Government Wide Performance Management Lessons from across the pond

1. Government Wide Performance ManagementLessons from across the pond

2. Some Context

3. The Start Pre 1998 Comprehensive Spending Review Annual budgeting – though intent to move to RAB had been stated Little connection to outcomes The First Comprehensive Spending Review in 1998 Move to RAB Move to three year budgeting Introduction of Public Service Agreements – 600 performance targets for 35 areas of Government

4. The Evolution “We were about to announce significant increases in spending and I felt it important that we explained to the public what they would get in return. The US had recently adopted GPRA and the UK system of allocating funds to government departments without any sense of what they would deliver seemed behind the times. The first set of PSAs were a little rough and ready but they did establish the principle.” Suma Chakrabarti, then head of General Expenditure Policy in HM Treasury Spending Reviews every 2 years until 2004 2000 – PSAs reduced to 160 and the introduction of joint targets and Technical Notes and Service Delivery Agreements 2001 – Creation of Prime Ministers’ Delivery Unit (PMDU) 2002 – Move towards longer term targets and PSAs reduced to 130, more joint targets 2004 – Number of targets reduced to 110, full reconciliation between 2000 - 2004 targets published. Targets developed in consultation with delivery chains The First Comprehensive Spending Review in 1998 Move to RAB Introduction of Public Service Agreements

5. The Evolution 2007 Comprehensive Spending Review Named accountable cabinet minister and senior official Shift towards indicators to measure progress, rather than hard SMART targets Emphasis on final outcomes directly felt by individuals, such as satisfaction/choice Cross Government nature of PSAs Greater emphasis on fairness – ‘floor’ targets New Coalition Government Anti target Big Society Austerity

6. Measurement and Targets - What did we learn?

7. When are targets and measurement good? To create focus – e.g.: Kennedy To drive performance – Jobcentre Plus To create accountability – NYPD; funding agencies To understand what works – Annual Pupil Level School Census To focus efforts when the outcome is immeasurable – More Later

8. When is Measurement Bad? Process focussed – e.g. Housing Perverse incentives – e.g. School exclusions Too many No clear line of sight Too late/ infrequent Poor Data

9. Some Examples

10. Key lessons Performance goals should be: • As outcome focussed a possible – to ensure innovation and flexibility in delivery and reduce the risks of perverse incentives through chasing outputs • For example: • Life expectancy • Even for ‘Miss World’ targets

11. Key lessons Performance goals should be: • Few in number to ensure focus and communicate priorities right down the delivery chain – including agencies and other key stakeholders. • Aligned all the way down the delivery chain – reflected in the priorities, objectives and incentive structures for agencies, teams and individuals. • For example: • UK DfID • DCSF

12. Key lessons Performance goals should be: • Stretching– accepting that not all objectives targets will be met but that is better than setting aspirations too low. • e.g. • Crime Reduction • Literacy and Numeracy

13. Key lessons Performance goals should be: • Tested with the delivery chain to increase buy-in and reduce the risk of perverse incentives in the delivery of outputs (particularly at agency level). • For example: • School admissions/ exclusions • ER • Waiting Lists

14. Key lessons Performance goals should be: • Designed with a full appreciation of the how outcomes need to be distributed as well as the likely implications on delivery. • For example: • Customer Satisfaction • Fear of Crime • School Performance • Smoking Ban

15. Making it a reality – What did we learn

16. Lessons from PMDU Boldness of reform Quality of execution

17. PMDU’s Deliverology

18. The PMDU’s Approach • Targets, which set measurable goals • Plans, which are used to manage delivery and set out the key milestones and trajectories • Monthly reports on key themes • Stocktakes, which the Prime Minister holds every 2/3 months • Priority reviews, to check the reality of delivery at the frontline • Problem-solving/Corrective action, where necessary • Delivery reports, summarizing the government's progress on delivery every six months

19. Key Questions to answer in a Delivery Plan • What is the service delivery chain? • •Who is accountable at the top . . . and all along the delivery chain? • •What are the key actions (milestones)? • •What is the timetable? • •Who are the key stakeholders? How will they be brought on board? • •What are the major risks? How will they be managed? • •What impact will the actions have on the key outcomes (trajectories)? • •What data do you need? Will it be early enough to act if progress is off track?

20. Illustrative performance delivery trajectories The following illustrative trajectory aims to show that once a target is established, credible plans and policies need to underpin its delivery, supported by a system for monitoring that allows a trajectory to be plotted, assessed and influenced as far as possible in order to address underperformance as soon as possible Medium term contract goal Long term strategic goal 60 High trajectory (policy has an immediate impact) Immediate progress indicators or milestones 50 Low trajectory (policy has a lagged impact) 40 30 Historical performance Policy A Policy B 20 Given the plans and the policies, predict the outcomes. Then, compare with reality and investigate any differences. Ensure plans and policies are in place to influence trajectory Policy C 10 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Plan A Plan B Plan C Source: PMDU

21. Annex

22. Resources, Inputs, Outputs and Outcomes Value for money represents the entire relationship between how resources are consumed and the outcomes achieved • How well have the costs of govt actions been translated into desired outcomes? • Which set of interventions is best able to achieve the desired outcomes at the lowest cost? OTHER EXTERNAL INFLUENCES Value for money £ PSA Resources Inputs Outputs Outcomes Economy Efficiency Effectiveness How well money is transferred into inputs Represents the relationship between outputs and inputs The extent to which outputs achieve the desired outcomes • Resources: the level of grant funding offered the department or agency to support the agency in terms of revenue and capital • Inputs: these are the resources used to aid delivery, for example, labour, physical assets, IT systems etc. • Outputs: these are the final products of the organisation, such as the issue of licences etc. • Outcomes: these are the final impacts and consequences of government activity. Ultimately, outcomes represent what is trying to be achieved. Examples include, longer life expectancy, better educated citizens etc.

23. Target and trajectory setting check list

24. Target and trajectory setting • The types of targets selected by agencies usually fall within the following broad categories: • Volume (e.g. handle x enquires per day) • Quality of service (e.g. improve customer satisfaction by x% year on year) • Efficiency (e.g. reduce the time/cost/labour required to do x) • Financial performance (e.g. reduce the unit cost of x by y% ) • Once established, Organisations need to build a trajectory for how a target will be met. Why? • To predict, monitor and manage performance (at local and national) rather than react, to know whether you are on track • To consider the impact of policies on performance using evidence • To understand performance, what works and does not work as well as where it works and does not • To know when an initiative/policy is working • To know early enough when something is not working to have time to do something about it

25. The characteristics of a good performance measure/target • A performance measure should be: • Relevant to what the organisation is aiming to achieve; • able to Avoid perverse incentives - not encourage unwanted or wasteful behaviour; • Attributable - the activity measured must be capable of being influenced by actions which can be attributed to the organisation, and it should be clear where accountability lies; • Well-defined - with a clear, unambiguous definition so that data will be collected consistently, and the measure is easy to understand and use; • Timely, producing data regularly enough to track progress and, quickly enough for the data to still be useful; • Reliable - accurate enough for its intended use, and responsive to change; • Comparable with either past periods or similar programmes elsewhere; and • Verifiable, with clear documentation behind it, so that the processes which produce the measure can be validated.

26. The basics of target setting and performance measurement • The purpose of targets • A clear statement of what you are trying to achieve • A clear sense of direction • A focus on delivering results • A basis for monitoring what is and is not working • Better accountability • Getting the best out of targets • Not too many… • Followed through consistently… • Real measure of success… • Which are owned by deliverers • Put the target in context • A target is often a proxy for a desired result. This should be a constant consideration to avoid perverse incentives. • E.g. Reducing accident and emergency waiting times to four hours is a target aimed at delivering: • Faster treatment • Better health outcomes • Better patient experience of the service • Use targets to rethink activity by working through chains of causation • What is the problem to be addressed? • What is known to work? • How can what works be progressed by Government intervention? • Who are the real deliver agents?