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Management Case Study

Using Performance Management to

Transform a Failing Organization: The
Improvement Journey of North East
Lincolnshire Council

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Using Performance Management to Transform a Failing Organization: The Case of NE Lincs Council API Case Study

Using Performance Management to Transform a Failing

Organization: The Improvement Journey of North East
Lincolnshire Council

Bernard Marr* and James Creelman

Abstract: This case study illustrates how an organization used Performance

Management to turn itself around from the worst performing Local Authority in the
country to one that is on a performance improvement journey, heading towards top
performance. This case study should of interest to most organizations as it
illustrates the essential role of senior leadership buy-in and support to change the
organizational culture and make it performance focused. It also demonstrates how
the organization managed to agree strategic priorities (which is so vial in difficult
economic times) and improve its data quality to generate management insights that
lead to real performance improvements.

Version: 26 October 2009 * corresponding author

Bernard Marr is the Chief Executive and Director of Research at the Advanced Performance Institute. E-mail:
James Creelman is a Fellow of the Advanced Performance Institute

The Advanced Performance Institute (API) is a world-leading independent research and advisory
organisation specialising in organisational performance. It provides expert knowledge, research, consulting
and training to performance orientated companies, governments and not-for-profit organisations across the
globe. For more reading material or information on how the API might be able to help your organisation please

How to reference this case study:

Marr, B. and Creelman, J. (2009) Using Performance Management to Transform a Failing Organization: The
Improvement Journey of North East Lincolnshire Council, Management Case Study, The Advanced
Performance Institute (

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Using Performance Management to Transform a Failing Organization: The Case of NE Lincs Council API Case Study

Using Performance Management to Transform a Failing Organization:

The Improvement Journey of North East Lincolnshire Council

Immingham. Formed as part of local government

reorganization in 1996 and consisting of 15 electoral
After several years of being assessed as performing wards, about 159,000 people live in the borough
poorly by the Audit Commission, in 2004 North East within a mix of dense urban conurbations and
(NE) Lincolnshire was plunged fully into a dispersed rural communities. The area is historically
performance crisis by a financial audit that best known for its fishing industry. The council,
uncovered serious accounting irregularities. which has 5908 employees, is presently run under a
Liberal Democrat and Conservative alliance with a
Being monitored by the then Office of the Deputy leader and cabinet model of governance.
Prime Minister, the council embarked on a far-
reaching improvement journey. The journey began A Performance Crisis
with the identification and implementation of 15 key
NE Lincolnshire Council has been on a
projects that were deemed necessary to rebuilding
‘performance journey’ since 2004. In that year the
the fabric of the organization and making the
council was plunged into a ‘performance crisis,’
organization ‘fit for purpose’. Extensive early efforts
through a damning financial audit. But NE
were also expended on improving business
Lincolnshire’s performance shortcomings had first
planning, in solving serious underlying data quality
been highlighted through a 2002 Comprehensive
issues and in creating a culture where performance
Performance Assessment (CP) undertaken by the
was reviewed regularly and carefully.
Audit Commission. As a brief explanation, the CPA
framework draws on a range of information such as
With the 2009-12 council plan, the performance
performance indicators, assessments of corporate
journey entered a new phase with the identification
capacity, audit and inspection reports, and
of five strategic aims with supporting priorities,
stakeholder opinions to reach a single judgement
measures and targets. These aims fully support
about the performance of a local government body.
community priorities that were identified by the
council and its partners through extensive local
Through the CPA framework, direct performance
comparisons can be made between one local
authority and the other 353 throughout England.
About North East Lincolnshire Council
According to the CPA findings, in 2002 the council
Located on the east coast of England, North East was judged as performing poorly (in the bottom 10%
(NE) Lincolnshire is a unitary local authority that nationwide), while in both 2003 and 2004 it was
includes the towns of Grimsby, Cleethorpes and judged as ‘weak’ (in the bottom 12%).

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Using Performance Management to Transform a Failing Organization: The Case of NE Lincs Council API Case Study

Financial Mismanagement amongst staff that services would further

But it was the financial audit of 2004 that would deteriorate.”
prove both the low-point in the council’s
performance and catalyze the subsequent Fifteen Key Projects
transformation efforts. “For several years the Audit Being in intervention meant that the council officials
Commission had expressed concerns about the had to agree a framework with the ODPM that
financial management of the council,” comments would describe the key actions to be taken to
Beverley Compton, Deputy Director, Policy and improve performance. Given the poor CPA ratings it
Performance. “These concerns had not been was recognized that inadequate financial
addressed and in the financial audit of March 2004, management was just one element of a wider
the auditor identified serious accounting errors,” she problem around governance and management.
says. Most worryingly, it was realized that the
council was planning to spend more money than it Core to the agreed framework were fifteen key
actually had, even when including what was in the projects that were essentially focused on rebuilding
general fund reserve. Indeed, the council had the fabric of the organization or as Compton states:
planned to spend £3 million of general fund “creating organizational fitness for purpose.”
reserves in 2003/4, but with only £1 million left, was
not in a position to do so. The Auditor actually found “This was the council’s first attempt at prioritizing
that the council had been overspending its 2003/4 where it wanted to direct performance improvement
plans by an estimated £3.9 million. efforts,” she recalls. “And delivering to these
projects was the main focus of the first 18 months of
As a result the council issued a public interest our performance improvement journey.”
report, which is a vehicle for exposing financial
mismanagement within councils. From this the Housing project
Office of the Deputy Prime Minister (ODPM) put the Progress in implementing these projects was
council into ‘intervention’, which is similar to the assessed on a monthly basis by the council and the
special measures approach to improving failing ODPM monitoring board. Some of these early
schools. projects meant tough decisions had to be made.

Job cuts For instance, through one of these projects the

Being placed into intervention led to the resignation council’s housing stock was transferred from the
of the Chief Executive Officer and the Director of council to local bodies, such as Housing
Finance. Moreover, to address the budgetary Associations under Large Scale Voluntary Transfer
problems, the council was forced to make significant (LSVT) provision.
job cuts, which Compton, who joined the council
from the Audit Commission in November 2004, says Although LSVT had been necessitated by the poor
“led to a loss of organizational memory and a fear management of the housing service, it was a

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Using Performance Management to Transform a Failing Organization: The Case of NE Lincs Council API Case Study

difficult decision for the elected councilors to make considerable amounts of money and providing
as they perceived providing housing as a key employees with significantly better office
service. That the implementation of the transfer accommodation, the council has been able to
was completed within the project timeframe was a introduce more integrated working, which as we
demonstration that the council really meant explain later has become a key performance focus
business. within the council, as well as more flexible working,
hot-desking and home working. “We were beginning
Job evaluation to challenge the organization to implement best
As another example the council completed a major practices wherever possible,” comments Compton,
job evaluation programme to ensure pay equality. adding that analysis shows that home-working
The council had attempted job evaluation on two significantly increases the productivity of benefit
previous occasions, but had failed to make the workers, as one example.
change, earning itself a reputation of having plans,
but failing to implement them. This early project Improving Business Planning
completion was another demonstration that the While implementing the key projects, the council
executive directors and council’s elected members also focused attention onto resolving underlying
could make tough decisions, stick to them and performance problems. For instance, it was
follow through with action - especially as recognized that business planning was weak and a
implementing this project meant a reduction on pay major obstacle to change. Through the
for some members of staff. establishment of a cross-council working group, a
planning template was developed and a timescale
Office Accommodation was identified for the preparation of the first set of
As well as the recruitment of key employees (Chief business plans, which were focused on improving
Executive, Deputy Director roles and finance staff), performance by the inclusion of clear objectives with
a further project focused on the council’s provision milestones.
of office accommodation. “We had staff located in
about 50 administrative buildings,” recalls Compton. Speed Dating
“It became evident that this was causing many Amongst the innovations used to create robust
problems. As examples, it made networking difficult plans was ‘speed dating’ through which managers
and meant that people became very siloed in their from different services came together in brief
work and thinking as they had little opportunity to session to discuss areas of work that could be
understand what was happening elsewhere in the completed together, or to share common/ cross
organization” she says, adding: “It was also very cutting themes that could be integrated into their
expensive to maintain so many buildings.” individual business plans. “As well as improving the
planning process, this helped to build strong
Successful project completions mean that staff are relationships within the council,” says Compton.
now located in just five buildings. As well as saving

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Using Performance Management to Transform a Failing Organization: The Case of NE Lincs Council API Case Study

Data Challenges Technology Changes

A further underlying problem within NE Lincolnshire Overcoming the data challenge required both
Council that was constraining attempts at technological and behavioural changes. From a
improvement was the quality of its performance technology perspective, the council had, in 2003,
data, as Compton recalls. “We had massive already procured an IT system to support
problems with data quality, to the extent that it was performance management and that would enable
a source of interest to the Audit Commission who the centralization of data, but it had not been
had commented on this as being a significant implemented.
Championed by the Chief Executive, in 2005 the
There were myriad data challenges. These system was implemented and launched. The
included that little data was held centrally which system enabled key plans to be mapped and,
made it difficult to take a ‘council-wide’ view of importantly, linked to key performance indicators
performance. Moreover, the lack of valid data made and targets.
it difficult to track the performance of the individual
services. There was also a reliance on manual Behavioural Changes
systems for data collection which resulted in poor From a behavioural viewpoint, the Chief Executive
quality data that further hampered decision making stated that everybody had to input the data on the
processes. same day each month so to allow for challenge and
interpretation. To signal the seriousness of this
Another problem was that the corporate initiative, the Chief Executive supported the zeroing
performance management and improvement team of performance of those managers that failed to
(which now has eight members) had always meet their data input deadlines. This meant that
checked the data for other. The team itself realized anybody who did not provide their performance data
that responsibility for having the correct data was in was automatically awarded a “below target
the wrong place. Service managers had to own the performance” symbol in the report with a star
data and use it to aid their performance denoting that the information had not been supplied.
improvement activities. Moreover, staff training and new validation systems
were introduced to ensure that data entry was right
A further key challenge was that performance first rime.
management and data management were not seen
as related, rather viewed as separate activities. The As a result of solving the data quality issues,
council’s senior team realized that it had to instil the performance reporting now clearly supports the
belief that good data management was an integral decision-making processes with NE Lincolnshire
element of an overall performance management Council. For example, all Directorates use this
system. system to aid the preparation and presentation of
corporate performance reports (the monthly and

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Using Performance Management to Transform a Failing Organization: The Case of NE Lincs Council API Case Study

quarterly reports). Service areas can now get an on the corporate plan. The report has been reduced
accurate view of trends in their performance and from the initial 30 pages to 6-8 pages.
quickly identify where corrective action might be
required. Furthermore, directors, elected members, Performance Reviews
managers and the public are now able to see at a A further area that challenged the organization was
glance how the Council is progressing against its around performance reviews. As other performance
goal and targets. management disciplines were being introduced
though 2005 and 2006, the council was also
But perhaps most importantly the new performance focused on ensuring it instilled a culture of reviewing
management system enables the better capturing of performance organization-wide. Although the new
stakeholder data. “We now have good evidence- senior team had a strong focus on reviewing
based data about the community and the key issues performance, this wasn’t something that historically
and problems that they face,” says Compton. “And had been expected of lower level managers.
we now have one system for viewing what’s
happening in the organization. We have a ‘whole Performance clinics
council’ picture, which is a long way from when we
Performance clinics were amongst the interventions
were when this journey started.”
deployed to alter this situation. These ‘clinics’
comprised of cross-organizational representatives
Keep Informed: Information at your Fingertips
who would come together to assess progress to key
In addition to the performance management data a performance targets and to serve as a problem-
new interactive resource called ‘informed’ has been solving forum. Compton provides this example of
made available to everyone to provide key statistics how the clinic operates. “Due to our financial crisis
about North East Lincolnshire through tables, we had to take resource away from services such
reports, graphs and maps. This resource provides as street cleaning, as one example. This meant
performance information and area profiles and is there was some erosion of the quality of the
another key source of data and information to service,” she says. “But when our financial situation
inform management decision making. began to stabilize money became available to
reinvest in such services. The performance clinic
Performance Reporting worked to indentify the service reinvestment
A lot of performance information is available in the priorities and helped in the introduction of a
organization and it is always tempting to just include performance culture in the organization.”
everything leading to thick and complex
performance reports. The council is making many Performance Culture: Signpost for Success
efforts to reduce its lengthy performance reports A further tool deployed to help create a performance
into something that is more user friendly Examples culture was the 2006 launch of an internal
include exception based reporting which is based document called ‘Signpost for Success’, which
provides a step-by-step guide to ‘the art of

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Using Performance Management to Transform a Failing Organization: The Case of NE Lincs Council API Case Study

performance management within the council’. 2009-12 council plan NE Lincolnshire Council took
Emblazoned across the front page was the words another large step on the performance management
‘performance, performance, performance,’ which journey with the introduction of an integrated
the Chief Executive chose as a new organizational performance management framework that focuses
mantra so to leave managers in no doubt as to what attention on five strategic aims:
was expected of them going forward (see Figure 1).
- Improve the quality of the built and natural
- Strengthen the local economy
- Create a safer and more secure area
- Improve health and well-being
- Being a well-managed, top-performing

Capturing the views of the community

Before looking at these aims in more detail, it is
important to note that they evolved from extensive
consultations with the local community that the
council carried out, along with local partner groups,
Figure 1: Signpost to Success Document during 2008 to uncover the biggest issues that
affect the quality of life in the borough. “We
Within the ‘Signposts for Success’ document are engaged in a number of conversations with our local
sections that considers the cycle of ‘what is and strategic partners, which includes
performance management’, ‘planning our representatives from the public sector, private
improvement’ (what the council is going to achieve sector, voluntary sector and various other
and how), ‘delivery’ (how are we going to do it), community groups to understand what the local
‘monitoring and measuring performance’ (how are priorities are,” says Compton. “We also created
we doing) and ‘review and challenge’ (what worked, neighborhood forums, which are held each month
what doesn’t and actions to improve). This and chaired by an elected official, to discover what’s
document was circulated widely among managers bothering local people and what we can do to solve
and other staff, and significant amounts of training them.” As further example, groups of council staff
were delivered so that these performance were taken out to talk directly with local community
management disciplines became embedded into the groups to better understand their priorities.
The work of 2008 built on already existing
Five Strategic Aims approaches that the council had in place for
With performance management disciplines taking capturing the concerns on the local community. For
hold organization-wide, with the publication of the instance, as with all local authorities NE

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Using Performance Management to Transform a Failing Organization: The Case of NE Lincs Council API Case Study

Lincolnshire used to be subjected to a centrally decisions stood at 45%, a considerable increase on

government run triennial survey of community the 19% score of 2006.
satisfaction. “We realized that we couldn’t wait for
three years to get a view of what was happening Ten community priorities
locally,” says Compton.” So we ran the survey With a deep understanding of community needs,
annually. We looked at community safety, leisure Together with its partners, NE Lincolnshire Council
facilities, library facilities, street cleaning, etc. It signed an agreement with the central Government,
followed exactly the government survey and gave known as Local Area Agreement 2, which places
us a benchmark as to how we were progressing special emphasis on partners working together to
over the three years and provided excellent insights tackle some of the most significant problems in the
from the community.” borough. The ‘State of the Borough’ report captures
many of the challenges the region is facing (see
Moreover, the council created a citizen panel of Figure 2). Ten community priorities were identified:
1500 people, which comprises a proportionately - Worklessness
higher representation from some of its more - Child and family
deprived communities. “We use that on a quarterly - Sustainable transport and infrastructure
basis to test out views on the community,” says - Sustainable business growth
Compton. “It provides a body of evidence to ensure - Housing
what we are doing is fully aligned to their needs. For - Health inequalities
example, if we are to launch a new strategy we will - Violence
use this panel to test the ideas and, if required, we - Substance misuse
will refine our goals based on the findings.” - Negative behavior
- Support to vulnerable adults.
Feedback from the citizen’s panel is providing data-
based evidence as to how the council is improving
in the eyes of the community. For example 72%
(906) members responded to the June 2007 wave
of questions. The answers showed unequivocally
that the council was improving, and against a range
of indicators. As examples, satisfaction with
external communication ‘ stood at 82%, compared
to 64% in 2006 and ‘overall satisfaction with the way
the council runs things’ was 85%, compared to 66%
in 2006. But for a council looking to improve how it
identifies and responds to community needs,
perhaps the most telling statistic is that the panel
reported that their ability to influence council Figure 2: State of the Borough Report

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Using Performance Management to Transform a Failing Organization: The Case of NE Lincs Council API Case Study

Strategic Aim Examples percentage of waste sent for recycling, reuse or

The council’s five strategic aims are fully aligned to composting is increasing’, with a target of 35% by
these 10 priority areas. As shown in Figure 3, each March 2011 (see Figure 4).
aim comprises a set of key priorities. In turn these
priorities are supported by key actions, milestones As another example, the strategic aim ‘create a
and measures, targets and due dates. safer and more secure area,’ is supported by the
priority ‘we will ensure that people feel safe at home
For example, the strategic aim ‘Improve the quality and in the community.’ In turn this is supported by a
of the built and natural environment’ is supported by number of actions, including ‘increase effective
the priority: ‘we will provide a high quality CCTV surveillance,’ which has a key
environment for all’. This is supported by a number measure/milestone of ‘CCTV introduced on buses’
of actions, including ‘increase participation in and a target of March 2011 for completion.
recycling to ensure than we recycle more of our Finally, the strategic aim ‘Improve health and well-
waste,’ the key measure/milestone is ‘the being’ has as a supporting priority ‘help people to

Figure 3: Plan on a Page

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Using Performance Management to Transform a Failing Organization: The Case of NE Lincs Council API Case Study

fulfill their expectations of independent living,’ which organization away from a narrow service-based
has the supporting action ‘increase support to view of performance to one that is cross-
enable more people to remain independent in their organizational, that delivers an integrated approach
own homes’ which is measured by ‘the number of to working and benefits from synergies and
people who are supported to maintain independent efficiencies” explains Compton. “For example, the
living increased’ and the target of 98.5% by March Director of Child Services is the lead for the health
2001. and well-being strategic aim, which includes cross-
cutting priorities. Delivering to these priorities
Integrated Working requires a coordinated approach across many
The introduction of this strategic aims framework services and indeed partner bodies.”
served as a trigger for a new way of working within
NE Lincolnshire Council. “A new Chief Executive But Compton continues that in creating strategic
took office in 2008 and he is very keen to move the aims the organization has been careful to ensure

Figure 4: Actions, Measures, Targets, Responsible

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Using Performance Management to Transform a Failing Organization: The Case of NE Lincs Council API Case Study

that this itself does not cause a narrowing of the These success examples will be distributed
performance view. “One of the dangers is that by internally amongst staff and promoted externally to
focusing and reporting on a strategic aim the bigger, the local community and other stakeholders. “They
cross-council view is missed,” she explains. “So just will serve as a readymade suite of case studies that
as we have aim discussions that look at the document our successes in driving performance
progress of priorities we also come together as a forward,” says Compton.
leadership team to look at what’s happening across
the five strategic aims so to get a whole council Celebrating success
picture and identify how we can all contribute to For an organization that emerged from crisis, an
driving overall performance forward.” important component of the communication strategy
has been the celebration of successes. After the
Good News Week CPA judgement was announced in late 2005 and
Communication also plays a crucial role in driving awarded NE Lincolnshire ‘no stars – not improving
performance forward. Amongst the many successful adequately’ and so rated ‘the worst authority in the
initiatives is ‘good news week’, through which staff country’ the then Chief Executive made celebrations
submit their stories around performance a priority. As the CPA model relies on historical
improvement via an e-mail box. Each day during data, this was essentially reporting on the council’s
‘good news week’ these stories are distributed performance during the financial crisis, and so was
organization-wide and even out to the community. not reflective of the improvements that had been
This has proven to be very popular and had a made during 2005. That said, the judgement still
positive impact on the organization.” says Compton. negatively impacted the morale of managers and
staff alike.
The council is presently looking to build on the
success of the initiative, which has been running for As a powerful demonstration of his commitment to
several years. “Good news week has proven an celebrate success, the Chief Executive gave
excellent way to collect lots of material on grass everyone a day off upon the achievement of the
roots performance improvement,” says Compton. Corporate Investors in People Standard in 2006
“What we are now looking at is how to drill down (which essentially shows that the organization is
further and find out exactly how the performance investing in the training and development of its
improvements came about, particularly looking at people and that this supports business goals).
the linkages between decision-making processes,
resources and outcomes. We can capture these Similarly, when the council was judged through the
electronically and in booklet format and it will enable CPA as ‘2 star – improving well’ in 2006, employees
us to understand and learn from our successes and were given another day’s holiday. NE Lincolnshire
share best practices.” Council was one of only three councils to improve
so dramatically from 2005 to 2006.

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Using Performance Management to Transform a Failing Organization: The Case of NE Lincs Council API Case Study

Next Step Performance Improvement they require help. Furthermore, it is looking at how
NE Lincolnshire Council has clearly made excellent service redesign options might drive efficiencies
progress since beginning its performance while enabling the council to maintain a strong
improvement journey in 2004. “There is now a much customer focus.
clearer focus on what we are trying to achieve for
the community and we have built a good body of Also, a performance audit by the Advanced
evidence to show that we understand their priorities Performance Institute (API) in late 2008 highlighted
and that we are delivering to them,” says Compton. the fact that the organization wasn’t always
“Throughout the organization, employees are much measuring the right things. As a result, the council
more aware of not just what we are doing but how started its planning process earlier than usual in
they can individually contribute to performance 2009 to allow more time for managers to identify the
improvement.” She adds that there have also been best measures to support their goals.
significant improvements in the quality of
management. “There’s much more of an Key Performance Questions (KPQs) have been
understanding around managing performance. used to enable a better understanding of which
Managers now recognize that this is part of their metrics to choose. For example what do we need
job.” to know? What is our best measure? Who needs to
know it? What decisions would be based on this
Although significant improvements have been information?
made, the council’s senior team is well aware that
there is still some distance to travel on its Conclusion
performance journey. Indeed, a CPA rating of 2 still In conclusion, Compton points to a number of key
places the council in the lower levels of the local factors that have contributed to the performance
authority performance league table. improvements made so far. She says it was critical
that elected officials supported performance
There are many initiatives underway to take improvement initiatives and were able to make
performance to the next level. For example, there is tough decisions and stick with them. Equally
a programme in place to train 80 managers across important was getting the unswerving commitment
the council in lean methodologies, which will enable of the then newly appointed Chief executive. “He
the better identification and solving of process was relentless in sending messages about the need
problems. to improving performance and back this with action.
He was prepared to chair performance clinics and
The council is also working hard to develop better ensured that the data issues were addressed.
performance management in all of its partnerships Basically, he made sure that performance
and at all levels – strategic and operational. It is improvement was on everybody’s agenda and
also striving to create a more trusting, open culture radar.”
where the assumption is that people are capable of
managing and will call on the corporate centre when

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Using Performance Management to Transform a Failing Organization: The Case of NE Lincs Council API Case Study

Chief Executive commitment also impacts another of everyone’s job. “We’ve made great strides in a
of Compton’s critical success factors – paying relatively short period of time,” concludes Compton.
attention to change management. “Change is “But we know that we have to continue the journey
difficult and oftentimes people don’t understand why and make further significant improvements and we
they have to change,” she says. ‘If we don’t send now have the culture and the momentum to make
consistent messages throughout the organization this happen.”
about what we are doing, why we are doing it and
what we expect from staff, then change would not
happen. And these messages have to be
For more case studies, reports and
reinforced at every level and all of the time.” articles visit

As a final success factor she highlights the

importance of creating a culture of constant review
where performance improvement is part and parcel

“The Performance Management Audit work by the Advanced Performance Institute has not
only identified things we can improve but has also re-vitalised our interest in performance
management and invigorated a real desire to get much better!”
Beverley Compton, Deputy Director, Policy and Performance

Endnotes, References & Further Reading

Marr, Bernard (2010), “The Intelligent Company: Five Steps to Success with Evidence-Based
Management”, Wiley, Oxford.

Marr, Bernard (2009), Managing and Delivering Performance: How Government, Public Sector
and Not-for-profit Organizations can Measure and Manage what Really Matters, Butterworth-
Heinemann, Oxford.

Marr, Bernard (2006), “Strategic Performance Management”, Butterworth-Heinemann, Oxford

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Using Performance Management to Transform a Failing Organization: The Case of NE Lincs Council API Case Study

Highlights from the API resources library:

Our Resource and Research Library offers a selection of relevant downloads and links to books, articles and
case studies. These have been selected as useful information sources for further reading and to illustrate best
practice and leading thinking.

Some key ideas explained in simple terms:

• What is Performance Management?

• What is the Balanced Scorecard?
• What is a Key Performance Indicator?

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