Performance and Productivity in Public and Nonprofit Organizations

Evan Berman

• Publisher: Routledge
• Year: 2015
• ISBN:
  9781317463009
• Edition: 2
• Topic: Business
• Subtopic: Business General
• Index: Business

Designed for course adoption as well as professional use, the revised edition of this accessible text provides a balanced assessment and overview of state-of-the-art organizational and performance productivity strategies. Public and nonprofit organizations face demands for increased productivity and responsiveness, and this practical guide offers strategies based on current research and scholarship that respond to these challenges. The book's comprehensive coverage includes: rationale for productivity and performance improvement; evolution of productivity improvement; the quality paradigm; customer service; information technology; traditional approaches to productivity improvement; re-engineering and restructuring; partnering and privatization; psychological contracts; and community based strategies. In addition to updating the examples of the first edition, this new edition also highlights the growing use of enterprise funds, partnership models of privatization, and web-based service delivery. Each chapter concludes with a useful summary and all-new application exercises.

1

What Is Performance? An Overview

Performance is about keeping public and nonprofit organizations up-to-date, vibrant, and relevant to society. It is about ensuring that agency programs and policies connect with the important challenges that people, communities, and the nation face. Schools need to teach children well, military procurement programs need to provide military personnel with the weapons and combat gear that they need, and environmental protection agencies should work to safeguard our natural heritage. Public and nonprofit organizations significantly affect, and have great potential to improve, the lives of citizens and communities in such areas as public safety, transportation, parks and recreation, economic development, education, housing, public health, environmental management, space exploration, social services, and more. In each of these areas there is interest, and sometimes very great interest, in ensuring that public and nonprofit organizations perform well and help society to move forward.

At heart, performance is about ensuring that organizations produce effective results, for example, that teen counseling services really do reduce suicide and pregnancy. But performance can also have additional dimensions. For example, there is also interest in ensuring that programs are equitably available to different population groups, and that programs are appropriately tailored to the needs of diverse groups. Today, program clients want choices, and to feel that they are attended to as human beings, not as numbers. The U.S. Internal Revenue Service has responded to this by providing counselors and flexible payment options to address the needs of millions of taxpayers. Another matter involves efficiency. It is important that programs use management methods that produce results at the lowest cost. For example, modern information technology can increase efficiency by allowing employees to handle more transactions per hour. A dollar saved in one area is another dollar available to achieve other organizational goals.

Another dimension of performance is avoidance of waste and fraud. People want to know that monies are used wisely and that they serve legitimate purposes—rather than those of special interests, for example. People want public and nonprofit organizations to be effective and not wasteful. Focusing on performance draws attention toward the propriety of goals and means. Last but not least, many people also seek to participate in the process of deciding what gets done and how, and they want to feel that their voices have been heard. Public participation is an important part of performance improvement efforts, and can lead to many good ideas.

In short, performance matters in many different ways. By engaging in and ensuring performance, agencies and their managers contribute to the welfare of society, which, in turn, increases public trust in its public and nonprofit organizations. Performance helps connect organizations with the concerns of their stakeholders. Modern societies require effective public and nonprofit organizations, and those who contribute to performance also contribute to improving society. A vast literature provides numerous examples of performance in public and nonprofit organizations (e.g., Light 2002a; White and Newcomber 2005; Osborne and Plastrick 2000; Nanus 1999; Lemberg 2004; Ott 2000; Salamon 2003; Riggio, Orr, and Shakely, 2003).

For those working in public and nonprofit programs, the need to ensure performance can provide an important source of motivation and professional satisfaction. There are many reasons for emphasizing performance as part of the professional outlook of managers and their employees. For example, it is consistently supported by many professional associations, which state personal commitment to excellence as an expectation and even an ethical standard for their members. Performance can provide a sense of purpose and intrinsic satisfaction that is not contingent on external events. When new managers with a strong, personal commitment to performance join an agency, new performance efforts are often in the air. Not surprisingly, studies of high-performing agencies find that these organizations often adapt to change faster and better than others because of their internal processes and the commitment of their managers and employees. The personal motivation and commitment of managers matter (Light 2005).

For many managers, performance is not only about doing the right thing, it is also about doing the practical thing. For example, when programs are challenged by shifting funding priorities, performance management can help refocus priorities and assist programs to achieve their aims in more efficient ways. It can help track and understand customer satisfaction, and suggest ways to deal with client disapproval where that exists. Performance management also helps deal with unexpected changes in the program environment, such as unexpected spikes in client requests, drops in revenues, or natural or man-made disasters. In such cases, rethinking program objectives, response strategies, and performance is key. Performance management strategies help deal with many exigencies that organizations and their programs face. Table 1.1 shows additional reasons for performance.

Table 1.1

Some Reasons for Performance Improvement

External relations • Increasing trust with external stakeholders • Getting organizations to be more responsive to clients • Improving communications with citizens and elected officials • Increasing the ability to effectively partner with other organizations Management • Increasing effectiveness of services • Choosing better goals and targets • Reducing administrative overhead costs • Decreasing errors and mistakes • Improving accountability • Increasing efficiency or cost savings • Improving employee motivation and commitment • Increasing advantages from information technology • Getting employees to take responsibility for skill upgrading • Making work teams more productive • Improving the climate of trust in organizations Marketing and fund-raising • Increasing yields from fund-raising efforts • Identifying new client groups for services • Improving the effectiveness of marketing efforts • Improving the yield from grant proposals Volunteerism • Reducing turnover among volunteers • Identifying new groups of volunteers • Reducing complaints from supervisors and volunteers • Reducing training time for volunteers

Defining Performance

This book defines performance as the effective and efficient use of resources to achieve results. Effectiveness is defined as the level of results; for example, the number of arrests made by police officers, the number of welfare clients who find employment after being counseled by case workers, or the amount of money raised through fund-raisers. Such results are also referred to as accomplishments; the number of arrests by officers, for example, is appropriately referred to as a level of accomplishment. Many citizens and clients care greatly about public service effectiveness, and many public debates focus on it. They focus on both the level of results and, importantly, whether agencies are in fact pursuing the right accomplishments or targets. That is, that they are seeking to achieve the targets that matter most to them and their communities.

In recent years, increased attention to the measurement of results has given rise to a distinction between outputs and outcomes as measures of effectiveness: Outputs are defined as the immediate results of agency activities, and outcomes are measures of the extent that organizations attain their goals (or, ultimate purposes). By way of example, vocational training institutions provide education that helps students to acquire skills, pass tests, and graduate; these are immediate results of education and, hence, outputs. These outputs in turn help students get better jobs—an outcome. Similarly, police arrests (outputs) may result in reduced neighborhood crime (an outcome). Though outcomes are the ultimate purpose and raison d’etre of programs, outputs matter for two reasons. First, focusing on outputs provides faster feedback about accomplishment than focusing on eventual outcomes. Second, organizations often have more control over their outputs. Other circumstances also effect whether students get jobs and whether neighborhood crime is contained, for example.

Efficiency is defined as the ratio of outcomes (and outputs) to inputs (O/I). It describes the cost per activity to achieve given outcomes; for example, the number of counseled clients per counselor who find employment or the number of graduating students per teacher. Efficiency is a ratio of the resources used (inputs) to achieve accomplishments (outcomes or outputs), or O/I. Efficiency is important because it helps budgets stretch further and thereby allows organizations to be more effective. For example, efficiency in fund-raising (e.g., dollars raised per staff member), police patrols (e.g., arrests or completed service calls per patrol member), or correctly handled service requests all help agencies do more. Efficiency has become very important in recent years as agencies struggle to meet rising demands. Efficiency is sometimes called productivity, and in this book we use these two terms as synonymous.¹

It might be noted that the ratio “caseload per worker” is not an efficiency measure. Caseloads are not outputs or outcomes, but rather activities, which are also called workloads. The measure “caseload per worker” is therefore known as a workload ratio, or activity/input. The distinction between outcomes and workloads is important because, as many caseworkers know, high workload ratios are important only when outcomes or outputs are maintained. Merely seeing many or more clients does not ensure effectiveness in any way. Likewise, going on many patrols or for inspections should not be confused with making valid arrests or completing inspections in correct ways. Chapter 8 discusses in greater detail the measurement of performance.

Finally, the terms performance and performance improvement are not synonymous. The former is concerned with the level of effectiveness and efficiency, and the ways in which agencies achieve this. It may involve concern for equity and accountability as well. The latter is concerned with changing and improving these processes. Performance improvement involves diagnosis of performance problems, knowledge of alternative performance improvement strategies, analysis of the receptivity of organizations for performance efforts, implementation of skills and strategies, and assessment of outcomes. This book deals with both performance and performance improvement—managers want to know what to do, and how to make it a reality.

Performance in the Public and Private Sectors

The definition of performance suggests that managers should be concerned with both goal attainment (that is, effectiveness) and the efficiency of efforts. Public, nonprofit, and for-profit organizations vary in their relative emphasis on effectiveness and efficiency. Nonprofit and for-profit (business) organizations constitute the private sector, and although this book does not focus on for-profit organizations, these are discussed here for purposes of comparison. Effectiveness often is of paramount importance in the public sector: for example, the public (and, hence, elected officials) expect 911 emergency services to respond promptly, teachers to teach well, traffic to flow smoothly, museums to be open, space shuttles to fly, environmental toxins to be regulated, and defense systems to work. Although efficiency is important, it is often less important than effectiveness. Indeed, many citizens are more concerned with the effectiveness of 911 services (for example, that services arrive on time with effective personnel and equipment) than with the efficiency of 911 services (for example, the cost of a timely response). Getting on the scene quickly far outweighs any tax savings that causes delays or ineffective service. Likewise, the safety (effectiveness) of air travel or the educational attainment of students is of greater concern than the efficiency with which these goals are attained. Indeed, concerns about schools usually center on their effectiveness rather than on their efficiency; people wonder why they are paying so much for performance that so often is questioned.

Indeed, the lack of attention to effectiveness can bring severe repercussions to public organizations. Public organizations that are perceived as having low levels of effectiveness often encounter pressures to increase their workloads. In one such instance, a municipal unit of police detectives that had not communicated its effectiveness to the community faced significant pressures from elected officials to determine the “right” caseload for its detectives. Elected officials were also considering reallocating resources in favor of community-based policing efforts. The lack of sustained efforts to demonstrate and communicate its effectiveness—indeed, no such data had ever been gathered—contributed to the concern over caseloads which, in this case, was also seen as a prelude to downsizing. In short, public organizations need to make the case that they are effective, or else pay the price in diminished trust and support. This appears to be equally true for public schools, drug treatment programs, street cleaning—almost every public service.

This does not mean that efficiency is unimportant in public organizations. For example, the cost of environmental regulation, and its impact on business, is clearly an important concern. Efficient organizations stretch their resources further and thus are more effective. Efficient detectives solve more cases with the same resources. Efficient school systems will use teaching strategies that result in the highest learning accomplishment among their students per dollar spent. Exemplary public organizations will research such strategies know them, and implement them. In some situations, efficiency becomes a very important concern, such as when budget pressures are severe (for example, in some schools, jails, or health care organizations); when businesses compete for service delivery with public agencies (for example, emergency medical services or park maintenance); when regulatory burdens are thought to be too high (such as in drug regulation); when public embarrassments occur (e.g., cost overruns in major public projects such as airports or tunnels); and when overhead agencies pursue efficiency gains through procurement and contracting processes.

Consensus exists that efficiency is typically a more important goal in the for-profit (business) sector, where success tends to be more singularly defined as profit. Efficiency improvements are important because they result in cost savings that directly contribute to profitability, competitiveness, and corporate survival. Many productivity improvement efforts in for-profit organizations focus on applications that increase employee output, reduce inventories, speed up production, and reduce rework. All of these are designed to increase efficiency and serve business purposes. Some of these have been adapted by public and nonprofit organizations emphasizing efficiency, especially those that emphasize “quality” in relation to customer responsiveness and producing error-free services. In some cases, federal agencies have found new ways to improve efficiency and service delivery. Some agencies, such as the Social Security Administration, have even attained exemplary, award-winning levels of customer service.

Nonprofit organizations are often thought of as seeking effectiveness and efficiency in equal measure (e.g., Drucker 1990). Donors, public agencies funding nonprofit organizations, and employees and managers who work for these organizations often have high expectations about their ability to make an impact on the areas in which they are involved. The extent to which they provide services and affect important community issues is an important measure of the effectiveness of nonprofit organizations. Tax laws require that nonprofit organizations reinvest excess revenues, which furthers their commitment to effectiveness...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• Preface
• 1. What Is Performance? An Overview
• 2. Major Performance Challenges
• 3. Achieving Success
• 4. Strategic Planning: What’s the Mission?
• 5. The Quality Paradigm
• 6. Information Technology
• 7. Productivity Through People
• 8. The Accountability Strategy: Performance Measurement
• 9. Rethinking the Organization
• 10. Oldies but Goodies
• Epilogue
• References
• Index
• About the Author