Performance management in the APS: A strategic framework

MAC

The Management Advisory Committee (MAC) is a forum of Secretaries and Agency Heads established under the Public Service Act 1999 to advise the Australian Government on matters relating to the management of the Australian Public Service

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Performance: Assessment and feedback

A fundamental component of any Performance Management Framework is the ability to measure performance at both the organisational and individual level. The nature of such measurement can vary significantly depending on the environmental shapers described in Chapter 2 that impact on any given organisation.

Assessing organisational performance is, however, a particular challenge for organisations. There are a number of questions that the report was unable to answer because of limits in our ability to measure performance, especially at the organisational level. For example the report was not able to draw a firm conclusion on the relative efficacy of different performance-linked remuneration strategies because it is not possible at this stage to compare the performance of organisations that use different approaches with any confidence.

Assessment of individual performance needs to be cast in the context of organisational performance. CEOs are engaged with this priority, emphasising both the desirability and difficulty of relating individual and organisational performance, particularly in the public sector. All also emphasised the importance of the quality of feedback provided on the basis of judgements about performance.

3.1 Issues in reviewing organisational performance

All APS Agencies are required to publish through Portfolio Budget Statements and Annual Reports performance information against their outcomes and outputs structure.

The Department of Finance and Administration has developed criteria for performance information in Portfolio Budget Statements and Annual Reports and the Australian National Audit Office is currently undertaking a performance audit of six Departments to review the adequacy of performance information against these criteria.

This external accountability represents the first key point of performance measurement for all APS Agencies. While the nature of performance indicators may vary significantly across agencies, the existence of such information is mandated.

This high-level performance information then tends to cascade down into key performance indicators at organisational unit level within agencies.

Interviews suggested, however, significant variations in approaches across agencies in the way organisational performance is measured. For example, in operational/service delivery environments high quantitative measures were used while in organisations dealing predominantly with policy issues such measures tended to be far more qualitative. Other agencies use ratings provided against briefs from their minister's offices to provide an indication of policy-advice performance.

Other CEOs are also focussing on very tangible measures.

In the APS one Secretary talked about modifying his feedback mechanism with the Minister and Minister's office to focus less on perception (always individual and often different between advisers.) He now uses highly quantitative measures from ministerial statistics, comparing for example response times, overdue rates and returns of letters and briefings as an indicator of responsiveness.

Some agencies have adopted a broader performance management approach using 'balanced scorecard' concepts. Typically, this includes the measurement of additional indicators (e.g. people, clients, innovation) beyond the outcomes/outputs and financial indicators traditionally used.

Other examples include:

Some agencies use staff surveys to assess the rhetoric/reality gap in the perceptions of staff and to gauge staff engagement and attitude to performance management and other initiatives.
Some are actively seeking structured feedback from ministers and their staff on the quality and timeliness of work, given that ministers are the key client.
Some seek input from external stakeholders in a structured way.

Finally, a recent challenge is cross-organisational performance. APS agencies have always collaborated but with increased emphasis, for example, on funds pooling between agencies and jurisdictions, we also need new ways to encourage and measure jointly produced outcomes or even the connectedness of organisations.

3.2 Measuring Individual Performance

The concept of integration is also strongly apparent in measuring performance at the individual level. Organisations attempt to have the measures included in performance agreements to be logically linked with organisational performance.

This approach helps achieve 'line of sight' between the organisation's outcomes and individual performance measures and supports measurement of the individual's contribution to organisational outputs.

Performance measures used in individual performance agreements usually contribute directly to remuneration outcomes for that individual. The credibility of the overall performance management system and pay outcomes will therefore be linked directly to the perceived appropriateness and fairness of the performance measures.

In general, more quantitative measures could be expected to result in a more credible performance appraisal outcome. However, in an environment where hard measurement against objectives is unachievable, the use of highly quantitative indicators can equally result in credibility problems. So, like the Performance Management Framework as a whole, the performance measures used need to be appropriately aligned to the organisational environment.

Many organisations interviewed were using values as well as business objectives in individual performance agreements. In this area in particular, quantitative measures were not used to any great extent. The exception to this was one large private sector organisation interviewed which used an on-line 360 degree feedback system to directly assess performance against values in their employees' agreements. Most organisations using 360 degree feedback tended to use this for developmental purposes rather than as a measure of behaviour against values in performance appraisals.

3.3 Performance Feedback

A consistent theme emerging from interviews was the view that considerable room for improvement exists in the provision of feedback from supervisors to individuals.

Several organisations had invested substantially in training managers in techniques for more effective feedback to their staff together with coaching and feedback skills.

A 'moment of truth' in any performance management system is the point of interaction between the staff member and their immediate manager. A well integrated and aligned performance management system can still face major credibility problems if the process of feedback is not handled well by the manager.

Many CEOs stressed that giving and receiving feedback is a key benefit of performance management. They saw it as an essential component of performance management systems and a fundamental skill that managers need to ensure the effectiveness of performance management. Without effective giving and receiving of feedback, performance management was unlikely to improve individual or organisational performance or be credible to staff.'

The strengths of the system are that it improves communication and obliges managers to do their job'.

Given the importance of effective feedback in performance management, there is an ongoing need for training to achieve high levels of competency. Managers and staff skilled at giving and receiving accurate, constructive feedback are fundamental to effective systems.

3.4 Conclusion

This is an area where there are no right answers or single solutions. Neither organisational nor individual performance can be measured by itself. It will always be a composite of measurables and judgements. There also needs to be a credible performance management system in place that is based on ethical behaviour and trust.

It is an area that needs further consideration. Relying purely on annual high-level organisational performance indicators or just on an individual's performance agreement loses a number of key opportunities. One of these is the ability to make more confident assessments about the relative effectiveness of different performance management approaches.

Approaches to assessing organisational performance are still being developed with implications for a range of management responsibilities, including understanding the contributions of performance management to organisational performance. Better measures of both individual and organisational performance are needed.