Performance Measures

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Type: 
Best Practice
Background: 

Performance measures are used by governments to collect information about operational activities, achievement of goals, community conditions, or other environmental factors to better understand a situation and make informed decisions. Regardless if an organization has a centralized collection system for performance measures, the use of performance data should be integral to an organization’s decision making processes and leaders within an organization should set expectations that key decisions are supported by evidence. For optimal use, performance measures need to be developed considering the potential audience for the information. As a result, organizations need to identify and track measures at an operational, managerial, policy making, and community level.

Recommendation: 

GFOA recommends all organizations identify, track, and communicate performance measures to monitor financial and budgetary status, service delivery, program outcomes, and community conditions.

When identifying performance measurements, governments should focus on making sure that measures meet the following conditions: 

  • Useful – measures should provide information that is helpful to decision making, understanding, or accountability efforts.
  • Relevant – measures can be clearly linked to the service delivery/program outcomes that they are intended to measure, appropriate for the outcome being measured, and are readily understandable
  • Reliable – collection methods and measure definitions need to be understood so stakeholders can rely on the information.  
  • Adequate – ensure enough and also an appropriate variety of measures are used to measure performance and that measures do not incentivize behavior that adversely impacts the measures – such as a quantity versus quality scenario. There is often not a single measure that can provide sufficient context and understanding
  • Collectible – measures are readily available and do not involve excessive time/effort to collect
  • Consistent – measures can be regularly collected to track outcomes over time and avoid need to continuously identify new measures
  • Environment – measures includes variables related to externalities that impact service delivery and program performance
  • Responsibility – clearly identify responsibilities for collection, storage and dissemination of the data
  • Systems – existing data collection capacities are leveraged appropriately or new systems are identified in order to ease the burden of data collection

Further, when identifying and using performance measures, organizations may find it helpful for comparison purposes or a recognized standard to assess current outcomes, facilitate discussion or share ideas that lead to improvement efforts.  However, governments must recognize the challenges and potential misrepresentations that can occur without careful considerations. For example, most governments exist in a unique environment and performance data is subject to a variety of contributing factors that may or may not be present in comparison data.  In addition, many measures may seem similar, but have a different definition of how the measure is calculated making a true comparison impossible. Once collected, governments should ensure that measures are communicated and well understood. This includes communication both internally and externally.

When communicating performance measures internally ensure the following: 

  • Expectations – clearly communicate how performance measures will be utilized in decision-making and across all levels of the organization
  • Purpose – emphasize that performance measures are used to inform decisions and facilitate improvement and understanding. Governments should be careful to avoid performance measures that are collected to simply show achievement for the purpose of soliciting recognition or rewards. Similarly, less than favorable outcomes should be evaluated to understand the root cause of the issue and avoid quick punitive actions as this will make accurate data collection efforts more difficult in the future 
  • Clarity – clearly articulate the performance measures, including both expected results/targets and actual results
  • Data Integrity – the source of the data and how the data is interpreted or used to draw conclusions should be clearly and fairly articulated. 
  • Context – provide background on why these particular performance measures were chosen, such as cost, timeliness, availability, etc. 
  • Production – reference sources of performance measures and how the measures were collected
  • Dissemination – ensure performance measures are distributed throughout all levels of the organization and are made readily available

When communicating performance measures externally the following should items should be addressed to ensure measures are readily available and accessible: 

  • Delivery – how and where will the performance measures be communicated
  • Audience – identify who the primary audience of the information will be
  • Format – what is the best way to present the information
  • Frequency – how often will the performance measures be communicated/updated
  • Clarity – explain the exact source of the data, how the calculations were conducted and why, what the performance measures show, both expected results/targets and actual results
  • Context – provide background on why these particular performance measures were chosen, why, if any target measures were set and why, and what the results mean to operations, service levels, or community outcomes.
Committee: 
Governmental Budgeting and Fiscal Policy
Approved by GFOA's Executive Board: 
March 2018