What gets measured sometimes gets managed.

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One of the commonly invoked adages among those who work with performance information and performance management is the classic "what gets measured gets managed." This aphorism, coined by management guru Peter Drucker, reflects the commonly held belief that the act of measuring performance is sufficient to provoke a managerial response--a response that will, it is strongly implied, improve performance.

This pattern of stimulus and response is often taken as a given--if you have a problem, you can effectively use one or more performance measurements to help fix it. Our daily routine and experience tend to reinforce this idea; most of us adjust our pressure on the gas pedal as we notice the speedometer creeping up, for example, and do so without thinking much about it. But as with so many adages, there is more to it. It is probably more accurate to say "what gets measured probably gets noticed--and therefore may get some response," although this version is not as much fun to say and is far less reassuring.

Indeed, the assumption of causality breaks down pretty quickly for organizations, especially large, complex ones like governments. Decision makers, whatever their level in the organizational chart, fail to use performance information to improve their performance for a whole raft of reasons. They may not understand what the data does or does not mean. They may lack incentives to respond. The proper response may not be clear. There may be incentives or political pressures not to respond. And in the absence of an aligned management framework, even well-intended efforts are likely to be divided and not lead to desired results, or possibly even work against one another.

MOVE TO THE NEXT LEVEL

It is this gap--the realization that introducing performance information does not automatically drive more effective management--that defines the real difference between performance reporting and performance management. Performance reporting in government presents performance data for a wide variety of purposes: compliance with statutory requirements, demonstration of transparency to stakeholders, showing accountability to citizens, etc. There is certainly nothing wrong with these purposes, and more governments would do well to subscribe to them. Indeed, an encouraging trend is the increased emphasis on state and local governments providing the public with performance reports that are timely and useful. A number of governments, especially local governments, are more aggressively seeking citizen input on what performance information they want to see and how they want to see it.

But performance management takes the benefits that performance reporting brings and carries them further, reaping significant additional value. Performance management does not take a sound managerial response to performance data for granted. Instead, it deliberately and systematically supports the use of performance data as an essential part of management processes at all levels to drive more informed, and better, decisions. Moving beyond a reporting culture to one that is focused on delivering results for customers is not always easy, but it is a critical success factor--perhaps the critical success factor--in delivering better performance from gov ernment.The rewards are real and significant, and performance management is widely recognized as a primary hallmark of a well-managed government.

THE MARICOPA COUNTY EXPERIENCE

Maricopa County, Arizona, provides an example of what can be achieved when performance management is incorporated into an organization. Since 1982, the County Department of Medical Eligibility (DOME) had been responsible for determining the Medicaid eligibility for indigent persons admitted to 35 hospitals within the boundaries of the jurisdiction. A state statute mandated that Arizona counties had to determine Medicaid eligibility within 48 hours of hospital admission to be eligible for state and federal Medicaid funds to pay the costs of treatment. The 48-hour timeframe was difficult to meet, and sometimes impossible, when patients were too ill to help the hospitals in determining eligibility. But failure to meet the standard was costing the county between $1 million and $2 million each month, plus additional fines and fees.

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To deal with this problem, DOME established a hospital claim risk-prioritization system that focused on performance management. First, the department established the following specific, measurable goals:

* reduce processing errors to less than 3 percent

* establish Medicaid eligibility within 48 hours in 90 percent of cases

* improve the relations between private hospital relations

and the county

* improve private hospital cash flow

* reduce litigation

* enhance the county's image in the community with major indigent healthcare stakeholders

The agency used the goals to re-engineer its business processes and focus the entire agency on the state-mandated timeframe. In redeveloping its mission, the agency redefined its customer as county taxpayers, rather than the indigent patients. The new focus--ensuring that federal and state Medicaid funds would be used to support the costs of medical care--would allow the county to stop diverting taxpayer dollars from other critical needs such as prosecutors, law enforcement, courts, jails, and other services.

DOME established statements of purpose and results, output, demand, and efficiency performance measures for all operational activities. This step, combined with the goals, clarified the agency's operational purpose for DOME staff. In addition, the agency developed a financial gain-sharing incentive program to increase commitment, which helped push the operational improvements forward. One of those improvements--a personal and real-time electronic communication with the area hospitals- led to cooperative agreements and timely sharing of information, which were critical to achieving the agency's goals.

Ultimately, the county's improvements led to savings of $25 million in less than one year. (The state now handles eligibility operations.)

ACHIEVING DESIRED OUTCOMES

Rather than simply generating performance data, effective performance management requires that the data must be embedded in a managing-for-results structure that aligns the measures with a clear mission, goal, or priority Being clear about the desired result from the outset increases the probability of success. Employees are unlikely to be effective in advancing a department's goals if they do not understand how the measures for which they are responsible align with those goals. Without this framework, employees are also more likely to focus on performance measures in an unbalanced or counterproductive manner. The value of this "power of purpose" has been demonstrated time and again--indeed, in many situations where employees have created the measures themselves, aligning a clear purpose, goal, or priority within a broader managing-for-results framework has led stronger performance measures and a greater commitment to using them. A managing-for-results framework also provides support for employees at all levels to focus more clearly on the desired results for the customer--which also leads to better results.

An example is the effort Metro Nashville/Davidson County, Tennessee, undertook to improve the quality of its emergency medical service (EMS) care. One of the fire department's largest programs is Basic Life Support, which provides urgent medical care and transport. The department measures the success of this program in part by looking at the quality of the medical care provided--specifically, how well the responders followed the department's established medical protocols. Using performance management tools, key fire department and EMS employees took it upon themselves to lead a campaign with 800 fellow employees to make sure they were paying attention to their medical protocols and were accurately tracking their compliance. This initiative led to changes in long-standing operating procedures, and as a result, the department can now report on the quality of care it provides, and that the quality of care has improved.

The county also worked on its 911 emergency call center. The center had long measured its response time to incoming calls, but as part of a managing-for-results performance management effort, Metro Nashville/Davidson County began to monitor response times more closely, with a clear focus on making improvements. It discovered periodic, significant short-term increases in call response times, which turned out to be the result of regular occurrences such as breaks and shift changes. Changing the way these minor staff disruptions were handled eliminated the spikes--and allowed emergency calls to be answered more quickly--at no additional cost to taxpayers.

Performance management frequently leads to improvements in customer service. The City of Long Beach, California, in another example, used the tools of performance management to cut its wait time for building permits in half. It did so by first clearly stating its desired results in a strategic business plan, closely watching performance information, and amending service delivery processes to improve results.

STEPS FOR SUCCESS

A systematic effort is required to ensure that performance management becomes an essential process at all levels, allowing for better and more informed decisions. Effective performance management is done within a larger managing-for-results framework to assure alignment of purposes, goals, or priorities. Creating and supporting an effective performance management system requires organizations to follow several important principles:

* Pay attention to change management. W. Edwards Deming, father of the modern quality movement, said the first rule of any improvement effort is to "drive out fear." Change--especially in large bureaucratic organizations like governments--creates conditions that are ripe for fear, misunderstanding, distrust, and resistance. Failure to recognize this reality and to address it in the beginning will lead to a less successful effort and thus a lower return on investment. What does this mean, in practical terms? Ensure that communication is frequent and widespread so the "information vacuum" is not as filled with distortions and rumors. Enlist trusted leaders to speak on behalf of the effort, and be clear about the benefits everyone will gain. Emphasize that this is how the organization will do business going forward, not a "flavor of the month" initiative that folks can just wait out.

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