HALTON BOROUGH COUNCIL

PERFORMANCE MANAGEMENT REVIEW

MARCH 2003

CONTENTS

1. Progress report: March 2003

2. Report of Working Group: December 2002

Progress Report on Performance Management: March 2003

1. Introduction

1.1 A project team was set up in October 2002 with a brief to produce proposals for improving the Council’s service planning and performance management systems. The team produced a number of discussion papers on four key topics. These were:

- Service planning- Target setting- Performance monitoring- Cultural issues

1.2 An important perspective guiding the work of the project team was the recognition that the development from routine performance measurement through to a performance culture is a continuum. At the beginning of December 2002, Management Team received a report, which summarised the conclusions of the project team and set out a series of recommendations for consideration and endorsement at an ‘Awayday’ for the Executive Board and Management Team.

2. Implementation

2.1 With the endorsement of the proposals the project team prepared an implementation plan to take forward the agreed actions. (See appendix 1). The plan was based on the four key topics showing the set of steps in each area to be undertaken. However, the plan did not refer to the strengthening of the corporate performance management arrangements by the establishment of a Best Value and Performance Management Division in the Chief Executive’s Directorate. The new posts are currently being graded and it is expected that the recruitment process will commence before the end of March.

Service Planning

2.2 Although the 2003/04 service plans have already been prepared a review of the service plan guidance for the 2004/05 service plans will be undertaken by the Performance Management team between April and October 2003. The views of the service planners and the audiences receiving the plans will be crucial if the revisions of the guidance (if any) are to be of real value. The review will also schedule a series of workshops in late summer/early autumn to consider the revised guidance and to highlight any final adjustments that maybe necessary before the service planning process begins.

Target Setting

2.3 Target setting is an integral part of the service planning process and therefore a review of the guidance on target setting will be undertaken in conjunction with the review of the planning guidance. Although the planning guidance is for the 2004/05 service plans, the target setting guidance will be available for the half-yearly review of the 2003/04 targets in November.

Performance Monitoring

2.4 The principal aspects of performance monitoring concern the development of suitable spreadsheet software, a standard format and frequency of reporting and the capacity for continued development of the performance monitoring system. It was the intention to use software developed by another authority but this has experienced difficulties. Therefore, a spreadsheet model is currently being developed in-house. The original deadline in the implementation plan was the end of February but this has now slipped. However, a revised deadline of the end of March looks to be more appropriate.

2.5 The software will be based on scorecards containing all the relevant data provided by the directorates on a quarterly, twice annually or annual basis. It will distinguish between inputs, outputs and outcomes and use a series of colour coded graphs, bar charts and symbols to:

- Compare the actual performances of selected indicators on a quarterly and/or annual basis.

- Analyse trends to show whether performance is improving, static or worsening

- Show the Council’s local targets, Government targets, national standards and LPSA targets

- Forecast whether the Council’s indicators are on course to exceed, achieve or miss the relevant targets

- Show the ‘best’ group (top quartile) and the ‘worst’ group (bottom quartile) performance levels

- Show the Council’s quartile rankings for the previous year. 2.6 There will be a standard report format established which would provide for

individual commentaries to assist with the interpretation of the figures. This will highlight any factors or reasons to explain why performance has changed or is expected to fluctuate. It will be particularly important for the commentary to set out what corrective action or intervention is proposed where performances are continuing to decline and there is a risk that targets will not be achieved unless steps are taken to reverse the trend.

2.6 Another key aspect is the frequency of performance reporting. The December report commented that many indicators show little change over a six-week period and that the reporting frequency should vary depending upon the target audiences. It recognised that operational managers may need to monitor performance more often say a monthly basis as part of their internal divisional plan monitoring. However, the reporting of key headline indicators and milestones to Management Team, Executive Board Members and the PPBs at the end of each quarter would be more appropriate.

2.7 It is important for Management Team Executive Board Members and the PPBs to receive performance information as close to the end of the reporting period as possible to ensure it is relevant and timely. Therefore when the calendar of meetings has been approved, a schedule will be prepared showing when the members of Management Team, Executive board Members and the PPBs can expect to receive the service plan monitoring reports containing information on performance.

Cultural Issues

2.8 The last stage of the continuum referred to earlier is the creation of a performance culture and the project team set out a number of proposals to address issues of commitment, ownership and empowerment. This is the probably the most complex area to tackle and although the implementation plan sets out a series of actions, these should be regarded as provisional at this stage and subject to further consideration.

2.9 The work of the teams involved in the preparation of the Communications Strategy, Management Development Review and the Human Resources Strategy will have also addressed some if not all of the same cultural issues considered by the project team. Therefore, rather than risk duplicating the work of others is proposed that the cultural issues relating to performance management and the suggested courses of action be picked up by those leading on the initiatives referred to above.

3. Recommendation

The purpose of this report is to inform of progress with the review of the service planning and performance management systems of the authority. Therefore it is recommended that:

This report is received and the actions outlined are endorsed.

Appendix 1PERFORMANCE MANAGEMENT

IMPLEMENTATION PLAN

ACTIONS TIMEFRAME

Service Planning(2002/03) (2003/04)

a) 2003/04 plans prepared and approved (by Council)

b) Review/revise service plan guidance

c) Issue service plan guidance for 2004/05

d) Instruction and training on revised guidance

e) 2004/5plans prepared and approved (by Council)

End of March

End of June

End of July

End of Oct

End of March

Target Setting

a) Prepare guidance for target setting in service plans

b) Instruction and training for managers and staff

c) Half-yearly review of 2003/04 targets

End of May

End of Oct

End of Nov

Performance Monitoring(2002/03) (2003/04)

a) Prepare formats and templates for performance reporting

b) Explore feasibility of in-house development of software

c) Pilot/trial run of performance reporting

d) Review/revise formats and templates

e) On-going development of software application

End of Feb

End of Feb

Mid March

End of Oct

End of Oct

Cultural Change

a) Examine others’ findings concerned with cultural issues

b) Identify gaps and undertake staff surveys (if req’d)

c) Prepare interim report for CEx and the Management Team

d) Commence trial to initiate cultural change in respect of performance management

e) Prepare progress report on the trials for Management Team

f) Brief managers re: cultural issues in the EDR process

g) Monitor the extent, impact and value of cultural change and report to Management Team

End of March

End of May

Mid June

mid July

End of Sept

Mid Nov

End of March

REVIEW OF PERFORMANCE MANAGEMENT: DECEMBER 2002

1. Introduction

1.1 What is Performance Management?

"What an organisation does to realise its aspirations" IDeA

Performance management is about agreeing objectives, setting targets, monitoring performance against targets, identifying opportunities for improvement, making the necessary changes and delivering quality public services.

The performance management system must therefore be integrated with corporate planning arrangements, including financial and other resource planning.

1.2 What is the purpose of this review?

Halton has had performance management systems in place for several years now. [INSERT CPA COMMENT] This review was set up to consider whether these systems require amendment in the light of experience both in Halton and elsewhere. The present systems are good and have served us well, but need continuous improvement.

Whilst much of this document might seem to address the systems and procedures related to planning changes/improvements to the mechanics of this management task of planning will have little or no effect without clear strategies to develop comprehensively a performance culture. Such a culture is characterised by: -

Continuous improvement Clarity of understanding of our core purpose High levels of staff capability and commitment High quality work environments Positive, supportive and challenging relationships Self review and evaluation

The implementation of these and other proposals will support the proposed changes to planning.

1.3 Will a good performance management system guarantee service improvements?

No. The performance management system will provide a framework but improved services can only be achieved with the ideas, support, and commitment of a motivated delivery team. Failure to change the culture of an organisation to one that is performance orientated, has the capacity to sterilise even the best performance management systems.

1.4 The structure of this report

The report is in five sections:-

1. Introduction2. Planning3. Target setting4. Monitoring5. Implementing the review recommendations

2. Planning

Current System - hierarchy of plans

Community Strategy

Corporate Plan

Service Plans

Divisional Plans

Personal Plans (EDR)

Priorities

Objectives

BVPI

Success criteria/targets

Issues

(1) The challenge of translating cross-cutting community and corporate objectives into service-based plans, and the need to link service targets to high level objectives.

(2) The potential duplication between service plans and the government`s statutory planning requirements (albeit the latter are under review).

(3) The need to relate the time horizons of different levels of planning (e.g. 5 year Corporate Plan with 3 year service plans).

(4) The need to integrate resource planning (financial, human, property and IT) to service planning.

(5) The need for clearer integration of Best Value Review action plans into Service Plans.

(6) The need to make the most of the service planning process as a means to promote innovative thinking and value-adding improvement ideas.

(7) Timing and sequencing of the planning process within the planning year so that there is time for creative thinking, and draft service plans are available in time to inform the budget process.

(8) Involvement - how to include and communicate with Members, staff and other stakeholders more fully and effectively in the course of developing and making use of service plans.

(9) Scope and presentation of service plans - issues such as distinguishing strategic from operational PIs and targets, and the possible inclusion in future service plans of information on resources, recent performance and planned actions are considered elsewhere in this paper and raise questions about the future format of Service Plans.

Proposals

(1) Following the setting of updated objectives and targets for the Council and its partners and the identification of the policy proposals for addressing the key priorities of the Community Strategy and (to be completed April 2003), the Corporate Plan should be reviewed and updated, particularly in respect of the targets set.

(2) Service Plans should clearly identify how service objectives link to Community Strategy and Corporate Plan objectives. Service Plans should also identify what are priorities and what are not.

(3) Where there are relevant statutory plans (eg Education Development Plan) there is no need to duplicate these. Service Plans can be briefer documents, distilling the key points from the statutory plan, with the statutory plans appended.

(4) Service Plans should look forward three years, but are likely to include greater detail relating to year 1.

(5) Service Plans should include more information on resources, including: year 1 budget details and information on significant forecast changes

in funding requirements in years 2 and 3;

information on human resource needs and changes in the skills mix required to equip the Council to meet future challenges facing the organisation;

information on strategically significant changes in future requirements for property, equipment and materials

information on future ICT requirements sufficient to provide a basis for a corporate ICT strategy.

(6) Strengthen the linkage with Best Value and mainstream the drive for continuous improvement by building improvement plans arising from Best Value and other reviews into Service Plans as a matter of course.

(7) Use the service planning process to encourage innovative thinking about improving performance and outcomes, using the four C’s and reviewing lessons from past performance.

(8) Provide training and development opportunities to raise awareness and improve organisational capability in this area.

(9) Start service planning earlier to allow more time for creative thinking, and member involvement, and to ensure that the service planning process, and the setting of priorities, can feed into the budget process at an early stage. To this end, the draft service plans might include two or three options based on different budget scenarios. This will clarify the impacts of budget decisions on performance.

(10) Using the longer planning timescale envisaged (see (7) above, ensure fuller involvement of Members, staff and other stakeholders in the service planning process.

3. Target Setting

One essential part of the planning process is the setting of targets. Targets are not an end in themselves. They need to be clearly related to corporate and key service objectives. Targets should

Demonstrate progress towards service objectives and contribution towards corporate objectives;

Be readily measurable and enable consistent tracking of performance;

Have clear and unambiguous definitions that are easily understood by the target audiences;

Enjoy the commitment of elected members, management and staff; and

Have named officers responsible for their achievement

Targets must be stretching (ambitious) but realistic (capable of delivery within the available resources).

We need high level long term targets (for example in the Community Strategy, Corporate Plan and LPSA) and shorter term "stepping stone" targets which will

demonstrate progress (usually annually) toward the longer term.

If the performance management process is the lead to improvements in all our key priority areas, we need to ensure that we have appropriate indicators for all objectives, be they national or local. The IDeA has produced a list of suggested local PI`s. This has the advantage that if several authorities are using the same PI`s comparisons are easier.

There are several ways of categorising indicators - one of the simplest is to divide them into inputs, outputs and outcomes. Inputs and outputs tend to be easier to measure than outcomes and therefore easier to set targets for. However, it is the outcomes which are important to the community and so it is essential that outcome targets are set, even when they are long term or aspirational, or where the authority has limited influence (eg. crime or health).

Target setting should:-

Involve elected members, council staff and the community

Be capable of tracking over previous years

Be related to national standards, government targets or codes of practice; and / or

Be related to the Council`s strategic priorities and service objectives.

It is important that targets are `owned` by all stakeholders. In particular, staff must believe that they are achievable, understand their link to key priorities, and understand how their individual efforts will make a difference.

The number of targets needs to be carefully considered, as does the reporting process (see section on monitoring below).

Wherever possible we should set hard targets, but where, exceptionally this is not possible, soft outcome targets should be adopted, with appropriate measures of progress, for example through milestones.

Proposals

LSP to consider extending its performance management system to ensure that all partners are committed to shared targets, especially on cross-cutting issues. The Council would itself adopt these targets as high level outcomes for its key priorities.

Ensure that service plans contain a balance of input, output and outcome targets and that their relationship to the key priorities and objectives is stated.

Service Plans should set stretching but realistic targets.

Review the corporate plan commitment to achieving top quartile status for all indicators by 2006. By reference to key corporate priorities, LPSA and national targets identify priorities for improvement.

Relate improvement targets to the availability of resources.

Ensure that staff have the opportunity to contribute to the target setting process.

Ensure that members can make properly informed decisions on setting targets.

The presumption is that targets will be set to achieve improved service outcomes. Where this is the case there should be a clear rationale (how will the improvement be achieved, what resources are needed). Where targets are not set to improve there should be an explanation.

4. Performance Monitoring

There is a well established system of performance monitoring in place. Each department reports to Management Team on a staggered six weekly cycle. These reports contain information on performance indicators, financial and human resources and qualitative descriptions of progress / issues. They are subsequently considered by the appropriate Policy and Performance Board.

It is considered that this could be improved by reviewing

The amount of information presented Frequency of reporting Presentation Use of comparisons / benchmarking Response to under-performance

Amount of information to be monitored

The amount of information required will differ according to the audience. Thus at operational level, managers will need to consider a full range of input, output and outcome indicators to ensure that the machinery is working properly. On the other hand, the Management Team and PPB should focus on a smaller number of key indicators. The Team / Board will be entitled to assume that other indicators are performing satisfactorily unless exceptions are reported. This will ensure a focus on the critical areas. Exception reporting should highlight good performance as well as under-performance. In selecting key indicators, consideration will be given to local priorities, national priorities and LPSA indicators. Where there are no appropriate national indicators in key areas, local ones will need to be adopted.

Presentation

Clear visual presentation is important. It should be possible to interpret figures at a glance, including trends over time and comparisons / benchmarks. Use of symbols, colours / traffic lights and graphical presentation is important.

Frequency

Many indicators show little change over a 6 week period, and frequent reporting takes up time which would be better used addressing some of the performance issues highlighted. Different audiences will need different reporting frequencies. Operational Managers may need to monitor all indicators on a monthly basis, but Management Team and PPB`s should look at performance on a quarterly basis. This would provide the opportunity for more indepth analysis of particular areas in the intervening meetings.

Improvement Planning

Where under-performance is identified, they should be analysed / explained in monitoring reports and proposals for corrective action (improvement plans) included. If Management Team / PPB requires further reports on response to under-performance, these could be prepared over the following 6 weeks (see frequency of reporting above).

Feedback

It is important that the monitoring reports and feedback from Management Team / PPB`s are passed onto middle Managers and frontline staff with praise for good performance and indicators of response to under-performance.

Proposals

Identify which indicators should be reported at which level – include the reporting arrangements in the service plans.

Select 5-10 key indicators for each service area. These must include outcomes and outputs relating to local and national priorities and PSA targets.

Reports at operational level will include all indicators.

Reports to Management Team and to PPB`s will be quarterly, and will concentrate on key indicators and exceptions to required performance on other indicators.

Presentation will use colours, symbols and graphs (eg. Sheffield`s report format)

Executive Board Portfolio holders should be briefed on the quarterly monitoring reports. If the Council decides to review its scrutiny processes, the involvement of portfolio holders in performance monitoring by PPBs might be looked at.

An overview report of all indicators, highlighting key indicators and exceptions for all service areas combined will be produced six-monthly for Executive Board.

Ensure that there are outcome indicators for all key policy areas by adopting local indicators where necessary.

Where monitoring reports identify under-performance - their options for corrective action should be presented.

Good performance should be reported as assiduously as under-performance.

Monitoring reports should provide comparisons against benchmarks and against historic performance. In many cases, comparisons with performance at the same point in previous years would be helpful.

Each service should produce a year end report on all indicators, highlighting good and bad performance, with a clear indication of how under-performance is being addressed in the following year`s action plan.

Not all services and service outcomes can be monitored by performance indicators in which case we need to measure progress against clear milestones and soft outcome targets.

Each service should monitor and report at an appropriate level, its contribution to Corporate Health targets (and other corporate measures).

Implementation - Cultural Issues

As stated in the introduction, the adoption of a performance management will not bring about improved performance. Improved performance will be the result of changes to the way we work and the commitment of staff at all levels to improve our services. The performance management system is a means to plan and measure these improvements.

A number of success factors need to be in place to make this process work, many of which are motivational / cultural. For example:-

Proposals

The implementation of these and other proposals will support the changes in planning.

Clear explanations of the process to all staff through awareness raising sessions.

Provision and maintenance of appropriate working environments.

It is essential that a performance culture is fully embraced at all levels within the Council and that politicians provide an active and determined lead. Should these cultural values fail to be accepted at any level, then performance management will be compromised.

If a new system is introduced it should be clearly explained to staff through awareness raising sessions.

Individuals need to be aware of their own contribution to improving performance - both by making expectations clear and by providing feedback on progress. If individuals can see how their own work contributes to improved outcomes in the community, directly or indirectly, it is a strong motivation.

There has to be effective two way communication to support this process; and

A culture that values staff

Many of these factors are common to other change management process, and are the subject of a separate report.