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National Performance Management Advisory Commission Issue Paper # 4 Topic: Author: Challenges to Implementing Performance Management Michael F.

Brown, County Executive Officer County of Santa Barbara, CA

This paper is based on a presentation by Michael Brown given at the first meeting of the National Performance Management Commission, June 30 through July 1, 2008. The presentation addressed the following issues related to implementing performance management systems: Historical Perspective Challenges Overcoming Challenges & Critical Success Factors Benefits

Historical Perspective
Performance management must be viewed in the historical context as an evolution in the field of public sector management. A performance-based system can be viewed as the third stage in the evolution of public administration management. System 1) Spoils System, Political Patronage 2) Bureaucratic Merit System, Political Neutrality Results Limited employee skills, dominance of informal practices minimal emphasis on effectiveness minimal overall capability Emphasis on rules, professionalism and efficiency more capability, but too much emphasis on process rather than results Produces enhanced capability. Contract relationships; replaces the focus on process with a focus on results.

3) Performance Based System

Challenges
Eight key challenges were identified as barriers to public management implementation of performance management systems: Existing Financial System Limitations In many organizations, the chart of accounts which is used to structure the budget development and financial reporting is not aligned to support operational analysis. The financial systems do

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not have the capacity to for reporting and sorting of data to support performance reporting. Data often does not supporting linkage of financial and operational data to determine cost per service unit or other efficiency metrics. Organizational Fears Department and agencies may be apprehensive about implementing performance management systems due to fears on how the results will be interpreted, what it may indicate about the departments performance, and/or a lack of clarity of how it will affect the department and its employees. Elected Official Fears Similar to organizational fears, elected officials may have similar fears about how the performance data will be used, analyzed or interpreted by the public. Additionally, officials may be reluctant to support investments in performance management systems if there may not be a clear return on the investment. Additionally, elected officials may fear that performance data may limit political flexibility and fear that data will limit the ability to data with other political realities Performance Management is Too Hard! Performance management can be overwhelming endeavor for some organizations and can be viewed complex, time-consuming, and simply requiring a tremendous effort given resource constraints. Organizational culture may work against the drive to support implementation. Strategic Planning Process Overload Experiences in strategic planning have been varied and have at times focused on process, planning and not performance and results. Leading some public officials and managers to believe that the process is not substantial and doesnt significantly impact organizational results. An initial implementation period for performance management, a so-called, honeymoon phase can be unnecessary prolonged and not yield results for elected or appointed officials. Regular Review and Use If data is not being used for decision-making, it loses its value to the organization and leads to eventual questioning of why the information is being collected or reported. Agencies need to develop policies on how performance results will be used for operational and fiscal decision-making. Looking to Software as the Solution Too often organizations rely on software as a precondition for performance management implementation without recognition that software doesnt change behavior. Secondly, private sector software has only recently transitioned to the public sector and able to meet government needs. Believing This Too Shall Pass - Any major shift in government thinking is phased in over decades and there is a hesitation to invest in performance management because managers believe it wont stick. If performance management isnt viewed as integral part of job performance, managers will not invest the time and energy to support its success.

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Overcoming Challenges & Critical Success Factors


The following strategies were indentified as means to overcoming obstacles Relying on Objective Assessments Coordinating Project Planning Centrally Adopting Performance Management Policies Honesty and Transparency Incentivizing Participation without Punishing Poor Results Incremental Improvements Dedicating Staff and Resources Clearly Defining Organization Direction

Several factors were identified as critical to the successful implementation and sustainability of a performance management system: Skilled Staff Staff that dedicated, knowledge and skilled in performance management. Enthusiasm and Commitment Leadership that actively supports and sustains performance management throughout the organization. Build on Recognized Models The International City/County Management Association Center for Performance Measurement is an example of an effective systematic approach for performance management and provides the capacity for comparative analysis of metrics and results. Organization Buy-In and Leadership Elected and appointed official buy-in will set the tone of performance management in the organization in terms of how others throughout the organization will perceive its importance and value. Through their leadership, commitment, and allocation of resources to support implementation, expectations will be set. Linkage to Budget Process As indicated above, performance management data must be used and relied upon to demonstrate its value to the organization. The budget process is a core government management process and integration between performance results and budgeting is critical to demonstrating its value and usefulness to the organization. Public Reporting Transparency and public access to performance management results and data will provide external pressure to ensure its sustainability and will also have the potential to create a positive force to reward and support improved results. The simple act of making performance result data available will enhance the credibility of the organization. Audit Data Sources Along with transparency, credible data is essential for the success of the performance management system. Data must be available and credible. Auditing of data is one important strategy to ensure that the data reported is accurate and verifiable.

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Benefits
Despite these challenges, there are significant tangible and intangible benefits to be realized by an organization through investment in performance management systems, in addition to the improved results that is the primary goal of performance management: Media/Public Relations As referenced above, media and press will reflect positively on the effort of investing in performance management systems, even if the initial results are less than what was hoped or targeted to b achieved. Goodwill - Taxpayer associations and other watchdog groups praise performance management and the associated/anticipated benefits that it can reap for organizations. Enhanced Credit Rating - Rating agencies look favorably upon local governments utilizing performance management systems

Conclusion
Performance management must be viewed as the next logical evolution of the field of public management. Performance management must be viewed as an essential component of successful management. This is cultural, operational and human resource management change. The transition will require recognition that: Rationality (not politics) is the underlying force of performance management City and County Managers bring rationality and professional expertise to the organization Performance management increases and enhances he professionalism exhibited by local government managers and must become an accepted practice norm within the field.

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