u.s. department of labor employment and training administration

U.S. Department of LaborU.S. Department of Labor

Employment and Employment and Training AdministrationTraining Administration

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What’s with all the What’s with all the numbers? numbers?

Building an Effective Building an Effective Performance Management Performance Management

System to Improve OutcomesSystem to Improve Outcomes

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AgendaAgenda

• The need for a different framework The need for a different framework for performance management for performance management

• Characteristics of an ideal Characteristics of an ideal frameworkframework

• Balanced Scorecard frameworkBalanced Scorecard framework• Corporate Performance Corporate Performance

Management framework Management framework• Core components of a performance management Core components of a performance management

systemsystem• Questions?Questions?

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The Need for a Different The Need for a Different Framework for Performance Framework for Performance

ManagementManagement

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Performance managementPerformance management is the practice of is the practice of actively using performance data to improve desired actively using performance data to improve desired outcomes. outcomes.

Source: Turning Point, Source: Turning Point, From Silos to Systems: Using Performance From Silos to Systems: Using Performance Management to Improve the Public’s HealthManagement to Improve the Public’s Health, 2003, 2003

Performance Management DefinedPerformance Management Defined

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The Need for a Different FrameworkThe Need for a Different Framework

• The common measures focus on The common measures focus on “bottom line” results, not the drivers “bottom line” results, not the drivers

• The need for timely resultsThe need for timely results

• There is a need for measures that There is a need for measures that align with the mission and strategy (i.e., a focus align with the mission and strategy (i.e., a focus on program business operations and outputs)on program business operations and outputs)

Common Measures and Performance Common Measures and Performance Management are not the SameManagement are not the Same

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The Need for a Different FrameworkThe Need for a Different Framework

• Participant impact measures provide a limited Participant impact measures provide a limited picture of organizational healthpicture of organizational health

• Participant impact measures alone are insufficient Participant impact measures alone are insufficient to assess continuous improvementto assess continuous improvement

Common Measures and Performance Common Measures and Performance Management are not the Same Management are not the Same (Continued)(Continued)

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• Deploys the agency’s strategic Deploys the agency’s strategic plan plan

• Focuses and aligns agency Focuses and aligns agency activities and effortsactivities and efforts

• Tests cause-and-effect relationships Tests cause-and-effect relationships among the program’s activities among the program’s activities

• Family of measurement types reduces risk of not Family of measurement types reduces risk of not meeting “bottom line” measuresmeeting “bottom line” measures

• Links performance measures to decision makingLinks performance measures to decision making

Characteristics of an Ideal FrameworkCharacteristics of an Ideal Framework

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Ideal Framework is Mission-FocusedIdeal Framework is Mission-Focused

““Would you tell me, please, which way I ought to go from Would you tell me, please, which way I ought to go from here?”here?”““That depends a good deal on where you want to get to,” said That depends a good deal on where you want to get to,” said the Cat.the Cat.““I don’t much care where --,” said Alice.I don’t much care where --,” said Alice.““Then it doesn’t matter which way you go,” said the Cat.Then it doesn’t matter which way you go,” said the Cat.““So long as I get somewhere,” Alice added as an explanation.So long as I get somewhere,” Alice added as an explanation.““Oh, you’re sure to do that,” said the Cat, “if you only walk long Oh, you’re sure to do that,” said the Cat, “if you only walk long enough.”enough.”

Helping Alice Get Out of Helping Alice Get Out of Wonderland Wonderland Your Mission Guides Your Actions…Your Mission Guides Your Actions…

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Balanced Scorecard Balanced Scorecard FrameworkFramework

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Balanced Scorecard FrameworkBalanced Scorecard Framework

The The Balanced ScorecardBalanced Scorecard is a is a performance management approach performance management approach that focuses on various overall key that focuses on various overall key performance indicators, including performance indicators, including customer perspective, internal- customer perspective, internal- business processes, learning and business processes, learning and growth and financials, to monitor progress toward growth and financials, to monitor progress toward organization's strategic goals. organization's strategic goals.

Each major unit throughout the organization often Each major unit throughout the organization often establishes its own scorecard which, in turn, is establishes its own scorecard which, in turn, is integrated with the scorecards of other units to integrated with the scorecards of other units to achieve the scorecard of the overall organization.achieve the scorecard of the overall organization.

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MISSIONMISSION

CUSTOMER PERSPECTIVECUSTOMER PERSPECTIVE

To achieve our mission, how To achieve our mission, how must we satisfy our customers?must we satisfy our customers?

FINANCIAL PERSPECTIVEFINANCIAL PERSPECTIVE

If we succeed, how will we look If we succeed, how will we look to Congress and the public?to Congress and the public?

INTERNAL PROCESSES PERSPECTIVEINTERNAL PROCESSES PERSPECTIVE

To satisfy our customers, Congress, the public, and To satisfy our customers, Congress, the public, and mission, what businesses processes must we excel at?mission, what businesses processes must we excel at?

LEARNING AND GROWTHLEARNING AND GROWTH

To achieve our mission, how must our people learn, To achieve our mission, how must our people learn, communicate, and work together?communicate, and work together?

Value, Benefit

Value, BenefitVa

lue,

Ben

efit

Valu

e, B

enef

it

Source: Public sector Balanced Scorecard from the Balanced Scorecard Collaborative Source: Public sector Balanced Scorecard from the Balanced Scorecard Collaborative

Balanced Scorecard FrameworkBalanced Scorecard Framework

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• Perspectives are key organizational strategies Perspectives are key organizational strategies • Aid to system and operations managementAid to system and operations management• Help in diagnosing and troubleshootingHelp in diagnosing and troubleshooting• PrioritizingPrioritizing• An aid to planningAn aid to planning• Understand improvementUnderstand improvement• Tracking performanceTracking performance• External accountabilityExternal accountability

To be successful, the To be successful, the drivers of performance drivers of performance

must be identifiedmust be identified

PerspectivesPerspectives ObjectivesObjectives MeasuresMeasures

Why Use Different Perspectives?Why Use Different Perspectives?

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• Identify strategic themes and group them under the Identify strategic themes and group them under the appropriate perspectiveappropriate perspective

• Create a strategy map to visualize the interaction of Create a strategy map to visualize the interaction of individual activities in the larger systemindividual activities in the larger system

• For each identified strategic theme, identify what For each identified strategic theme, identify what you are trying to achieve and the obstacles you you are trying to achieve and the obstacles you faceface

• Develop measurable objectives that specify numeric Develop measurable objectives that specify numeric target levels, where appropriatetarget levels, where appropriate

• Limit objectives to major program elements Limit objectives to major program elements

PerspectivesPerspectives ObjectivesObjectives MeasuresMeasures

Use a Strategy Map to Develop ObjectivesUse a Strategy Map to Develop Objectives

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• How well did we succeed at providing How well did we succeed at providing customer value? customer value?

• How well do we do the things which How well do we do the things which support creating customer value? support creating customer value?

Each measure should answer one of the Each measure should answer one of the following questions: following questions:

PerspectivesPerspectives ObjectivesObjectives MeasurMeasureses

Develop Measures for the ObjectivesDevelop Measures for the Objectives

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• CompareCompare

• LearnLearn

• MotivateMotivate

• Reward and celebrateReward and celebrate

• Promote and explainPromote and explain

PerspectivesPerspectives ObjectivesObjectives MeasurMeasureses

Uses of Performance MeasuresUses of Performance Measures

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PerspectivesPerspectives

AgencyAgency

DepartmentDepartment

Team/IndividualTeam/Individual

MeasuresMeasures ObjectivesObjectives

Strategies Should be Aligned at Different Strategies Should be Aligned at Different Organizational LevelsOrganizational Levels

The Importance of AlignmentThe Importance of Alignment

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Wherever the product of a public organization has Wherever the product of a public organization has not been monitored in a way that ties performance not been monitored in a way that ties performance to reward, the introduction of an effective to reward, the introduction of an effective monitoring system will yield a monitoring system will yield a fifty percentfifty percent improvement in the product in the short run.improvement in the product in the short run.

In other words…In other words…What gets measured gets doneWhat gets measured gets done

Chase’s Law on MeasurementChase’s Law on Measurement

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Customer Perspective ExampleCustomer Perspective ExampleInitiative:Initiative: Implement an expanded supportive services Implement an expanded supportive services strategy to increase the percent of program completers strategy to increase the percent of program completers from the current rate of 83%from the current rate of 83%Rationale:Rationale: Successful completions highly correlated with Successful completions highly correlated with increased employment and earningsincreased employment and earnings

Linking Strategy to MeasurementLinking Strategy to Measurement

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Freeware for Creating Strategy MapsFreeware for Creating Strategy MapsThis is an Example and not an Endorsement by ETA.This is an Example and not an Endorsement by ETA.

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Illustration Using the BSC Illustration Using the BSC ApproachApproach

Increasing the Efficiency and Profitability Increasing the Efficiency and Profitability of a Commercial Airlineof a Commercial Airline

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Corporate Performance Corporate Performance ManagementManagement

An Extension of the BSC ApproachAn Extension of the BSC Approach

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Corporate Performance ManagementCorporate Performance Management is defined as is defined as the processes, methodologies, metrics and systems the processes, methodologies, metrics and systems needed to measure and manage business needed to measure and manage business performance. In the five years since CPM was performance. In the five years since CPM was introduced, this approach to management has been introduced, this approach to management has been credited with many success stories and turnarounds. credited with many success stories and turnarounds. CPM builds on the core features of the BSC. CPM builds on the core features of the BSC.

CPM FrameworkCPM Framework

CPMCPM

MissionMission

RefineRefine

Review/Review/AnalyzeAnalyze

Measure/ Measure/ MonitorMonitor

Align/ Align/ Execute Execute

Define/ Define/ PlanPlan

CPM includes CPM includes the whole set the whole set of management of management processes that processes that starts with the starts with the mission of the mission of the organization.organization.

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Elements of CPMElements of CPM

MissionMission

Define/PlanDefine/Plan

Align/ExecuteAlign/Execute

Measure/MonitorMeasure/Monitor

Review/AnalyzeReview/Analyze

RefineRefine

• Organization’s purposeOrganization’s purpose

• VisionVision

• Value driversValue drivers

• Used to align all activities Used to align all activities in an organizationin an organization

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Elements of CPMElements of CPM

MissionMission

Define/PlanDefine/Plan

Align/ExecuteAlign/Execute

Measure/MonitorMeasure/Monitor

Review/AnalyzeReview/Analyze

RefineRefine

• Feedback from Feedback from implementation of current implementation of current strategystrategy

• Refine organization’s Refine organization’s corporate strategy modelcorporate strategy model– Strategic objectivesStrategic objectives– Key performance measuresKey performance measures– TargetsTargets– Strategic initiativesStrategic initiatives

• Communicate strategy to Communicate strategy to all organizational levelsall organizational levels

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Elements of CPMElements of CPM

MissionMission

Define/PlanDefine/Plan

Align/ExecuteAlign/Execute

Measure/MonitorMeasure/Monitor

Review/AnalyzeReview/Analyze

RefineRefine

• Organizational divisions Organizational divisions and units align strategies and units align strategies to corporate strategyto corporate strategy– Strategic objectivesStrategic objectives– Key performance measuresKey performance measures– TargetsTargets– Operational plansOperational plans

• Execute operational plansExecute operational plans

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Elements of CPMElements of CPM

MissionMission

Define/PlanDefine/Plan

Align/ExecuteAlign/Execute

Measure/MonitorMeasure/Monitor

Review/AnalyzeReview/Analyze

RefineRefine

• Continuous monitoringContinuous monitoring• Track progress on key Track progress on key

performance measuresperformance measures• Requires the collection Requires the collection

and reporting of timely, and reporting of timely, accurate, and accessible accurate, and accessible data data

• Create and use Create and use performance scorecard to performance scorecard to see the entire organizationsee the entire organization

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Elements of CPMElements of CPM

MissionMission

Define/PlanDefine/Plan

Align/ExecuteAlign/Execute

Measure/MonitorMeasure/Monitor

Review/AnalyzeReview/Analyze

RefineRefine

• Analyze performance Analyze performance gaps on key performance gaps on key performance measuresmeasures

• Use performance data Use performance data and create a learning and create a learning feedback loop to educate feedback loop to educate all levelsall levels– Business insights on Business insights on

performanceperformance– Use these insights to Use these insights to

understandunderstand

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Elements of CPMElements of CPM

MissionMission

Define/PlanDefine/Plan

Align/ExecuteAlign/Execute

Measure/MonitorMeasure/Monitor

Review/AnalyzeReview/Analyze

RefineRefine

• Decision makers Decision makers collaborate, sharing collaborate, sharing different viewpoints and different viewpoints and ideasideas

• Generate integrated Generate integrated insights from insights from Review/Analyze stepReview/Analyze step

• Refine corporate strategy Refine corporate strategy and execution planand execution plan

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Key Features of CPMKey Features of CPM

• Comprehensive and structured Comprehensive and structured planning planning

• Disciplined execution and Disciplined execution and review review

• Information-based decision makingInformation-based decision making• Integrated management processesIntegrated management processes• Agile management structureAgile management structure

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Core Components of a Core Components of a Performance Management Performance Management

SystemSystem

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Performance Management System DefinedPerformance Management System Defined

A A Performance Performance Management Management System System is the is the continuous use of continuous use of four practices (four practices (see see

diagram) diagram) that are fully that are fully integrated into an integrated into an organization’s core organization’s core business business operations.operations.

Source: Turning Point, Source: Turning Point, From Silos to Systems: Using Performance From Silos to Systems: Using Performance Management to Improve the Public’s HealthManagement to Improve the Public’s Health, 2003, 2003

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Important ConceptsImportant Concepts

Performance StandardsPerformance Standards are objective are objective

standards or guidelines that are used to standards or guidelines that are used to

assess an organization’s performance (e.g., assess an organization’s performance (e.g.,

80 percent entered employment rate). 80 percent entered employment rate). Standards may be set based on national, Standards may be set based on national,

state, or scientific guidelines; by bench- state, or scientific guidelines; by bench-

marking against similar organizations; based on the marking against similar organizations; based on the public’s or leaders’ expectations; or other methods.public’s or leaders’ expectations; or other methods.Source: Turning Point, Source: Turning Point, From Silos to Systems: Using Performance From Silos to Systems: Using Performance Management to Improve the Public’s HealthManagement to Improve the Public’s Health, 2003, 2003

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Important ConceptsImportant Concepts

Source: Turning Point, Source: Turning Point, From Silos to Systems: Using Performance From Silos to Systems: Using Performance Management to Improve the Public’s HealthManagement to Improve the Public’s Health, 2003, 2003

Performance IndicatorsPerformance Indicators summarize the focus (e.g., summarize the focus (e.g., talent development, customer service) of performance talent development, customer service) of performance goals and measures, often used for communication goals and measures, often used for communication purposes and preceding the development of specific purposes and preceding the development of specific measures.measures.

Performance MeasuresPerformance Measures are quantitative measures of are quantitative measures of capacities, processes, or outcomes relevant to the capacities, processes, or outcomes relevant to the assessment of a performance indicator.assessment of a performance indicator.

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Important ConceptsImportant Concepts

Source: Turning Point, Source: Turning Point, From Silos to Systems: Using Performance From Silos to Systems: Using Performance Management to Improve the Public’s HealthManagement to Improve the Public’s Health, 2003, 2003

Performance TargetsPerformance Targets set specific and measurable set specific and measurable goals related to agency or system performance. goals related to agency or system performance. Where a relevant performance standard is available, Where a relevant performance standard is available, the target may be the same as, exceed, or be an the target may be the same as, exceed, or be an intermediate step toward that standard.intermediate step toward that standard.

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Review of Critical Success FactorsReview of Critical Success Factors

BSC and CPM Emphasize the Performance BSC and CPM Emphasize the Performance Management System Should…Management System Should…

• Align to the corporate mission and strategyAlign to the corporate mission and strategy• Develop meaningful key performance Develop meaningful key performance

measuresmeasures• Increase data availabilityIncrease data availability• Maximize data qualityMaximize data quality• Enhance performance reportingEnhance performance reporting• Improve analysisImprove analysis• Achieve performance integrationAchieve performance integration• Drive decision makingDrive decision making

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Questions?Questions?