31 – Measures, targets, KPI’s, KRA’s and CSF’s. What are we talking about?

Posted by Lancing Farrell                                                                              740 words

There is a lot of talk in the public sector about measurement. Some people say that you ‘can’t manage what you can’t measure’ or, ‘what gets measured, gets done’. There is no doubt that measurement is inextricably linked to the pursuit of better performance and greater accountability. In local government, we seem to be desperately looking for things we can measure that will tell us how well we are doing. But are we measuring the things that count?

John Seddon has strong views on measurement. He describes a systemic relationship between purpose (i.e. what a service exists to do), measures (i.e. how it is managed), and method (i.e. how people work in the system). He sees the imposition of arbitrary measures (i.e. targets) as replacing the real purpose of a system with a de facto purpose. The risk is that people then start to work to meet the targets and work is designed around the requirements to report on achievement of targets. Instead, he says that measures should be derived from the purpose, as defined by the customer, and used where the work is done by the people doing the work. The test of a good measure is if it helps to understand and improve work.

It is a simple and practical approach. After all, a measure is simply how something that is being produced will be quantified. Presumably there is some understanding of what amount and quality should be produced and this can be compared with what has actually been produced. If it is important to produce a predetermined amount, set a target. A target is not always a bad thing. If it sets a goal, then achieving that goal can give people a sense of success and be highly motivating. Some people need goals and goal setting theory suggests that specific goals are more effective motivators of performance than general goals.

Goal theory also says that when people are confronted by tasks that are complex for them, that urging them to ‘do their best’ can result in them developing better strategies than setting specific performance targets.  It is worth bearing in mind that the objective for many services is to use resources efficiently and effectively to produce as much of the service as possible. In these situations, the complexity arising from the variability and unpredictability of demand limits the ability to set targets that can reliably be met without distorting service delivery to focus on the target instead of the customer’s needs.

Mark H. Moore takes the idea of measuring achievement of purpose a step further than Seddon when he describes the creation of public value. In this context, the purpose is the achievement of the organisational mission, which should describe the value that the organisation will create using the resources and authority given to it by the community. Purpose is not only about individuals and the value they receive at the point of delivery, but includes the wider community benefitting from the collective value of the services available. Essentially, Moore is moving the measurement debate away from simple measures of inputs, processes and outputs to focus on outcomes in ‘altering social conditions in collectively desired directions’.

To achieve this he has developed the Public Value Scorecard. It is built around a ‘public value account’ that matches the use of community assets and the associated costs, with the achievement of collectively valued social outcomes. There are also scorecards for ‘legitimacy and support’ (the external demands for accountability in the authorising environment of the organisation) and ‘operational capacity’ (the ‘value chain’ that links the inputs of public resources into a production system that produces transactions with clients and, ultimately, creates socially desired outcomes). It is a simple and compelling idea.

What about KPI’s (key performance indicators) I hear you ask? How do they fit in? In some ways they tie together the elements of the discussion so far. A KPI is a measure that tells you how well you are doing in relation to the key result areas (KRA) or critical success factors (CSF) you have identified for your organisation. For Moore this is the creation of public value. For Seddon it is achievement of purpose. In both cases the objective is to identify what is critical to success and high performance, determine ways to measure it that are accurate and useful, and then use the knowledge that comes from measurement to improve.

Seddon, J. 2014. The Whitehall Effect.

Moore, M. 2013. Recognising Public Value.