Accenture Federal Services. From Measurement to Improvement. Transforming Performance Management in Federal Agencies to Drive High Performance

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1 Accenture Federal Services From Measurement to Improvement Transforming Performance Management in Federal Agencies to Drive High Performance

2 Executive Summary The question we ask today is not whether our government is too big or too small, but whether it works. President Barack Obama In the wake of the global economic downturn, federal agencies in the United States face unprecedented challenges not only must they meet their goals and the rising expectations of Congress and citizens, but they must also continuously improve their efficiency and productivity. By establishing rigorous performance management programs, agencies can meet these challenges and deliver more with less. The Obama Administration is changing the nature of performance management in government. The passage of the GPRA Modernization Act of 2010 seeks to further improve performance management in the federal government. The new law requires federal agencies to publicly commit to a focused set of desired outcomes and measure progress toward their achievement. New performance management initiatives will have a significant impact on agencies. In the past, federal performance management initiatives focused on making agencies retroactively accountable for the money they spent and the programs they pursued. The GPRA Modernization Act of 2010 instead challenges agencies to focus on actively using performance data to inform future performance improvements. Many agencies have taken steps with performance management, but initiatives have often been fragmented and limited in approach, and thus fallen short in delivering desired results. Accenture Federal Services sees an opportunity for federal agencies to take an end-to-end approach and, by combining clear strategy with a wellstructured approach honed in the private sector, make a real difference in achieving publicly committed goals. Comprehensive performance management systems help public-sector organizations continuously improve their productivity and efficiency. Federal agencies can maximize the effectiveness of their performance management by focusing on five key performance management success factors: 1. Identify a balanced set of goals aligned with key stakeholder expectations and desired outcomes. 2. Define outcome-based measures that measure the accomplishment of goals and supporting objectives. 3. Create a performance measure hierarchy to provide the added level of detail to execute strategies and inform decision making. 4. Institutionalize the performance management system throughout the federal agency. 5. Develop a performance management tool to simplify the analysis and reporting of data. As federal agencies come under increasing accountability for their outcomes, the need to establish intrinsic capabilities to enable long-term performance management becomes greater. This paper examines the current governmental landscape and discusses how federal agencies can effectively and rapidly improve their performance management capabilities, create a clear road map and accelerate movement toward active use of performance data to inform future performance improvements, achieve publicly committed goals and increase value for citizens helping to drive high performance. 2

3 The Current Public- Sector Landscape Performance management in the public sector has a long history. There have been nearly two decades of federal government performance management initiatives, beginning with the Government Performance and Results Act (GPRA) of Since then, governments around the world have adopted similar approaches to improve public-sector performance management. Most public-sector organizations, however, still struggle with performance management. Private-sector organizations are ultimately seeking a profit that is a well-defined and easily measureable outcome. Publicsector organizations deliver services for the public good whose outcomes are difficult to measure. This challenge has led publicsector organizations to use performance management to measure outputs and activities, not the end results or impacts of their services. Improving performance management is a primary focus of the Obama Administration. The current environment increases pressure to improve performance management in order to measure the results governments achieve with public money. Governments are shifting toward more goal-focused performance management to better measure their effectiveness. The President s FY13 Budget recognizes that, the Nation s current fiscal situation makes it more important than ever for government agencies to use taxpayer money wisely to achieve more mission for the money. A critical part of our effort is creating a culture of continual performance improvement where federal agencies constantly strive to improve ways to achieve positive outcomes. As part of this effort, public-sector organizations have adapted private-sector performance management techniques to meet their needs, but challenges remain. Accenture s Unlocking Public Value paper, which proposes a detailed framework to assess public-sector organizations value to the public, notes that no universally accepted standards for measuring and assessing value and performance in the public sector exist. Public-sector organizations are in the business of delivering public services whose value is not easily expressed in monetary terms, making value and performance difficult to compare across the public sector. This value and performance measurement difficulty is reinforced by the Accenture Institute for Public Service Value interview results of 300 government executives across nine countries regarding their performance management practices. We found that while there is widespread adoption of basic performance management techniques, public-service organizations struggle to realize the full benefits that performance management can offer. Our research indicates that most public managers use performance management primarily as a means of retrospective review or accountability. As a result, performance management is not regularly used in publicservice organizations in a strategic and dynamic way for example, to plan, develop, and manage future organizational capability or to respond to performance issues before they become problems. The passage of the GPRA Modernization Act of 2010, however, enables an improved performance management approach in the federal government. The law aims to build on the GPRA of 1993 by requiring federal agencies to undergo more frequent performance assessments, create roles within agencies that oversee performance management and establish a balanced set of outcome-based performance measures to assess progress toward agencies goals. Through the GPRA Modernization Act of 2010, federal agencies have to publicly commit to meet a focused set of defined goals that encompass citizens expectations of the agencies. In pursuit of these goals, agencies must improve their performance management systems so they focus less on reporting past performance and more on using performance data to measure progress toward desired outcomes and guide future improvements. The new law will help our efforts to shift attention from just the production of agency performance plans and reports to increased focus on using goals and measures to improve the effectiveness and efficiency of federal action. Jeffrey Zients, Chief Performance Officer, Office of Management and Budget (OMB) 3

4 We must use taxpayer dollars in the most effective and costefficient ways we can, and continually search for smarter ways to serve the American people. A critical part of our effort is creating a culture of performance improvement where federal agencies constantly strive to achieve meaningful progress and find lowercost ways to achieve positive outcomes. Jeffrey Zients, Chief Performance Officer, Office of Management and Budget (OMB) An Effective Approach to Public- Sector Performance Management Drawing on years of experience in developing performance management capabilities for businesses, Accenture believes federal agencies can leverage this experience to rapidly establish or improve their performance management capabilities. The process begins with the setting of strategic goals. Federal agencies should develop strategic goals based on expected outcomes of their services and missions. Measuring outcomes assesses the end result or impact of what a public-sector organization produces. Effective performance management uses outcome-based measures to assess progress toward achieving on organization s strategic goals. The federal government made this a priority with the GPRA Modernization Act of Agency leaders can better make this shift by understanding five key success factors to implement an effective performance management system: 1. Identify a balanced set of goals aligned with key stakeholder expectations and desired outcomes. Choosing a limited, yet comprehensive set of goals from different perspectives of the agency enables agency leaders to focus on all aspects of their organization, rather than focusing on one or two aspects at the expense of others. 2. Define outcome-based measures that measure the accomplishment of goals and supporting objectives. The results of the measures help guide agencies decisions that result in improved outcomes for citizens. However, federal agencies often use output or activitybased measures that assess what the agency produces, not the impact of their services. 3. Create a performance measure hierarchy to provide the added level of detail to execute strategies and inform decision making. The lower-level measures in the hierarchy include a breadth of output and activity measures that span different aspects of the agency. If a top-level, outcome-based measure does not reach its target, agency leaders can drill down in the hierarchy to identify issues and develop remediation plans to improve future performance. 4. Institutionalize the performance management system throughout the federal agency. A new performance management approach needs to have the support and ownership from the entire agency, which starts with agency leaders sponsorship. Also, the performance management system s structure and processes must be documented to be formalized in the organization. 5. Develop a performance management tool to simplify the analysis and reporting of data. Federal agencies often start with implementing a fancy performance management tool, which is a key mistake. Once the groundwork is set for the performance management system, only then should a tool be implemented that centralizes and simplifies analysis and reporting. 4

5 To help agency leaders develop effective performance management systems, Accenture has identified four key performance management activities, as outlined in Figure 1. This approach is designed to help agencies rapidly achieve performance improvements in the short term and provide the building blocks to establish comprehensive performance management systems in the longer term. The key activities are: Plan to put the building blocks in place for effective performance management systems. Identify appropriate and quantifiable outcome-based measures that align with strategic goals. Implement an effective performance management system with the support of the organization. Use performance data to measure results and guide the organization forward. Each of these key activities is described in further detail below. Figure 1. Four key performance management activities. A. Plan B. Identify C. Implement D. Use Plan Create a comprehensive strategic plan to achieve the agency s goals. The critical first step in establishing an effective performance management system is to develop a strategic plan that defines the agency s goals. The GPRA of 1993 and the GPRA Modernization Act of 2010 have formal strategic planning requirements for agencies. Although creating strategic plans is common practice now for agencies, using strategic plans as a guide for the organization remains a challenge. Communicate the agency s vision and goals for the future to employees, partners and the public in the strategic plan. The Office of Management and Budget s (OMB s) guidance on strategic planning is that it is the foundation of an agency s planning system because it provides direction for programmatic and management functions to help execute the strategies needed to reach goals. The strategic plan should include a manageable yet balanced set of strategic goals that reflect the desired outcomes of the agency s key stakeholders and align with the agency s mission. Strategic goals may be longer term and more aspirational, but each should be supported by specific and measurable objectives. 1 Establish a Balanced Scorecard framework for the agency s performance management system. This approach creates a framework that aligns outcome-based measures to the agency s goals and supporting objectives in order to provide a comprehensive view of the agency s performance and its progress with achieving desired outcomes. Identify Identify outcome-based measures that align with the agency s objectives. Each objective should have a limited number of outcome-based measures that measure the accomplishment of the objective. An outcome-based measure does not measure what an agency does (its activities), but instead assesses the impact of those activities, such as improved safety, health, education, economic stability, or whatever is appropriate according to the agency s mission. 2 Outcomes are not easy to measure partly because they can be influenced by factors beyond the agency s control; however, striving to measure outcomes is the only way to ensure they are being achieved and in turn will help focus the organization on achieving those outcomes. Filter measures to ensure they are appropriate and practical to measure and clearly define each one. Once potential measures have been identified, they need to be filtered with a set of criteria. Each measure must measure an end result to assess the achievement of the objective. Each measure must be quantifiable and relatively easy to measure as well. Once the measures are deemed appropriate, clearly define each measure and its calculation. Create a hierarchy of measures for each outcome-based measure. The top-level, outcome-based measures carry the most significance in the Balanced Scorecard performance management framework, but lower-level activity and output measures should be identified that support each outcome-based measure. This step creates a hierarchy of measures and provides the added level of detail to help with strategic and operational decision making. 1 Accenture. (2012). Making the Future a Reality: Augmenting Strategic Planning with Strategic Management, p Ibid, p. 9 5

6 Implement Define and institutionalize reporting processes for all measures in the performance management system. Develop the methods to calculate each measure that may include defining the calculations in detail, creating new reports within various systems, or writing a customer satisfaction survey. Once completed, specific reporting processes for all measures should be documented in a performance management handbook. The handbook formalizes the new performance management system and serves as the instruction manual for reporting performance data. Streamline reporting across the agency in a central performance management tool. Federal agencies often find that they have excessive and redundant reports with multiple reporting silos, systems and tools. Ultimately, more effort is spent on generating reports than analyzing the data and using the reports to manage performance and improve decision making. Data should be reported and analyzed through a central tool using a balanced scorecard dashboard. The dashboard allows agency leaders to quickly assess progress toward achieving their goals by focusing on the most critical measures. Establish buy-in and support for the new performance management system. Agency leaders must be the primary sponsors of the performance management system to ensure that support for the system cascades from leadership. A critical step to increase buy-in and adoption is to provide performance management training to all parts of the organization. Use Use performance data to actively shape continuous improvement within the agency. Many public-sector organizations use passive performance monitoring the production of performance reports is viewed as an end goal and the data is not actually used to make decisions. Moving from passive performance monitoring to active performance management by proactively using performance reports to shape management decisions will benefit federal agencies and improve outcomes for their stakeholders. The GPRA Modernization Act of 2010 promotes the use of data to improve future performance through new requirements for agencies. When an agency fails to meet or exceed a performance goal, the agency is required to provide a specific explanation for the shortcoming and describe actions the agency will take to achieve the goal in the future. The Path Forward The Obama Administration s move to an increasingly outcome-based performance system is a positive one. Outcome-based performance management enables agencies to organize their activities and budgets around the results that matter to citizens and to monitor how effectively and efficiently they are achieving these results. It also enables agencies to monitor changing circumstances and modify their policies, programs, services and budgets as needed to deliver improved outcomes more cost effectively. For many agencies, performance management is still a rear-view mirror activity. It reflects what agencies have achieved in the past rather than being used as a means of improving future performance. Developing performance management systems that can be used effectively to make proactive changes to optimize future performance is an ongoing process. It takes focus, effort and discipline to address the constraints and barriers along the way. The journey for each agency will be unique. While there are common activities and practices that underpin effective performance systems, each agency must develop a system that is right for its specific situation and stakeholders. Accenture has extensive experience in improving organizations performance management and teaming with the government to improve outcomes. We have experience with the full life cycle of performance management implementation. We help agencies with a range of activities, from developing performance management strategies to conducting change management to implementing advanced reporting solutions. The journey to effective performance management requires dedicated effort, but the benefits result in continuous improvement across the organization and increased value for citizens. 6

7 Case Studies Accenture s Enterprise Performance Management (EPM) service line has been instrumental in helping public agencies around the globe achieve higher performance. Some examples include: Arizona Department of Revenue: Public Service Value Model Accenture helped the State of Arizona s Department of Revenue take the recent performance improvements it realized from its Business Reengineering/Integrated Tax System and apply them to the agency s mission and strategic business-planning goals. The project used an analysis generated from the Accenture Public Service Value Model to help form a foundation for the agency s strategic planning process, performance measurement and performance management. It also illustrated the impact of agency changes on value creation for Arizona taxpayers. New York City: Performance Management The New York City Department of Information Technology and Telecommunications (DoITT) and the New York City Mayor s Office of Operations teamed with Accenture to develop and implement the NYCStat Stimulus Tracker, an online capability to help the city track more than $5 billion of federal stimulus/ recovery funds provided through the American Recovery and Reinvestment Act of Accenture also worked with DoITT to develop the Citywide Performance Reporting system, an interactive dashboard that provides public access to critical performance indicators for the city and tracks the service delivery of more than 40 city agencies, and the NYC 311 Customer Service Center and hotline. 7 Ontario Ministry of Health: Public Service Value Model The Ontario Ministry of Health & Long-Term Care recognized the need to develop a more efficient business model that could handle citizen demands cost-effectively over the long term without sacrificing service quality. Accenture worked closely with the ministry to tailor a Public Service Value Model and determine and assign weightings to a manageable number of relevant metrics. The results of the analysis substantiated the organization s theories on opportunities for improving cost effectiveness. The analysis also provided tactical recommendations to generate quick returns in cost-effectiveness.

8 For more information To discuss performance management in federal agencies, please contact: Kevin Greer Michael Lumb Accenture Federal Services, based in Arlington, VA, a wholly owned subsidiary of Accenture LLP, helps US federal agencies build the government of the future. Visit for information regarding Accenture Federal Services, including our perspectives on agency and cabinet challenges and experience delivering results. About Accenture Accenture is a global management consulting, technology services and outsourcing company, with approximately 261,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, Its home page is Copyright 2013 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

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