Performance Rules

Managing for results is making a bigger difference during this downturn.

Raelene Freitag has noticed a phenomenon in recent weeks. The director of the Children's Research Center in Madison, Wisconsin, says that in previous downturns, performance measures were set aside when a financial crisis hit. "The reaction was, 'Worker caseloads are going up, and we don't have time to do that now.'"

But lately, Freitag reports, she's heard people say that performance measures are more important than ever. "It's premature to say it's a pattern," she says, "but it's striking."

We have some good news for Ms. Freitag. Based on our own observations and conversations with folks around the country, this economic malaise is so profound that a growing number of states, cities and counties are newly appreciative of the value results-based performance measures can offer. Simple fixes utilizing across-the-board cuts and a bunch of accounting gimmicks are just not enough--nor were they ever the most efficient way to balance a budget. Instead, legislatures and city councils are seeking dramatic tactical cuts and shifts in spending that can be defended to the public and the constituency for that spending.

"Results-based accountability is the silver lining of this hideous economy," Diana Urban, a legislator from Connecticut, told us recently. We've known Urban for some years now, and many of our conversations have centered on the frustrations she's felt in getting Connecticut leaders to pay adequate attention to information that measures the performance of various programs, departments or agencies. Now, she reports, it's an entirely different world.

Consider this: The first half hour of each appropriations session in the Connecticut legislature now is devoted exclusively to results-based measures, and how those measures might inform the actual allocation of cash. The entire Appropriations Committee attends.

In Pennsylvania, the idea of measuring results--as opposed to measuring the simple outputs of programs, such as miles of road paved--was nowhere on the agenda until 18 months ago. Then, however, a new position was created: a deputy secretary for performance improvement who reports directly to the budget director. Sharon Daboin, who holds the post, says that opportunities to apply performance measures are multiplied by the fiscal crisis. There's very little pushback. "These are things that we should have done all along," she says. "We know that."

Not all the signs are positive, of course. In Oregon, a model system for measuring performance and connecting agency action to larger state goals found itself on the chopping block in the ongoing budget crisis. The Oregon Progress Board has been de-funded, although efforts are underway to provide a little cash to make sure that the benchmarks remain in use.

The Oregon situation reminds us that, in the past, we've sometimes been overly optimistic about the future for performance-based measures. But there's yet another difference between 2009 and prior times. The technology finally is here to slice and dice the data to make it more useful to more audiences.

Lisa Signori, director of Boston's Office of Administration and Finance, gave us a great example. The system that's now being used in Boston to collect, use and report performance measurement provides managers with data in close to real time. Layers of information are geared to different audiences and automatically updated, with a built-in connection between the inputs and the results. Signori can use the system to tell how a reduction in the number of employees in a program will affect the level of service. "You can," she says, "look at the connection between budget and performance."

Isn't that precisely the kind of information legislators at all levels of government should want?

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