Performance anxieties, by Vivienne Russell

8 Jun 09
With the Budget emphasising the need for efficiency savings, performance management is going to play a crucial role in coming years. In association with Oracle, PF convened a round table of experts to discuss the public sector’s approach and where it can be improved. Vivienne Russell reports

With the Budget emphasising the need for efficiency savings, performance management is going to play a crucial role in coming years. In association with Oracle, PF convened a round table of experts to discuss the public sector’s approach and where it can be improved. Vivienne Russell reports

The timing could not have been better. Just one day after Chancellor Alistair Darling’s Budget and two days after the Treasury’s Operational Efficiency Team set out its programme to achieve £15bn in savings, Public Finance convened a round table debate on performance management in the public sector.

Hosted in association with Oracle, the debate brought together practitioners, regulators, politicians, consultants and academics to consider how good the public sector is at performance management, what it could do better and whether the approaches currently deployed are the right ones.

The Budget and the OEP report provided not just a topical backdrop to the discussion, but a frequent point of reference for contributors as they turned their minds to getting the most out of the public services in the context of severe spending restraint.

Chaired by local government expert Tony Travers, the event heard contributions from John Thornton, executive director of e-ssential Resources and author of Oracle’s paper on performance management; Tom Gash, a fellow at the Institute for Government and lead author of its Performance art report; Nick Sloan, director of performance measurement at the National Audit Office; John Kirkpatrick, director of studies at the Audit Commission; Max Moullin, director of the Quality Management and Performance Measurement Research Unit at Sheffield Business School; and Tony Wright, chair of the Commons’ public administration select committee.

Discussion ranged across central-local government relations, the balance between top-down and bottom-up measures, the role of the media and the lessons of high-profile performance failures, such as in the Baby P case and at Mid-Staffordshire NHS Trust.

Tony Travers started the debate with the observation that performance management is an issue that perplexes governments of all parties in the UK. ‘Even more than other countries, we’re under pressure to make every service deliver £110 worth of service for £90 worth of tax. It’s a long-term problem.’ But the possibility of 30 years of spending squeezes made the short to medium term ‘even more interesting than normal’.

John Thornton took up this theme in his opening presentation. He observed that static or reduced funding of public services would be accompanied by yet greater public expectations and demands as well as pressure to produce efficiencies. Cuts were a crude solution and did not work, he added. ‘The only way forward is dramatic improvements in performance management.’ He offered a definition of performance management: ‘Proactively managing the relationship between resources consumed, activity and outcomes’. This was even more important in the public sector, which had to grapple with complex and sometimes competing objectives.

The public sector had made a decent start, but there was room for improvement, he added, particularly in three areas: using performance management to support collaborative working across organisational boundaries; instilling a stronger performance management culture; and developing a ‘golden thread’ to link organisational objectives to individual ones.

Gash said that progress on NHS waiting times and the success of Comprehensive Performance Assessments in local government were examples of performance management measures that had worked. He observed that, however, there was lots of confusion in the system, particularly over financial drivers of performance and whether they should be used or not. ‘You can’t yet lock performance management into the budgeting process and it seems to me that’s very important in the context of the current fiscal squeeze,’ he said.

‘At the moment, the ties between Public Service Agreements, the Budget process and the Comprehensive Spending Review are pretty loose. I think the same is true of Local Area Agreements, exemplified by the fact that LAAs were agreed after local government budgets were settled,’ Gash added. He ventured that performance management in the public sector was poised to take any one of a number of directions.

The debate then considered whether the experiences of the past 12 years had been useful or whether there was a need to start afresh. John Seddon, chief executive of Vanguard Consulting, said: ‘We’re doing the wrong thing on performance management.’ Imposing top-down measures on organisations distorted their purpose, he argued, citing the Baby P case – Haringey council was meeting its targets but providing a bad service. ‘On the other hand, when you derive your measures of service from the customers’ point of view and put them in the hands of the workers, you liberate method and you achieve a [better] level of performance,’ he said.

Seddon received qualified support from Paul O’Brien, chief executive of the Association of Public Service Excellence, who said a balance needed to be struck. A framework of national minimum standards should be put in place, but performance improvement should be driven locally. ‘I don’t believe that innovation and improvement can be driven top-down – I think it actually comes from the frontline up.’

Thornton replied that organisations with a strong performance management culture were best placed to produce the desired results – others needed more discipline and sanctions. ‘Ultimately, achieving performance management and achieving outcomes is about people… and if you’ve got people who are enthusiastic and understand what they need to do, then you can move mountains.’

Colin Talbot, professor of public policy and management at Manchester Business School’s Herbert Simon Institute, agreed that, even with a change of government, performance management was here to stay. There was, however, little understanding of what was effective. ‘It’s quite true that some top-down stuff has worked but some hasn’t and we’re not entirely sure why.’ He added: ‘Central government has done virtually nothing to assess how well this stuff works.’

Gerard Murphy, director of finance at Greater Manchester Fire & Rescue Service, ventured a view from the front line, criticising ‘dysfunctional’ Whitehall for failing to get its own house in order. Some central government departments had a good relationship with local providers, others did not. ‘If we, as service providers, have got different masters with different abilities then things are wrong before you start,’ he said.

Regulatory and inspection bodies can play an important part in fostering good performance management and the next phase of the debate explored the role of both the National Audit Office and the Audit Commission. The participants considered how much the job of driving good performance in the public sector could or should be put at the auditors’ doors.

Nick Sloan of the NAO echoed many of the points already made – central government was getting better at performance management but there was little understanding of what worked. There was also weak understanding of how to use performance measures to motivate and monitor individuals. ‘You can’t hold an accounting officer to account for the nation’s health in the same way you can hold a widget manager responsible for the efficiency of the production of widgets,’ he said. ‘It seems we’ve done very little work as a central government institution to try to develop the accountability process so it’s not destructive.’

He went on to criticise the media as more interested in individual failures than in trends and overall improvement. ‘You get somebody whose child has died in a way that can be culpably linked to a public servant, that is the story. Yet if we’re to make this work, there has to be something in there that broadens that picture.’

Tony Wright, chair of the Commons’ public administration select committee, challenged Sloan on why the NAO had never got a handle on Whitehall’s poor management of performance. Sloan retorted that the audit office does address performance issues. However, he said, in the delicate political territory the NAO has to negotiate, it was difficult to define what good performance is and looks like .

He rejected the suggestion – put to Wright’s committee by former Cabinet secretary Robin (now Lord) Butler – of a National Performance Office, analogous to the NAO. Sloan said: ‘I can see why people yearn, especially people who’ve left public administration, for a simple answer. I just don’t think it’s there to be had.’ Defining and dictating performance priorities were matters for politicians and not auditors, he added. The NAO’s new management board, due to take over in early summer, would be grappling with these questions.

Speaking for the Audit Commission, John Kirkpatrick said the commission’s job was not to performance-manage local authorities, but to help them better performance-manage themselves. He made a plea for the importance of auditors in the performance management framework. ‘I wouldn’t back off from our view that, even if it’s not quite performance management, the role of the auditor or regulator is one that potentially complements an organisation’s own performance management whatever the overall framework, because of what it does, in particular in driving accountability,’ he said. ‘Without an independent voice to highlight what is going on, organisations are much weaker.’

The afternoon’s final session considered whether the right approach was being taken. Max Moullin of Sheffield Business School put forward the view that performance measures needed to be developed jointly between central government, regulators and frontline bodies. ‘If the measures aren’t directly related to outcomes or evidence-based drivers of those outcomes, then they should be scrapped – they are dysfunctional,’ he said. He cited primary care trusts he had visited that were more concerned with recording the number of women who were breast-feeding than promoting breast-feeding itself. ‘That’s not the indicator of performance and that should not be the target.’

Tony Wright spoke of the importance of users in good performance management. He gave the example of the high-profile performance failures at Stafford Hospital, which serves his constituents, in which poor emergency care led to patients dying needlessly. ‘The people who knew what was going on were the users and it was eventually they who persuaded the Healthcare Commission to do an inquiry. It turned out the board of the hospital was not even monitoring complaints or discussing them. Building the user experience in is integral to any discussion of performance.’

Melanie Hunt, director of learning and skills at Ofsted, agreed that harnessing user experience was vital. She said the education watchdog was beginning to refine its inspection process to capture user feedback.

The debate then took a very topical turn, with Public Finance deputy editor Judy Hirst questioning how useful and grounded the discussions had been, given the recent Budget announcement. Did the gloomy public spending prognosis and £15bn efficiency demands mean top-down performance management would be the order of the day, whether people liked it or not?

Gerard Murphy said a smaller workforce would be an inevitable consequence of spending restraint and posed the question: ‘How do you motivate the workforce to downsize itself?’ The scale and reach of public services would have to retrench, he suggested. ‘The trick will be how to pull that off while keeping the users engaged.’

Jenni Inglis, a director at the Social Return on Investment Network, said that there were clear limits to cost-driven efficiencies and the focus needed to shift to outcomes that were important to people. ‘It’s no good just looking at efficiency in public service delivery, we have to get closer to what actually changes in people’s lives, how to create better values and ways of including those in the market mechanism,’ she said.

Some contributors, such as Tom Gash, thought the economic downturn provided a good opportunity for some really radical thinking on performance management, making greater use of behavioural economics to influence citizen behaviour and outcomes. Moullin said it would be misguided to try to do the same things with less money; rather it should be an opportunity to get people together to focus on what they wanted and think about how it can be provided.

Wright predicted that economic reality would fundamentally alter government rhetoric on public services. ‘I do think we will hear a lot less about choice, personalisation, empowerment and all that bag of tricks because they are the expression of a very well endowed public sector and we’re not going to have a very well endowed public sector,’ he said. ‘In a sensible world, we would start working out what we think the core functions of the state are.’

Summing up the afternoon’s debate, Travers observed that performance management would only go on to gain in importance if ‘salami-slicing’ cuts were avoided. ‘This isn’t the end of the process, it’s likely to be the beginning of a groaning, rococo version of the discussion we’ve just been having. A new government will be faced with all these issues on an epic scale.’

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