58 – Performance appraisal in local government 4/4. What else could we do?

Posted by Lancing Farrell                                                                              650 words

optimus prime transformer

This is the last post in this series. It is also where things start to get interesting. There are alternatives to performance appraisal the way we have always done it. The difficulty is that most are quite different to the current approach and pursuing them will involve the risks that always accompany change. Are we up for it?

We could just stop using performance appraisals. As Peter R. Scholtes writes in The Leaders Handbook, this would require us to start thinking differently. In essence, this would involve adopting a ‘systems thinking’ approach to managing the organisation. This is likely to require systems to support employee development and promotion, providing feedback for improvement, determining training needs, and performance managing the poor performers.

Scholtes proposes what he calls ‘debundling’ of performance appraisal to focus on each benefit that the performance appraisal system supposedly provides. Continue reading

56 – Local government performance appraisal 3/4. What can you do in response to the issues?

Posted by Lancing Farrell                                                                                              530 words

apple and orange

Choices are necessary regarding the role of performance appraisal and how it will be done. I don’t think anyone thinks that performance should not be measured. It is a matter of how you do it.

Peter R. Scholtes points out the fundamental choice facing every organisation very clearly in The Leaders Handbook. What is most important to your organisation – controlling the behaviour of people to the satisfaction of management, or understanding, controlling and improving processes to benefit customers? Continue reading

52 – Local government performance appraisal 1/4. What are the issues? (or 5 reasons it doesn’t work)

Posted by Lancing Farrell                                                                             700 words

performance - rowing

This is the first in a series of four posts on performance appraisal. The central idea is that current performance appraisal systems are not effective.

To begin with, the annual performance appraisal process (sometimes called the performance development plan (PDP) or staff development scheme (SDS)) is often not carried out in local government. When it is, people have usually been compelled to do so or they are simply ‘ticking the boxes’ and being compliant. I have often thought that this is important evidence that the process is not helpful. People ‘vote with their feet’ – if they thought that performance appraisal was useful and that it added value, they would be doing it.

Continue reading

43 – Developing a dashboard for performance measurement. A case study.

Posted by Colin Weatherby                                                                         1000 words

mini dashboard

I was recently asked to create a dashboard for my unit with the intention that it function like the dashboard on my car (no this is not my car). This is to be done in the absence of an organisational dashboard or scorecard or performance reporting system. There have been a few posts on this topic by Lancing Farrell (here and here) and this post discusses the application of some of the theory.

I started by listing all of the current measures that are in place from external and internal sources of accountability. This included legislation, sector-wide improvement programs, customer satisfaction surveys, occupational health and safety accreditation audits, internal audit programs, culture surveys, organisational policies, and financial reporting. Some of these measures are applied continuously, some are annual and others occur periodically. All of them have some organisational or public reporting of performance. This list was very much a list of things that other people think it is important to measure about the performance of the department. For whatever reason.

Then I made a list of all of the things that I think it is important to measure to know work is being done properly. Continue reading

41 – ‘Where does the customer fit into a service operation?’ A brief discussion of the work of Richard B. Chase.

Posted by Lancing Farrell                                                                                                     1200 words

In 1978 Richard B. Chase published his paper Where does the customer fit into a service operation? John Seddon says this article began the separation of front and back office operations; something that he believes has created many problems in public sector service delivery today. Maybe he is right. But when you read the article, what Chase is advocating makes sense and I can’t help thinking that it isn’t necessarily a bad idea, rather it is an idea that has been used badly.

Chase is an operations manager. By 1978 he had already co-authored a popular operations management text. He starts his paper stating that a manager needs to understand the ‘operating characteristics that set one service system apart from another’ in order to make improvements. Continue reading

33 – Developing an organisational performance measurement system. Some ideas.

Posted by Lancing Farrell                                                                                     820 words

I have been thumbing through ‘Improving Performance – How to Manage the White Space on the Organisation Chart’ by Geary A. Rummler and Alan P. Brache, in particular the chapter about performance measurement. In it they describe measurement is the single greatest determinant of an organisation’s effectiveness as a system, and as the primary tool for ‘communicating direction, establishing accountability, defining roles, allocating resources, monitoring/evaluating performance, and taking improvement action’.

I haven’t seen a local government that has actively used performance measurement this way. Instead, it tends to be driven by external accountability requirements. We use the performance measurement that we do to convince others that we are doing what we should. Continue reading

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? Continue reading

29 – Local government shared services. Is it the silver bullet for rate capping? – Part 2

Posted by Colin Weatherby                                                                         950 words

In the previous post, I discussed economies of scale and the cost savings possible through shared services. This post continues the discussion, starting with the implications of front and back office separation.

The history of ‘back office’ and ‘front office’ separation is worth some discussion. According to Seddon, it began with an article by Richard Chase in the Harvard Business Review in 1978. In the article, Chase recommends separating the ‘high customer contact’ and ‘low customer contact’ elements of the service system because of the different operations involved. Low customer contact operations are more efficient and, as a result, have lower costs and it makes sense to isolate them from the disruptive effects of customer interactions if it can be done without sacrificing service effectiveness. However, service effectiveness is exactly what Seddon believes has been lost in many of the cases he cites. Continue reading

7 – ‘Why this obsession with cutting public service jobs?’ The Age, 2 January 2015

I have often wondered this myself. It seems to be part of our culture to get stuck into public servants every now and then. The author says that cutting public service budgets it is politically attractive because ‘everyone hates public service workers and cutting their budgets seems to help balance the budget by removing public sector waste’.

However, in doing so, they are achieving a false economy according to the report cited from the Centre for Policy Development (CPD), False Economies: Unpacking public sector efficiency.

‘Every Australian needs to understand what politicians are talking about when they speak of the ‘efficiency’ of government. Why should we care? Because this is our money, being spent on us and the things that matter to us.’

This report completes a body of work on productivity and efficiency completed by the CPD Public Service Research Director, Chris Stone. Some of his key messages are;

  • A sound understanding of efficiency is needed in public debates on what services to fund, and whether their delivery should be outsourced or not, in order to ensure we are getting public value for public money.
  • There are significant difficulties involved in comparing the Australian public sector performance with the private sector, but the evidence available indicates that the two sectors have a similar level of efficiency.
  • Although Australia’s public sector is comparatively efficient, there is scope for improvement.
  • The government is identifying the public services that will be affected by cuts, but does not appear to be guided by any underlying rationale of what services government should be providing.
  • The heavy focus on cuts without sufficient consideration of the value of services means that other strategies for increasing efficiency are neglected, in particular innovation and professional accountability.
  • Two significant barriers to public sector innovation are an overly risk averse orientation within organisations, and a lack of resources invested in developing and implementing innovative ideas.
  • The current method for managing performance does not provide clear guidance to public servants on how they can work toward their organisation’s goals.

It is a report of more than 70 pages and should be read by every public service manager. The discussion in Chapter 1 about different types of efficiency is enlightening.

The connection between value, public value in particular, and reducing resources to achieve greater ‘efficiency’ is important. When there is a lack of clarity about what is meant to be achieved it is difficult to measure performance and easy to cut resources with a clear conscience. The consequences are only immediately evident to an informed few and may become evident to everyone in the long term. Defining the public value to be created is an essential activity. Then the arguments about efficiency can be held in the knowledge of what impact on value will result from changes to resources.

Colin Weatherby

Stone, Christopher 2014. False Economies: Unpacking public sector efficiency (http://cpd.org.au/wp-content/uploads/2014/06/CPD-OP37_False-economies_-compiled_EMBARGO26June.pdf)

3 – Local government and complexity. Is there a simple explanation?

The last post talked about why services are offered by local government and some ideas relevant to determining what should be offered. That whole post may have seemed like an over simplification. After all, if it was that simple, each local government would have a list of the services they offer and it would be straightforward to communicate to the community which services will or won’t be offered. In practice, it is not that easy to be definite about the services available because almost any service request will be considered and councils are reluctant to say no.

This post is an effort to explain why that is so by discussing the complexity that exists in public services. For some of the ideas I acknowledge posts on the blog site ‘Flip Chart Fairy Tales’.

To begin with, services are complicated by the involvement of end users (customers) in the delivery process. Customers are not consuming something that has been made earlier. They play a voluntary and virtually uncontrollable role in producing a service. And, every customer has different needs and preferences. Therefore, processes for service delivery are not as predictable and controllable as they are in activities such as manufacturing. Despite this, many of the theories and methods for productivity improvement used in local government come from manufacturing. For example, lean.

Next, because of the nature of services, it is easier to measure cost than quality and it is more difficult to make productivity improvements than in manufacturing. Service quality is subjective and depends on the perceptions of the customer. As a result, it can be difficult to tell whether a reduction in cost has led to a reduction in quality. The cost-cutting programs so common in local government often wreak havoc on service quality but it goes unnoticed or unmeasured. In comparison, in the private sector, service businesses have a fail-safe measure of performance – their customers will leave if the quality drops. In public services that are free at the point of consumption and where there is little or no choice of provider, this measure is not available.

Public sector organisations also have to deliver services to whoever comes through the door. Price is not a ‘gatekeeper’ for access to services. And, the people receiving services can come from all parts of society and may have limited education and language skills, making their impact on the service delivery process more significant. Customers introduce variability that complicates service delivery.

Frances Frei describes five types of variability introduced by customers:

  1. They want a service when it suits them.
  2. They can ask for a range of services.
  3. They vary in their ability to do what they need to do in order to receive a service.
  4. They will expend varying degrees of effort to get a service.
  5. They have different opinions about what it means to be treated well.

This adds complexity and unpredictability to delivering services and public service organisations often respond by trying to standardise processes to reduce costs and improve productivity. In practice, this often means ‘designing out’ the source of complexity, i.e. the customer. In public services, the process of standardising service delivery can lead to ‘failure demand’ and increased costs.

John Seddon describes failure demand as ‘demand caused by a failure to do something or do something right for a customer’. It is a particular problem for public services. Because services are free at the point of consumption, if needs are not met people are easily able to re-present or escalate their request, which creates extra demand and increases costs. For example, Seddon estimated that more than 80% of the demand in a health and social care system in the UK was failure demand and that it took 400 hours of work to create 100 hours of value. This may be an extreme example, but it highlights the potential.

The workings of public services are further complicated by the environment in which they operate. It is harder to nail down strategic goals and specific measures for public sector organisations. Local governments often have difficulty defining and measuring what they actually exist to do. That is why their mission statements can seem so nebulous and public value can be so hard to define. Then there are the numerous obstacles to change, including complexity, political resistance, cultural resistance, size and scope, and lack of experience managing change. Improving productivity is difficult and transformational change processes are common.

Restructures seem to follow every change of CEO. Functions are re-assigned and re-named. However, costs are incurred in the processes for delivering services and significant efficiency savings can only be made by improving the way the service delivery processes operate. Geary Rummler and Alan Brache say that an organisation is only as good as its processes and that process improvement presents the greatest improvement opportunity for most organisations. However, improving processes can require a lot of detailed work and knowledge about work flows. Change is more likely to involve ‘incremental adjustment’, which takes more time and effort than the career plans for many executive will allow.

Finally, it is impossible to separate public services from politics. This is perhaps more true in local government where the politicians are highly accountable to their constituents. The competing financial, social and policy objectives can make decision-making much more complex than in the private sector.

Lancing Farell

Flip Chart Fairy Tales. https://flipchartfairytales.wordpress.com/2012/03/19/why-is-the-public-sector-so-complex

Frei, Francis X. 2006. Breaking the Trade-Off between Efficiency and Service. Harvard Business Review, November.

Rummler, Geary A., and Brache, Alan P. 1995. Improving Performance – How to Manage the White Space on the Organisation Chart.

Seddon, John 2014. The Whitehall Effect.