluation and managers' performance appraisal are all
processes that work much more effectively with performance measures.
Accountability, resource allocation and communication with the public will also
be strengthened through the use of performance measures. Performance measures
must be clearly linked to and support these processes.
development and use of performance measurement is not complicated. Meaningful
and useful performance information can be developed by following a simple
program logic. Furthermore, performance measures can be used in a manner similar
to the use of financial information. The environment of government today
requires the use of performance measurement. Governments must give equal and
formal attention to results as well as resources.