Key Performance Indicators for Government and Non Profit Agencies

DAVID PARMENTER is an international presenter who is known for his entertaining and thought-provoking sessions, which have led to substantial change in many organizations. He is a leading expert in the development of winning KPIs, replacing the annual planning process with quarterly rolling planning and management practices that will get you to the top. David has delivered workshops to thousands of attendees in many cities around the world, including Sydney, Melbourne, Hong Kong, Kuala Lumpur, Singapore, Tehran, Jeddah, Muscat, Johannesburg, Prague, Rome, Dublin, London, Manchester, Edinburgh, and Toronto. He has worked for Ernst & Young, BP Oil Ltd, and Arthur Andersen, and is a Fellow of the Institute of Chartered Accountants in England and Wales. David is a regular writer for professional and business journals. He is also the author of Winning CFOs: Implementing and Applying Better Practices and The Leading-Edge Manager's Guide to Success (both from Wiley). David can be contacted via parmenter@waymark.co.nz or +64 4 499 0007. His website, davidparmenter.com, contains many white papers, articles, and freeware that will be useful to readers.

• Preface xiiiAcknowledgments xxiPart I Setting The SceneChapter 1 Background 3Are Agencies Really Non Profit Agencies? 3Measurement in Government and Non Profit Agencies 3Unintended Behavior: The Dark Side of Measures 4Balanced Scorecards within Government and Non Profit Agencies 6Checklist: Where Are You in Your Journey with Performance Measures? 6Major Benefits of Performance Measures 8Notes 10Chapter 2 Myths of Performance Measurement 13Myth 1: Measuring Performance Is Relatively Simple and the Appropriate Measures Are Very Obvious 13Myth 2: You Can Delegate a Performance Management Project to a Consulting Firm 14Myth 3: Your In-House Project Team Can Achieve Success while Continuing with Their Other Duties 14Myth 4: By Tying KPIs to Pay You Will Increase Performance 14Myth 5: Most Measures Lead to Better Performance 15Myth 6: Performance Measures Are Mainly Used to Help Manage Implementation of Strategic Initiatives 16Myth 7: The Balanced Scorecard Was First Off the Blocks 17Myth 8: Measures Fit Neatly into One Balanced-Scorecard Perspective 18Myth 9: The Balanced Scorecard Can Report Progress to Both Management and the Board 18Myth 10: There Are Only Four Balanced-Scorecard Perspectives 18Myth 11: Strategy Mapping Is a Vital Requirement 20Myth 12: All Performance Measures Are KPIs 22Myth 13: Monitoring Monthly Performance Measures Will Improve Performance 23Myth 14: KPIs Are Financial and Nonfinancial Indicators 23Myth 15: The More Measures the Better 23Myth 16: Indicators Are Either Lead (Performance Driver) or Lag (Outcome) Indicators 24Myth 17: We Know What Good Performance Will Look Like Before the Year Starts and, thus, Can Set Relevant Year-End Targets 24Notes 25Chapter 3 Revitalizing Performance Management 27Foundation Stone 1: Understanding Human Behavior 27Foundation Stone 2: Knowledge of the Paradigm Shifters (Drucker, Collins, Welch, Hamel, Peters, Waterman, and Others) 29Foundation Stone 3: Using an Appropriate Strategy 44Foundation Stone 4: Critical Success Factors Known by All Staff 45Foundation Stone 5: Abandon Processes That Do Not Work 45Rejuvenating Human Resources 46Performance-Related Pay: Correcting the Errors 47Reviewing an Individual’s Performance 48Getting the Right People on the Bus 48Jack Welch’s 20/70/10 Differentiation Rule 49Secrets from High-Performing Teams 49Toyota’s 14 Principles 50Role of Performance Measures: Implementing Winning KPIs 51Quarterly Rolling Planning: The Setting of Targets 51Reporting Performance 52Outside-In View 53Adopting Kaizen 53Working Smarter Not Harder 54Getting Technology to Deliver 54Moving from Management to Leadership 55Notes 55Chapter 4 Measurement Leadership Has to Come from the Chief Executive Officer 57Barriers to Measurement Leadership 57The Way Forward for the Chief Executive Officer 58Appoint a Chief Measurement Officer 60Notes 60Chapter 5 Strategy and Its Relevance to Performance Measures 61Define Your Organization’s Mission, Vision, Values 61Create a Strategy That Is Understood by Staff 63Ensure That Your Strategy Is Balanced 64Monitor Implementation of Your Strategy 66Creating the Future 66Replace the Annual Planning Process with Rolling Planning 67Notes 67Part II Winning KPIs MethodologyChapter 6 The Great KPI Misunderstanding 71Key Result Indicators 71Performance and Result Indicators 73Key Performance Indicators 74Seven Characteristics of KPIs 76Difference between Key Results Indicators and KPIs 78Lead and Lag Confusion 7910/80/10 Rule 81Importance of Timely Measurement 82Note 83Chapter 7 Finding Your Organization’s Critical Success Factors 85The Missing Link 85Importance of Knowing Your Organization’s Critical Success Factors 86Four Tasks for Identifying Organization-Wide Critical Success Factors 91Strategy Mapping 100Notes 103Chapter 8 Foundation Stones for Implementing Key Performance Indicators 105“Partnership with the Staff, Unions, and Third Parties” Foundation Stone 105“Transfer of Power to the Front Line” Foundation Stone 107“Measure and Report Only What Matters” Foundation Stone 108“Source KPIs from the Critical Success Factors” Foundation Stone 110“Abandon Processes That Do Not Deliver” Foundation Stone 111“Understand Human Behavior” Foundation Stone 112“Organization-Wide Understanding of Winning KPIs Definition” Foundation Stone 113Notes 113Chapter 9 Implementing the 12-Step Process 115How the 12-Step Model and the Seven Foundation Stones Fit Together 115Step One: Senior Management Team Commitment 115Step Two: Establish a Winning KPI Team Working Full Time on the Project 120Step Three: Establish a Just-Do-It Culture and Process 124Step Four: Set Up a Holistic KPI Development Strategy 127Step Five: Market the KPI System to All Employees 131Step Six: Identify Organization-Wide Critical Success Factors 134Step Seven: Record Performance Measures in a Database 134Step Eight: Select Team-Level Performance Measures 137Step Nine: Select Organizational Winning KPIs 143Step Ten: Develop the Reporting Framework at All Levels 145Step Eleven: Facilitate the Use of Winning KPIs 148Step Twelve: Refine KPIs to Maintain Their Relevance 151Notes 152Chapter 10 Determining the Measures 155How to Derive Measures 156Brainstorming Measures 156Stacey Barr’s PuMP 157Checking KPIs for Behavioral Alignment 159Chapter 11 Case Studies 161Golf Club (Non Profit Membership Organization) 161Surf Life Saving (Non Profit Membership Organization) 166Government Department 169Professional Accounting Body 170Chapter 12 Selling Change 173Selling by Emotional Drivers 173Selling the Move to Winning KPIs 174Chapter 13 Common Critical Success Factors and Their Likely Measures for Government and Non Profit Agencies 177Chapter 14 Reporting Performance Measures 185The Work of Stephen Few in Data Visualization 185Reporting the KPIs to Management and Staff 186Reporting Performance Measures to Management 191Reporting Performance Measures to Staff 195Reporting Performance Measures to the Board 195Reporting Team Performance Measures 201How the Reporting of Performance Measures Fits Together 204Notes 204Epilogue: Resources 205Appendix A: Foundation Stones of Performance-Related Pay Schemes 211Appendix B: Effective Recruiting—Getting the Right People on the Bus 223Appendix C: The Public Sector Can Abandon the Flawed Budget Process 229Appendix D: Jack Welch’s Strategy Slides 241Appendix E: Suggested Success Factors for Government and Non Profit Agencies 243Appendix F: List of Performance Measures Suitable for Government and Non Profit Agencies 273Appendix G: Presenting the Critical Success Factors to the Board/Government Official 293Appendix H: Main Differences between the Balanced-Scorecard and Winning-KPIs Methodologies 301Index 305