Survey Questions. Performance Management Not Just Measures! (Based on the Public Procurement Practice: Performance Management)

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Performance Management –

Not Just Measures!

(Based on the Public Procurement Practice: Performance Management)

Beth Fleming, CPPO, C.P.M.

Director of Purchasing

Denton County, Texas

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Survey Questions

• Has your procurement division completed a

Strategic Planning process?

• Does your procurement division currently

collect performance data?

• Does your procurement division analyze the

data for continuous improvement?

2 • In October 2010, the Values and Guiding Principles were finalized and adopted by the NIGP Board of Directors. From that point forward the Values and Guiding Principles began to be adopted by many stakeholder organizations and work on Public Procurement Practices began. • In August 2011, NIGP announced a formal partnership with the UK based, Chartered Institute for Purchasing and Supply (CIPS). The partnership officially took the Principles & Practices Project global, and both NIGP and CIPS are working together to achieve a set of Public Procurement Principles & Practices that will set the standard for the profession around the world. • NIGP anticipates a total of 30 practices for the profession by July 2013.

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Practices Courtesy of:

NIGP & CIPS: A Partnership for Public Good • CIPS has 65,000 members from both private and public

sectors in 150 countries around the world.

• NIGP expands its global presence in public procurement through partnership with CIPS, the world’s largest procurement and supply professional organization. • The NIGP-CIPS partnership is founded upon a shared

vision of public procurement for public good. From that vision, our two institutes have embarked upon two immediate initiatives:

• Globalization of the Values, Guiding Principles and Standard Practices for public procurement

• Combined consultative support to governments around the world desiring guidance and improvement in their procurement practices

Performance Management Process

Yogi Berra purportedly said: “You’ve got to be careful if you don’t know where you’re going, because you might not get there.” Such is also the case when a local government embarks on a concerted effort to improve services. Performance measurement can help you determine where you are and, more importantly, where you want to go. 5

Benefits –

Performance Management

• Strengthens Accountability • Enhances Decision‐Making • Improves Customer Service • Assists the Agency in Determining Effective Resource Use • Supports Strategic Planning and Goal Setting

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Five Important Questions

Every leader should be asking the following

five questions:

• What results are we trying to achieve? • How would we know if we were achieving them? • What strategies are we using to achieve the results? • Are these strategies working? • What do we need to do differently to achieve our results? 7 • Strategic Procurement Planning – Standard of Practice 1 • Performance Measurement – Standard of Practice 2 • Performance Management – Standard of Practice 3 • Performance Metrics – Standard of Practice 4 8

Strategic Procurement Planning

Standard of Practice 1

• Strategic Planning

–The process of creating alignment and consistency in documents that establish long‐range objectives and overall strategy or course of action by which an organization fulfills its mission

• Strategic Procurement Planning (SP

2

)

–Transformation of organization’s mission, goals and objectives into measurable activities to be used to plan, budget and manage the procurement function. The ultimate goal is to bring about positive change in organizational culture, systems, and operational practices. Practices Courtesy of: NIGP & CIPS: A Partnership for Public Good ₉

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Strategic Procurement Planning

Standard of Practice 1 Strategic Planning Priorities Customer Needs/ Priorities Develop Mission Set Goals/ Objectives 10

Strategic Plan Building Blocks

Mission

Your Foundation and Support

Goals

What you want to do

Strategies

Approach

Objectives

Precise and Measurable Results

Action Steps Execution Phase Targets Outcomes

• Strategic Procurement Planning

–Standard of Practice 1

• Performance Measurement

• Performance Management

• Performance Metrics

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Performance Measurement

• Performance Measurement

–The process by which procurement established criteria, based on strategic planning goals, for determining the results and quality of its activities. It involves creating a simple, effective system for determining whether procurement is meetings its objectives. Practices Courtesy of: NIGP & CIPS: A Partnership for Public Good 13

Performance Measurement

Standard of Practice 2 Strategic Planning Priorities Customer Needs/ Priorities Develop Mission Set Goals/ Objectives Identify Performance Measures 14

Methods Used in

Performance Measurement

• Performance Reviews

• Staff Meetings

• Benchmarking

• Performance Indicators

• Performance Targets

• Quality Management

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Planning Performance Measures

• Input from key stakeholders

• Simple and relevant measures

• Specific and consistently applied

• Identify dependencies

• Specific time period for reporting

• Balance measures

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Performance Measurement Levels

• Individual performance

• Group performance

• Organizational performance

• Supplier performance

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Performance Measurement

Areas

• Customer Satisfaction

• Timeliness

• Quality

• Effectiveness

• Efficiency

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• Strategic Procurement Planning

• Performance Measurement

• Performance Management

• Performance Metrics

–Standard of Practice 4 19

Performance Metrics

• Performance Metrics

–Term given to the measurement of performance. An analytical application of measurements that allows comparison of performance standards. Practices Courtesy of: NIGP & CIPS: A Partnership for Public Good 20

Performance Metrics

Standard of Practice 4 Strategic Planning Priorities Customer Needs/ Priorities Develop Mission Set Program Goals Identify Performance Measures Collect Data/ Metrics 21

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Definitions

• Input – Indicates the resources (dollars and staff) used • Output – Specifies the work performed • Efficiency – Monitors the output of an activity in relation to the resources used to produce the output – Ratio between inputs and outputs OR – Relationship between inputs and outputs • Effectiveness (Service Quality) – Tracks the quality of the work performed – Quality, timeliness and customer satisfaction • Outcome – Describes the results for a broad goal area that is supported by the above measures – Program Outcomes – Outcomes directly related to the program – Community/Organization Outcomes – Outcomes that are broader than the program and are community/organization‐wide (e.g., Strategic Plan) 22

Efficiency Measures

• Efficiency – the relationship between inputs and outputs or how well did you use the resources in relation to the output produced? –Cost per case handled is an efficiency measure –FTEs per case handled or cases per FTE are efficiency measures –Crime Rate per 1,000 population is not an efficiency, but an outcome (no input or no relationship to resources) –Injuries per 100,000 population is not an efficiency, but an outcome (no input or no relationship to resources) • Procurement Efficiency Measures: –Averaged 3,200 Purchase Orders per Buyer –Cost of $115 per purchase order issued –Established 13 new supply contracts this year –Annual rate of stock “turnover” 23

Effectiveness Measures

• Effectiveness – based on the quality, timeliness and satisfaction of the product or services or are you accomplishing what you set out to do? • A relationship between these variables exists to determine whether or not the perception of service is ranked high –Average daily turnaround to process tickets (measures timeliness) –Percentage of customers satisfied with services provided (measures satisfaction) • Procurement Effectiveness Measures –Average days to process routine supply purchase orders –Average weeks to process bids –Percentage of expended amount by use of term/supply contracts –Satisfaction level of customers (internal or external)

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Example – Performance Metrics

0 50 100 150 200 250 300 2004 2009 2010 2011 2012 Goal

County Budget (in millions) Purchase Orders Issued (in Hundreds)

Budget Compared to POs Issued

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Example ‐ Performance Metrics

0 5 10 15 20 25 30 35 2004 2009 2010 2011 2012 Goal % of Expended Amount on Term Contracts (in millions) % of Expended Amount on Cooperative Contracts (in millions)

Term Contracts Compared to Cooperative Contracts

Example ‐ Performance Metrics

0 5 10 15 20 25 30 2004 2009 2010 2011 2012 Goal Number of Purchasing FTEs City Budget (in Hundred Millions) Weeks to process bids

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QUESTIONS?

To submit a question, type your question in the

upper part of your Q&A window and click on

“

Ask.

”

Thank you for your questions!

Beth Fleming, CPPO, C.P.M.

[email protected]

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• Strategic Procurement Planning

• Performance Measurement

• Performance Management

• Performance Metrics

–Standard of Practice 4 29

Performance Management

• Performance Management

–An ongoing, systematic approach to improving results through evidence based decision making, continuous organizational learning, and a focus on accountability for performance. Performance Management is integrated into all aspects of an organization’s management and policy‐making processes, aligning an organization’s practices so it is focused on achieving improved results for the public. Practices Courtesy of:

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Performance Management

Standard of Practice 3 Strategic Planning Priorities Customer Needs/ Priorities Develop Mission/Vision Set Procurement Goals Identify Objectives/ Measures Collect Data Analyze Data Report Results Revise Goals/ Resources 31

Data Collection and Analysis

• Performance measurement involves collecting data in a systematic and objective manner to determine efficiency and effectiveness of service delivery and program objectives. • If performance measurement is simply viewed as a data collection and reporting exercise, it will serve little purpose. • It is only through the analysis of data that performance measurement can really become a tool for continuous service improvement. 32

From Measurement to Management

Performance Targets Measures of success toward

accomplished objectives Performance Measures Inputs: resources required to accomplish activity

Outputs: quantitative measures of what the

activity produces

Outcomes: impact of activity (quality, not just outputs) Efficiency: cost per unit of outputs and outcomes

Per form ance Mea sure men t Per forma nce Man ageme nt Strategic Objective Mission or Vision 33

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Example –

Performance Management

• Analysis of Cost

Avoidance/

Revenue Data

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Example –

Performance Management

• Analysis of

M/WBE Goals

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Example –

Performance Management

• Analysis of Outreach

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Example –

Performance Management

• Analysis of

Low Value

Purchasing Activity

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Measurement Made Simple

• Measures Reveal our Values –If we value customer satisfaction – we’ll measure it –If we care about speed – we’ll measure it –Case Study – In a call center that was struggling with customer satisfaction, employee morale, and an ever‐increasing call volume, their performance measures were: • How many calls each employee handled during an hour • How long each employee was taking to finish a call –What values were they reinforcing? –Measures were perfectly suited for the sweatshop they created. 38

Measurement Made Simple

• Measures Drive Behavior –We need to be sure that we are measuring the right things –If we want to be more customer focused, we should measure customer satisfaction –Case Study – Given the measures in the call center case, it is no surprise to see how employees behaved • Employees would answer a call and answer quickly to increase calls counts and short talk times • Few would go extra mile to accomplish customer satisfaction 39

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Measurement Made Simple

• Measures Can Inspire Us –One of the top motivators for employees is the feeling that they are making a difference –The right measurements help them see they matter –Measures that inspire us: • United Way Campaign thermometer • 61 home runs • Pounds lost seen on your scale 40

Measurement Made Simple

• Measures Help Us Learn –This is the true purpose to help us answer important questions –The right measurements can transform the intelligence of the organization –What we learn: • How long does this process take? • Are we having an impact? • Is the new process working? 41

Seven Pitfalls to Avoid

1. No Set Context – Data by themselves have no meaning. The general public is no longer satisfied with information about how money is spent or how many clients are processed, they are asking, “What was accomplished?” or “What was the outcome?” 2. Lack of Commitment from Leaders – There must be a strong commitment from leaders to move toward measuring performance and not just collecting data on effort. Without leadership, resistance will overcome the best intentions. 3. No Development of Capacity – Employees must have the capacity to develop measures, or they will use whatever “measures” are already available. 4. A Focus on Punishment Instead of Improvement – If measurement focuses on negative accountability, we will seek to avoid accountability when things go wrong. Measurement should be a tool for improvement.

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Seven Pitfalls to Avoid

5. No Stakeholder Feedback – When designing any data system, the designers must know what the information will be used for and who the audience is. 6. No Link Between Performance Measurement and Resource Allocation – For many governments, the ultimate aim of management based on performance measures is to integrate program performance and outcome information with the budget process. 7. Bureaucratic Uniformity – One size does not fit all. Forcing uniformity across distinct agencies prohibits flexibility and ignores differences. 43

References

• Desenberg, Jon, Show Me the Measures, Performance Measurement 101. • GFOA, Sample Purchasing Performance Measures. • ICMA, A Roadmap for Measuring Performance, www.icma.org • ICMA, Beyond the Data of Performance Management, www.icma.org • Lawson, Michael, Why Performance Matters, ICMA, April, 2006. • Miller, Ken, We Don’t Make Widgets, Governing Books, 2006. • NIGP‐CIPS, Principles and Practices of Public Procurement, www.nigp.org, Herndon, VA, 2010. • NIGP, Inc. (2010). Public Procurement Dictionary of Terms. Herndon, VA. • Theurer, Jim, Seven Pitfalls to Avoid When Establishing Performance Measures, Public Management, July, 1998. 44