Managing and Delivering Performance

Bernard Marr

• Publisher: Routledge
• Year: 2009
• ISBN:
  9781136437694
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Business allgemein

Performance management is at the top of agendas in most government and public organizations, as well as many not-for-profit organizations. In this follow up to his successful book, Strategic Performance Management, the author focuses on the unique challenges public sector organizations face when tackling the issues of strategic performance management. Drawing on his extensive experience of working with numerous government, public sector, and not-for-profit organizations over the author covers: * The context of decision making in the public sector* The significance of the use of budgeting for performance management, and the impact of performance measurements on budgets* A huge range of underpinning cases and examples from the public sector, including cases on the Home Office and the NHS in the UK, and the US Air ForceFor senior executives in the public sector and government, and for faculty and students in the field this is the authoritative strategic level treatment of this fast-growing area.

Part I

Identifying and Agreeing What Matters

Identifying and agreeing on strategic objectives and priorities is essential in any government and not-for-profit organization. However, I see many of these organizations struggling to agree on strategic priorities. One reason for this is the fact that they often have different external stakeholders with differing, and sometimes opposing, external demands and requirements. As a consequence, organizations have difficulties answering the question of why they exist and struggle to agree on their key output and outcome deliverables. Is your organization here to serve the government, the citizens or a specific community? If you or anybody in your organization finds it difficult to answer this or if they come up with different answers, then there is a problem. To use a nautical analogy – how can you expect everyone in the boat to help row the boat forward if no one is clear about which direction the boat should be heading? It is obvious that in order to provide value to customers and deliver best performance, government sector and not-for-profit organizations need to agree on strategic deliverables and then create plans that will enable them to deliver these deliverables in the most effective and efficient manner.

This brings me to the next problem. What I see quite often is that even if government and not-for-profit organizations have agreed on a list of output and outcome deliverables, they often fail to link them to internal competencies and resources required to deliver these outputs and outcomes. This means that lack of competence or resource limitations are often ignored when designing public service and not-for-profit strategies. Strategic objectives without the capacity, resources and competencies to deliver are no more than wishful thinking. Any good strategy therefore brings together the outcomes and external value proposition with the internal competencies and resources requited to deliver them.

I have seen so many business plans and strategies, especially in public service and not-for-profit organizations, that are not worth the paper they are written on. The exercise of creating a strategic plan is far too often just an administrative burden – something you have to do but don’t want to do. The result is that instead of being powerful documents that clearly lay out priorities and objectives, they often are a wish list of strategic objectives, regularly based on the objectives of the previous years, written up in a 35-page document that really no one ever reads or understands.

Managing and delivering performance in the government and not-for-profit sector is about engaging everyone in the strategy and its execution so that organizational performance becomes everyone’s everyday job. The starting point for good performance management is therefore a shared understanding and clarification of the strategic context of the organization. We cannot expect people to understand and implement our strategy if they don’t know what the strategy is.

Ensuring that everybody knows where the journey is heading before setting off might seem intuitive to the managers and executives involved. However, my experience has taught me differently. Far too often, organizations embark on their journey to manage performance without clarifying their strategy. Ignoring the thorough examination of the external and internal contexts of an organization’s strategy is a mistake that we tend to make time and again. And even if organizations do understand the strategic context, it is often a one-sided view where they look at either external opportunities or internal competencies. The main reason for this is that we are too often deeply submerged in the everyday microdetail of the organization’s workings. However, if we want to make strategic performance management a success then we need to come up to the surface, take a deep breath and have a realistic look at where we are.

While some managers and executives may feel that they clearly understand their organization’s strategy, my experience is that this understanding is often their interpretation of the strategy and that others have a significantly different interpretation of what the strategy is. Developing a common and shared understanding of the organization’s direction is one of the most valuable and rewarding exercises. This shared understanding can then be translated into a visual and narrative summary of the organizational business model. A so-called ‘value creation map’ can be created to bring together on one piece of paper the key components of the organization’s strategy, namely the stakeholder value proposition and the core activities required to deliver the value proposition, as well as the key resources (tangible and intangible) that underlie the core activities. This is then accompanied by a brief onepage narrative summary of this business model called the ‘value creation narrative’.

The value creation map and value creation narrative describe the business model and therefore create a shared understanding of the strategy. This in turn helps to create a common purpose, a shared identity and a sense of community. This understanding of strategy can then be used to align the organizational activities, allow organizations to manage their relevant risks and create the right organizational structure and governance, before it can guide the development of meaningful and relevant performance indicators, which can then be used to challenge and refine the business model and its assumptions.

Too many performance management approaches assume that the strategy and business models are well understood by everyone in the organization. From my experience, this is not always the case and this is often a key contributing factor to the failing of performance management initiatives. The following chapters bring different components of strategic management together to form a template for what needs to be addressed in order to define the strategy and the business plan. Depending on how well your organization’s strategy is defined and understood, you can select the appropriate starting point. For many government and not-for-profit organizations or many business units within them, the external context is somewhat dictated by the overall organizational purpose. For example, the police forces have to continue to play their role in crime prevention as outlined by their governments. In the same way, central government departments have to perform their assigned roles, and if you are working for a cancer charity then your main objective will always be to provide funding and care for people affected by cancer. This means the overall direction is set by the purpose and requirements of external stakeholders. The government and not-for-profit organizations have not got the same freedom that many commercial organizations enjoy, and therefore, they can rarely decide to move into a completely different overall purpose.

Even though there are some clear boundaries set in terms of overall purpose, the finer details still need to be clarified. For example, one of the overall purposes of the police force might be crime prevention; however, this does not clarify current priorities. It is still important to identify and agree on what to focus on, especially in a world with resource limitations. For example, the police might decide to focus on reducing more serious violence and increasing community confidence, or they might focus on the increased threat posed by violent extremists to communities. The point I am trying to make here is that even though there might be a predefined overall purpose, the strategic options are still endless and agreement and clarity need to be achieved in order to make any strategy actionable.

Once the strategy has been agreed and mapped, it is important to align organizational activities and projects with this strategy. This is a crucial link that is often somewhat ignored. The organizations need to ensure that they have the right projects and initiatives in place to deliver their different strategic objectives. This might seem trivial but again my experience has taught me differently. The organizations are full of projects and initiatives that are not necessarily linked to the delivery of the newly defined strategy. It is therefore important to map the existing activities onto the strategy to ensure it can and will be delivered. Initiatives and projects make the strategy real; without closely aligned initiatives and projects the strategy will never be delivered. This brings me to a related problem: the budgeting processes. Initiatives and projects require resources and funding, which means that the budgeting process should be driven by your strategic objectives and the necessary activities required to deliver them. Unfortunately, the budgeting processes I have observed in many public service and not-for-profit organizations are over and over again completely detached from the strategy process and often highly dysfunctional and arbitrary. Again, how can anybody expect the delivery of the strategy if the funding decisions are made in ways where budgets for business units are either raised or cut by a certain percentage figure without any considerations of the strategic needs?

The other element of good strategic performance management is the mitigation of risks. Risk management is high up on the agenda of most government and notfor-profit organizations. The problem is that risk management is not often aligned with the strategy. If our strategy identifies the crucial deliverables and enablers of performance, then we have to consider these elements in our risk management activities.

In this part of the book, I outline the latest tools that have been designed to enable organizations to identify and agree on what matters. Figure P1.1 outlines the structure and chapters in this part of the book. I will start by looking at the overall purpose, values and goals which define the boundary conditions that delimit the confines in which an organization operates. In most cases, these are already defined. Chapter 1 describes what they are and their role in the organization. Chapter 2 looks at how to define the outcomes and the overall value proposition of the organization before I discuss in Chapter 3 the enablers and resources required to deliver the strategy. Chapter 4 then describes how these insights can be translated into a business model, visually represented in a value creation map and described in a value creation narrative. If you believe your organization already has clearly articulated outcome objectives and deliverables, then you might go straight to the internal analysis (Chapter 3). If you believe both the external and internal contexts are understood and objectives have been clearly defined (likely to be quite rare), you can go straight to the mapping and narrating your value creation (Chapter 4).

FIGURE P1.1 Overview.

Once I have provided the tools and techniques for creating a truly integrated and cohesive strategy, I will move to Chapter 5 where I will discuss the alignment of activities and budgets, the alignment of risk management, and the alignment of organizational structure and governance.

Chapter 1

Clarifying Purpose, Goals and Values

All organizations need to adapt over time – to changes in their overall direction, to regulatory demands, to changing stakeholder wants and needs, or to evolving and changing internal competencies. Nevertheless, some aspects of ‘what the enterprise is there to do and how it will go about doing it’ remain relatively constant through time. Statements pertaining to overall purpose, visionary goals and core values are created by organizations in order to provide the overall guiding principles for their s...

Table of contents

• Cover Page
• Table Of Contents
• Half-Title Page
• Title Page
• Preface
• Introduction
• Measuring Performance
• Creating Key Performance Questions
• Designing Performance Indicators
• Identifying and Agreeing What Matters
• Clarifying Purpose, Goals and Values
• Understanding Your Outcomes, Outputs and Value Proposition
• Understanding Inputs, Competencies and Resources
• Mapping and Defining your Strategy
• Aligning Your Organization with Your Strategy
• Collecting the Right Management Information
• Learning and Improving Performance
• Fostering a Performance-Driven Culture
• Leveraging Performance Management Software Applications
• Learning from Current Performance Management Practices
• Index