National Academies Press: OpenBook

Developing an Airport Performance-Measurement System (2010)

Chapter: PART II - Building a Performance-Measurement System

« Previous: PART I - Introduction to Performance-Measurement Systems
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
×
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
×
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
×
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Suggested Citation:"PART II - Building a Performance-Measurement System." National Academies of Sciences, Engineering, and Medicine. 2010. Developing an Airport Performance-Measurement System. Washington, DC: The National Academies Press. doi: 10.17226/14428.
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Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Building a Performance- Measurement System P A R T I I 35 Introduction to Part II 35 Stages of Performance Measurement 37 Strategic Planning and the Performance-Measurement System Go Hand in Hand 38 Chapter 1 Prepare to Plan and Measure (Step 1) 38 Task 1: Assess the Need for a Performance-Measurement System 40 Task 2: Scan the Airport Environment 43 Task 3: Commit to Measure Performance 47 Chapter 2 Plan to Achieve Results (Step 2) 47 Task 4: Confirm the Airport’s Mission, Vision, and Values 50 Task 5: Identify Long-Term Goals 54 Task 6: Identify Short-Term and Intermediate Objectives 59 Chapter 3 Create the Reporting Structure (Step 3) 59 Task 7: Set Measurement Responsibilities 65 Task 8: Develop and Test a Performance-Measurement Reporting System 72 Chapter 4 Act and Measure (Step 4) 72 Task 9: Implement and Measure 77 Task 10: Baseline Measures and Set Targets 78 Task 11: Report and Analyze Performance Results 83 Chapter 5 Manage Performance Measurement (Step 5) 83 Task 12: Manage Performance Players 84 Task 13: Initiate a New Performance-Measurement Cycle 88 Chapter 6 Current and Emerging Technology for the Performance-Measurement Process 88 Understanding Software-Based Reporting 89 Key Characteristics of Effective Performance-Measurement Software 90 Considerations When Purchasing Performance-Measurement Software

Part II of this guidebook is intended to provide airport managers with the necessary steps to develop a well-structured performance-measurement system tailored to the specific needs of air- ports. The proposed development process suits airports of all sizes and incorporates examples and best practices from airports that have mastered performance measurement in the United States and Canada. Finally, managers will find a sequence of worksheets to assist them in a step-by-step development of their performance-measurement system. The framework used in this guidebook for the development of a well-defined performance- measurement system starts with an assessment of the airport’s environment to confirm the align- ment of strategic elements with long-term and short-term objectives that will be later used to determine performance measures and targets. It is key to ensure a connection among planning, execution, and measurement. Finally, the framework evaluates the results and uses that perfor- mance data to initiate a new performance-measurement system cycle. This model allows an airport full flexibility in determining what measures and what categories of measures are most appropriate for it to use in managing its performance. Stages of Performance Measurement The performance-measurement system was conceived as a five-step cyclical process, as shown in Exhibit II-1. The discussion that accompanies the five stages provides guidance on a step-by- step process, suggests tools, gives process hints and warnings to help airports achieve maximum results, and provides worksheets of this step-by-step process that can be used to help develop and/or improve their performance-measurement system. The goal is to encourage airports to engage in a cyclical performance-measurement process in which they 1. Focus. Conduct environmental scanning sessions to identify key airport and business trends and seek stakeholder input. 2. Create Strategic Alignment. Confirm the alignment of mission, vision, values, and long- term objectives. 3. Develop Measures. Select key performance indicators that serve to measure airportwide objectives. 4. Cascade Measures. Select performance measures that monitor intermediate and short-term objectives at the divisional and department levels. 5. Collect and Validate Data. Ensure that data are available, verifiable, and valid. 6. Report Data. Report relevant data to upper management in a timely manner. 35 Introduction to Part II

7. Assess the New Performance-Measurement System Cycle. Assess the performance- measurement system and recommend any changes prior to the commencement of the new performance-measurement cycle. The step-by-step process also includes a performance-measurement assessment tool that con- sists of a series of questions for airports about their performance-measurement system orga- nized by development step. Through checking on the development progress of the system at the end of each stage, as well as at the end of the process, the airport should have a sense of where it is strong and where it can improve. Importantly, the performance-measurement assessment tool provides airports with immediate feedback, enabling corrective action during the development of the performance-measurement system. 36 Part II: Building a Performance-Measurement System * PM – Performance measurement ** PMRS – Performance-measurement reporting system Task 1. Assess the Need for a PM* System Task 4. Confirm Mission, Vision, & Values Task 5. Identify Long-Term Goals Task 6. Identify Short-Term Objectives Task 2. Scan Airport Environment Task 8. Develop & Test a PMRS Task 9. Implement & Measure Task 10. Baseline Measures & Set Targets Task 12. Manage Performance Players Task 13. Initiate a New PM Cycle Tasks Step 2 Plan to Ac hieve Results Step 1 Pr epare to Plan & Measure Step 3 Create the Reporting Structure Step 4 Act & Measure Step 5 Manage Pe rformance Measurement Task 11. Report & Analyze Task 3. Commit to Measure Performance Task 7. Set Measurement Responsibilities Exhibit II-1. Steps for measuring performance. Performance-Measurement System for Larger Airports The implementation of the five steps presented in the following chapters should result in a well-developed performance-measurement system at larger airports, and it will aid the airport in doing a better job of fulfilling its mission and meet- ing the needs of its customers, investors, and other stakeholders.

Strategic Planning and the Performance-Measurement System Go Hand in Hand Airports should view their performance-measurement system as a key tool in implementing and measuring the success of their strategic plan. Although the process of developing an effective performance-measurement system begins as a strategic-planning process focused on how to mea- sure airport management’s proposed strategic outcomes, later in the process the performance- measurement system becomes a tool for managing the strategic plan. In other words, the performance-measurement system becomes a tool for knowing where you are in implementing your strategic plan, whether you are achieving results, and what current practices need to be adjusted to achieve better results. This guidebook provides airport managers with the necessary tools to evaluate how well an air- port is achieving its strategic goals and mandates; however, strategic planning and performance measurement go hand in hand. Readers interested in airport performance-measurement systems may also be interested in the guidance on airport strategic planning offered in ACRP Report 20: Strategic Planning in the Airport Industry.15 These two publications complement each other and together provide readers with information and guidance on strategic-planning and performance- measurement tools to help airports improve performance outcomes. Introduction to Part II 37 Performance-Measurement System for Smaller Airports Smaller airports, on the other hand, should assess whether they need to use every tool and suggested process presented in this guidebook and whether they need to implement the entire performance-measurement system at once. Smaller air- ports should use discretion in implementing the proposed development steps and tailor the tools and suggestions presented here to their own particular situation and needs.

38 C H A P T E R 1 Prepare to Plan and Measure (Step 1) Step 1 of the performance-measurement process includes the following tasks: Task 1: Assess the Need for a Performance Measurement System, Task 2: Scan the Airport Environment, and Task 3: Commit to Measure Performance. Task 1 involves investigating whether an airportwide performance-measurement system is needed and, if so, why. Task 2 includes identifying the benefits of systematic performance measurement for the airport and scanning the airport’s environment. Task 3 includes gaining or reaffirming the commitment of the airport director and the senior executive team and identifying the roles of everyone who will be involved in performance measurement. Task 1: Assess the Need for a Performance-Measurement System The first step in developing a performance-measurement system is to assess the need for its implementation and the benefits it can provide (see Exhibit II-1.1). Generally, organizations mea- sure performance in order to assess and improve goal attainment, strengthen strategic alignment, and justify budgets. In assessing the need for a performance-measurement system, you will have to evaluate the particular needs of your airport, assess its current performance environment, and identify how a performance-measurement system could help improve the management of your airport. Most likely, you will present the initiative to the airport director and perhaps other senior exec- utives. Thus, you will have to justify your recommendation. First, identify the broad benefits that a well-defined, performance-measurement system will bring to your airport. For instance, a performance-measurement system should help increase cost savings, identify performance trends, improve the decision-making process, identify performance gaps, support budgeting practices, and also ensure that resources are aligned with strategic goals. Measuring performance, however, can pose challenges and limitations that can jeopardize the implementation of the performance-measurement system. For instance, executives can Task 1. Assess the Need for a PM System Task 2. Scan Airport Environment Step 1 Prepare to Plan & Measure Task 3. Commit to Measure Performance • Understand the benefits of having a performance-measurement system • Involve staff from the very beginning of the process • Benchmark internally and externally • Use and participate in industry surveys and studies Assess the benefits and challenges of a performance- measurement system to make the case to senior executives.

Prepare to Plan and Measure (Step 1) 39 challenge the priority given to performance indicators, and employees might disagree with the idea that performance mea- surement is needed and argue that “if it is not broken why fix it or measure it?” The limitations of implementing a performance- measurement system can be caused by a lack of technology, the costs of developing the system, and a lack of staff to develop and run the system. Be ready to address these issues. You can sup- port your initiative by identifying some of the benefits the per- formance-measurement system will bring to the airport. These benefits include information on the airport’s progress toward achieving its strategic goals, transparency in evaluating out- comes, information on areas in which the airport is performing well and areas in which performance could be improved, open communication practices, and a competitive organizational climate. The foundation of an airport’s performance-measurement system is its strategic plan. Before a performance-measurement system can be developed, the airport needs to have adopted some form of strategic plan. A firm understanding of the airport’s mission, vision, values, and strategic objectives is fundamental to a well-structured and solid performance-measurement system. Planning for success and measuring successful performance go hand-in-hand. ACRP Report 20: Strategic Planning in the Airport Industry16 focuses on how to develop a strategic plan, starting with the airport’s mission and vision and ultimately describing the activities that will achieve suc- cess. As a follow-up to the guidance on strategic planning offered in ACRP Report 20, this guide- book on performance measurement focuses on measuring success by developing an airportwide, integrated, performance-measurement system that measures performance at all levels of the organization and provides information to airport leaders so that they can identify and address issues and opportunities in ways that improve airport performance. Identify Need and Opportunity Assess the Situation Clearly state the purpose and benefits of the PM* System. Based on the purpose of the PM System, assess data requirements and how the need for a PM System will be communicated to others. *PM - Performance measurement Exhibit II-1.1. Assess the need for a performance-measurement system. A good performance- measurement system is based on a solid strategic plan. Understanding the Benefits. Assessing the need for a performance-measurement system should help senior executives understand and support setting and mea- suring results-based goals. Each airport was established for a purpose. For pub- lic airports, legislation often specifies a mission, and it is usually something like “providing safe air services and meeting the community’s business and passen- ger needs.” For airports governed by airport authorities the purpose could be more financial. Measurable goals can be set for the airport mission, and the airport can measure its achievement. Measuring enables an airport to monitor success. Understanding can be augmented by other factors. If the entity that owns the air- port has implemented a performance-measurement system, it will want an airport system that supports their performance-measurement system. You may be able to point to their performance-measurement system as well as the performance- measurement systems of other airports to make the case that performance measurement and management work.

40 Part II: Building a Performance-Measurement System Need for and Benefits of a Performance-Measurement System Identifying the needs, benefits, and challenges of a performance-measurement system in the early stages of development is crucial to assessing the impact of the system in the entire organ- ization. As with any other process, to obtain the sponsorship and support of upper manage- ment, the performance-measurement system will have to offer clear benefits to the airport. Dayton International Airport completed a strategic plan and implemented a Balanced Scorecard in 2007 that serves as the navigation system of the organization. The performance-measurement system was created to determine what to measure based on strategies in the strategic plan and external benchmarks. The benefits of implementing a performance-measurement system, according to Dayton International Airport’s experi- ence, are the establishment of the organization’s direction and the alignment of all organizational efforts with that direction. Worksheet 1. Assess the Need for a Performance-Measurement System In completing this worksheet, the reader will justify the development and imple- mentation of a performance-measurement system and be ready to present the initiative to senior management. Task 2: Scan the Airport Environment Your airport is not isolated. Obtaining factual and subjective information on stakeholders’ expectations of and interest in the airport will help you not only assess the need for a performance- measurement system, but also improve performance. An airport stakeholder is an individual or group that affects or can be affected by the airport’s actions. It is important to know who they are and gain insight on their needs, priorities, and requirements, as well as the opportunities and issues that they see facing the airport. Any airport has many internal (e.g., employees, managers, owners, board) and external stakeholders (e.g., suppliers, society, immediate community, government, customers, airlines, concessionaires, regulators, and others). Know who the most important stakeholders are based on their influence on the airport and their interest in the success of the airport. Once stakeholders have been identified, develop a list of stakeholders to involve based on both interest in your airport and power to influence the airport’s direction. Interest and power are separate characteristics and need to be analyzed independently. Organizing stakeholders by “power” and “interest” as shown in Exhibit II-1.2 can provide a structure for requesting and using input and comments. Stakeholders with a large amount of power over and interest in the airport include the flying public or airport customers, powerful community groups, trade unions, local government offi- cials, and others. Bringing these groups into a measurement development process can ensure that they accept and understand their roles and stake in achieving success for all parties. On the other hand, elected officials at the state level, for instance, would be categorized as being interested in air- port performance but not as wielding much power over airport operations. This group and others like it should be kept informed, but not brought into high-level discussions. Conversely, powerful but disinterested groups should be monitored, but it is not necessary to solicit their input into measurement development. Gain stakeholder insight on their needs, priorities, and requirements.

Scan the Airport’s Present and Future Environment It is time now to engage stakeholders and ask how the airport is doing. How is it likely to do in the future? How will the future dif- fer and how will that affect the airport’s ability to move toward its vision? This is the “environmental assessment.” This key step helps in planning actions and setting perfor- mance targets. Without understanding the external and internal environment and the airport’s strengths and weaknesses, devel- oping executable, meaningful strategies becomes much more dif- ficult. The environmental assessment sets the stage for a change management model, emphasizing what obstacles must be over- come in moving toward the organization’s vision. The emphasis on change becomes particularly important in the context of estab- lishing your performance-measurement targets. Effectively aligning the airport’s strategies and activities with stakeholder goals and with the opportunities and threats in the external environment is as important as aligning the airport’s internal structure and activities with the strategies. In fact, key outcome measures will be largely unattainable without the buy-in and cooperation of other responsible parties. Measures such as on-time departure and passenger satisfaction are the product of cooperative work with stakehold- ers. Aligning performance measures with the aims of cooperative external parties can improve performance for the airport and external stakeholders and result in an improved experience for customers. If stakeholders see airport outcomes that support their own interests and requirements, they are more likely to commit their support. Three keys to structuring this input are the following: • Categorize responses. Identify and merge similar commentaries. Finding shared sentiments and viewpoints can bring multiple groups together more quickly. • Engage a full range of views. Stakeholders value simply being asked for input. Each group’s per- spective, even if not fully accepted, can help move the conversation forward and produce results. • Acknowledge input and provide feedback. A truly valuable conversation on performance means embracing cooperation and acceptability. Every suggestion and every idea may not be acceptable or even prudent; yet these opinions form the first step in stakeholder support and engagement. Bringing multiple stakeholders together in one scanning session can expose and test multiple perspectives on business, political, social and other pertinent issues. To build stakeholder par- ticipation in this process consider asking the following: • Who are our customers and what are their needs? What are the obstacles in getting them what they need and want? • Who are our investors and owners? What are they looking for? (Your board is a good place to start. Don’t forget that the FAA is an investor through Airport Improvement Program [AIP] grants.) • Who are our other stakeholders? Employees? Regulators (FAA, state departments of trans- portation [DOTs], EPA, others)? Immediate community impacted by noise and other con- cerns? Suppliers? Others? Finally, outreach to stakeholders and employees can be as simple or as in-depth as the air- port and its performance-planning process requires. Outreach does not, however, have to be Prepare to Plan and Measure (Step 1) 41 Source: Infrastructure Management Group Exhibit II-1.2. Stakeholder mapping. Environmental scan- ning is beneficial to aligning the strategic plan and initiatives to internal and external forces.

complicated. For small airports, it can be as simple as informal conversations with key employees, customers, and stakeholders. 42 Part II: Building a Performance-Measurement System Involving Staff. Airport employees are key stakeholders with great power over and interest in airport success. Involve them in the environmental scanning. Not only do they bring valuable frontline perspectives, knowledge, and understand- ing to the table, involving them helps them “own” the results. One of the best motivators of performance is seeing your input being used and engaging in creating solutions. Environmental Scanning Tools There are many tools available for environmental scanning. For example, trend analysis looks at where an airport has come from and where it is today. Turning toward the future, perhaps the simplest tool is a SWOT analysis, in which a list would be made of an airport’s internal strengths (S) and weaknesses (W) and the opportuni- ties (O) and threats (T) in its environment. You want to build on strengths and take advan- tage of opportunities as well as address weaknesses and mitigate threats that you see now and in the future. Another future-focused tool is scenario building. It can be relatively simple, but it is often a formal, complex, time-consuming process. Scenario building begins by identifying a host of fac- tors that may affect an airport’s future. These are combined into four to six broad “drivers” of the future, such as economic growth. Using the identified factors, consider how each driver can vary. Also consider wild cards—unanticipated, discontinuous events such as disasters, terror- ism, and the current economic crisis—that can affect the future. Next, combine the drivers into scenarios of the future and choose up to four scenarios that roughly cover the range of possible futures. These scenarios are explored, and strategies are developed to achieve the airport’s goals in each scenario. Strategies that work in several scenarios are robust strategies and are strong candidates for the airport to adopt in its planning. The other strategies may also be useful in the future, if it becomes clear that a particular scenario is coming to pass. Finally, you can synthesize the results you gained from other tools using gap analysis. By stat- ing where you want to be and where you are likely to be under different futures, you can iden- tify the gaps and develop strategies. The gaps you identify are the major challenges facing the airport, and they are prime candidates to be the strategic issues you’ll want to address in your strategic and performance project plan. Use environmental scanning tools appropriate to the airport’s size and type. Worksheet 2. Scan the Airport Environment The goal of this worksheet is to outline a comprehensive airport environmental- scanning process, the results of which will be later used to adjust strategic elements and long-term objectives.

Task 3: Commit to Measure Performance If you don’t know what success looks like, you will not be able to achieve it. Achieving success means knowing whether you have accomplished the airport’s mission. Commitment to mea- suring results is the key to monitoring progress toward a mission. Planning for and measuring results takes thought, time, effort, and resources. Without commitment, the performance- measurement system will be ineffective and useless. Commitment needs to come from the very top levels of the airport organization. If the airport director and senior executives are not committed to measuring and being accountable for air- port performance, there may be good performance measurement in parts of the airport, but only rarely will there be a truly airportwide, systematic set of metrics established. Having the airport director’s commitment makes gaining commitment from other senior executives much easier. Prepare to Plan and Measure (Step 1) 43 Environmental Assessment Environmental assessment is key to the successful positioning of the airport in the market. Relying on factual market information, understanding stakeholder needs, and acknowledging the impact of the airport in the community, airport managers will be more assertive in design- ing the future of the airport. In developing a strategic plan, Dayton International Airport conducted one-on-one interviews with over 35 inter- nal and external stakeholders, including city and county managers, the chamber of commerce, the conventions and visitors bureau, car rental agencies, airlines, and fixed-base operators (FBOs). Dayton International Airport also held focus groups with employees to learn about airport weaknesses and strengths, as well as the opportuni- ties and threats in the market. The process took 3 months and served to position Dayton International Airport in the marketplace, taking into consideration size, competition, and environmental factors that play a key role in identifying those characteristics that differentiate the airport from peers. Minneapolis–St. Paul International Airport reviews the airport’s overall strategic plan and long-term initiatives every year in a process that involves conducting an environmental and a SWOT analysis and reviewing their impact on the airport’s performance-measurement system. When Commitment Is Lacking. At a large hub, a performance-measurement sys- tem was implemented with a great endorsement from the chief financial officer (CFO), but it has been difficult to gain support from employees and peers. Because the system hasn’t been endorsed by the airport’s top management, there is resist- ance to its implementation. Airport employees take the attitude that the interest in the performance-measurement system is coming from a single source and when that source leaves the system will be abandoned. Having commitment from the very top of the organization and communicating that commitment to staff pro- vides a clear message that the performance-measurement system is here to stay regardless of who is leading the effort. Staff should also understand the benefits of having such a system. This guidebook addresses how to gain commitment to planning for measuring performance and actually measuring performance throughout the organization. At this stage in the performance-

measurement system development process, two tools that can help senior executives commit are (1) understanding the benefits that the airport will gain from a well-structured performance- measurement system and (2) seeing benchmarking information that shows how well the airport compares to similar airports. The benefits of having a performance-measurement system are numerous and vary by airport, but some common benefits are the following: • Knowing where you are in regard to achieving your goals • Providing documentation regarding performance to internal and external stakeholders • Assessing whether targets and outcomes are being met • Identifying the strengths and weaknesses of the airport • Rewarding exemplary performance • Providing transparency in the assessment of processes • Aligning processes and strategies 44 Part II: Building a Performance-Measurement System Benchmarking. Benchmarking means comparing key performance data from your airport with data from peers or other airports similar in nature and location. Comparing benchmarks allows you to assess performance inside and outside of your organization. Identifying peer airports for external benchmarking should be done carefully so as to achieve properly comparable benchmarks. Senior Management Commitment Gaining commitment from senior management is fundamental to obtaining staff buy-in and making progress toward the airport’s goals. Airport senior executives need to display strong commitment to the performance-measurement system and advocate accountability for achieving results if the airport is to improve its performance. At Minneapolis–St. Paul International Airport, the performance-measurement system was initiated by the airport executive director and supported by the Metropolitan Airports Commission (MAC) directors and the Board of Commissioners. The performance-measurement system commenced in 2003 and was included as part of the airport’s strategic plan development. Due to management support, MAC developed and implemented its performance-measurement system in only a 9-month period. One of the most advanced airport performance-measurement systems is used by Tampa International Airport. The idea of measuring performance was brought to the airport by the executive director based on his previous experience in Salt Lake City. The performance-measurement system was developed by senior management with the participation of the Finance, Human Resources, and Performance Management/Internal Audit departments. Worksheet 3. Commit to Measure Performance This exercise will help you determine the level of commitment of senior executives and the governing body (cities or airport authorities). Their commitment is funda- mental in securing the grounds for a successful performance-measurement system.

Identify Key Performance Players The airport director has a key decision to make early in the development of the performance- measurement system and that is to select the key performance players that will provide support, logistics, and facilitation, and coordinate measuring performance and reporting. The number of people involved varies from airport to airport depending on airport size, staffing levels, senior executive commitment, the extent of the performance-measurement system, and how devel- oped the system is. In the largest airports, the airport director might choose a core person (core executive) to sponsor and coordinate performance-based planning and measurement. In many airports, this responsibility is assigned to an executive, such as the business planning or human resources (HR) director. Other airports name a dedicated person for this purpose, such as a con- tinuous improvement coordinator, performance project manager, performance management, internal audit, and so forth. In some instances, a performance team (Core Team) is also assigned to assist the core executive in this effort. In the smallest airports, especially general aviation air- ports, the airport director may himself or herself be the Core Team that oversees planning and measurement. To simplify, the core executive, the Core Team, and the airport director when act- ing as the core executive will be addressed as the Core Team. Once the responsible party for the performance-measurement system has been identified, the Core Team should identify senior executives in charge of making the key decisions on plan- ning and performance. The director and the Core Team, if different, will also need to identify the policy board, namely, the board of directors and/or governing entity that will approve the performance-measurement system. Prepare to Plan and Measure (Step 1) 45 In the smallest airports, the same person may fill all the roles involved in implementing performance-based planning and measurement. Involvement Is Always Good. Early involvement of staff in key decisions in the development of the performance-measurement system, such as setting objectives and activities, will help with gaining buy-in of the system by staff members. Use of External Organizations Part of planning for the performance-measurement system is deciding whether and how to use external organizations, especially paid contractors and consultants. While major decisions will be made by the airport’s leadership, external organizations can provide invaluable support in the following ways: • Experts on strategic and performance theory and practice can help an airport develop and exe- cute its project plan based on broad experience with a wide variety of organizations. • Experts on organizational process and organizational development can help design, plan, and facilitate the numerous sessions the airport will hold, gaining the most out of participants and assisting the airport in developing its plans and programs. They can also help design and sup- port outreach efforts and distill the results. • Airport experts can research airport best practices, provide advice on criteria to use in select- ing comparable airports, and evaluate an airport’s own processes and programs, pointing out possible weaknesses and ways to address them. Industrywide Surveys and Studies. ACI-World administers the Airport Service Quality (ASQ) Survey, a customer survey tool that is used to benchmark air- ports on the level of service performance delivered by the airport and pinpoint

46 Part II: Building a Performance-Measurement System under-performance, bottlenecks, and over-performance. Currently, 120 airports in more than 45 countries are enrolled in the survey, and participation is increasing. More information on the survey can be found at http://www.airportservicequality. aero/content/survey.html. ACI has also undertaken an extensive study entitled Airport Benchmarking to Maximise Efficiency.17 The study, published in July 2006, reviews a variety of products developed to assist airports in maximizing their efficiency, provides background on airport benchmarking, and describes a number of initiatives in ACI’s regions. The study can be found at http://www.airports.org. Selecting the Core Executive and/or Team Setting up a core performance executive and/or team is a common practice at airports for establishing accountability and responsibility for the performance-measurement system. Often, this role is given to an existing position, such as the director of business planning or the human resources director. In the smallest airports, it may be the airport director. Other air- ports create a dedicated office. Some airports assign the Core Team’s responsibility to a spe- cific person or department and rename it to reflect this new task. Regardless of the approach, there’s always a responsible party for the execution of the system. At San Diego International Airport, the airport authority’s business planning department was charged to align the new performance-management system with the organization’s strategic goals and each division’s annual goals. With cooperation and support from all of the functional groups, the current performance-management system was designed, tested, and implemented. In order to successfully implement a performance-measurement system, Dayton International Airport created a continuous improvement coordinator position that is fully dedicated to the management of the performance- measurement system and other strategic endeavors, such as the development and future update of the strate- gic plan. Toronto Pearson International Airport has established a Strategic Planning and Airport Development (SPAD) department. One of its functions is to develop and oversee the performance-measurement system and report the results of the airport’s performance to the executive team and chief executive officer (CEO). The Metropolitan Washington Airports Authority created the Financial Strategy and Analysis Department to advance the development of a performance-measurement system that incorporates both Dulles International Airport and Reagan National Airport. The Metropolitan Washington Airports Authority consists of two differ- ent airports, and implementing a performance-measurement system that is relevant to both can be challeng- ing. Due to the different natures of the two airports, the performance measure components at Dulles International Airport and Reagan National Airport monitor somewhat different areas and use performance measures in different ways for management decisions.

47 C H A P T E R 2 Plan to Achieve Results (Step 2) Task 4. Confirm Mission, Vision, & Values Task 5. Identify Long-Term Goals Step 2 Plan to Achieve Results Task 6. Identify Short-Term Objectives A good performance-measurement system is closely integrated with an airport’s strategic plan. While the strategic plan should define an organization’s mission, vision, and values and outline the strategic goals to be achieved, an effective performance-measurement system should measure whether those strategic goals are achieved. Performance monitoring makes employees and management pay attention to results and improve them, and if performance measures are correctly lined up with the airport’s strategic goals, performance monitoring should help achieve those goals. Step 2 of performance measurement includes Task 4: Confirm the Airport’s Mis- sion, Vision, and Values; Task 5: Identify Long-Term Goals, and Task 6: Identify Short-Term Objectives. Task 4: Confirm the Airport’s Mission, Vision, and Values Mission, vision, and values are the bedrock for developing strategies and measuring results. While most organizations have closed the gap between strategic plans and performance measures, it is still common for the two processes to proceed independently, especially in de-centralized business environments. Developing performance measures based on strategic goals ensures that measures are designed with the end in mind, preventing pointless data collection. The Mission Statement Strategic planning starts from a mission statement that clearly states what the Airport does and why. “What” and “why” are good mantras for planning, measuring, and managing perfor- mance. The mission gives the measurement framework boundaries and scope. Mission statements are often set in statutes and rarely change. Most airports also have a shorter statement intended to inform the public and employees and enlist their support. Both mission statements should include measureable terms, as measurability is key. For example, a mission statement such as “Achieve a world-class airport” is overly vague without more explanation. If instead the mission statement says “Achieve a world-class airport by providing our customers safe • Promote employee participation • Document performance measures • Concentrate on outcomes • Cascade and align measures The mission should be clear and measurable.

and reliable services, satisfying the community needs, and serving as the economic engine to the region,” you have a complete statement. Safety, reliability, community satisfaction, and economic benefits are all measurable. In some instances, airport departments also have their own missions. If so, taken together, they should support all aspects of the airport’s mission. Each department should be clear on how its mission both supports the airport mission and provides direction to its people. Organizational Values Values are simply the organization’s message on how employees should behave as they pur- sue the organization’s performance goals. While performance measures track what is produced and the results of those products and services, value statements describe how customers expect to be treated and how the airport gets to the end point. For example, responsibility and account- ability are crucial values for any performance-measurement system. Airport values are reflected in airport mission statement modifiers such as “safe,” “secure,” “effective,” and “in an environmentally sound manner,” among others. ACRP Report 20: Strate- gic Planning in the Airport Industry states, “A values statement describes the way an organization desires to conduct itself, both internally and externally, while engaging in its business activities. The values statement should answer the following three questions: (1) How should our organi- zation treat external stakeholders? (2) How should we treat our fellow employees? and (3) How do we want our organization to be viewed by external stakeholders and employees?”18 The Vision Statement While the airport’s mission statement sets boundaries for all subsequent goals and measures, the vision statement is where leadership establishes a focused long-term result for the airport’s activities and services. The vision statement needs to answer, “What is the expected result from all of our work?” and “How will we know when we’ve achieved that result?” If a vision does not bring to mind a clear and specific idea of what success means, it cannot serve as the foundation for all subsequent plans and performance measures. This measurable result, often on a 5-year time horizon (it may be as long as 10 or 20 years), becomes the end point for all the airport’s strategies and activities. Without a definable vision, performance-measure development will lack cohesion and a common end point. The vision establishes the basis for long-term goals. It is the initial and primary bridge between a strategic plan and a performance-measurement framework. It creates the first out- come measures in a top-down model. Just as a vision is necessary to develop specific results- oriented measures, no vision statements should be drafted without understanding how the vision will be measured. 48 Part II: Building a Performance-Measurement System Values can be the basis for sound leading measures. Set a short, clear vision that can be the basis for measurable long- term goals. Promote Employee Participation. Involve airport employees in helping set the airport’s mission, vision, and values and in developing the goals, strategies, plans, programs, and measures to achieve them. Employees not only bring valuable perspectives, knowledge, and understanding, but also involving them helps them “own” the results. One of the best performance motivators is believing in what your airport is seeking to achieve and knowing how your contribution fits in.

Plan to Achieve Results (Step 2) 49 Mission and Values Mission and values represent what an organization is today, and they should be reflected through the organization’s products and services, customer care, and relationships with all stakeholders. Nashville International Airport has been a leading airport in strategic planning and perfor- mance measurement. In 2003, Nashville International Airport started by developing a comprehensive Long-Term Strategic Business Plan with clear mission and vision statements. Values are prominently displayed on lapel buttons worn by all employees on identification badges, patches, and vehicles. Nashville International Airport vision, mission, and values statements are provided below: • Vision: To deliver exemplary customer service by providing premier airport services and facilities. • Mission: To be the heartbeat of the Mid-South by providing services and facilities that keep Music City flying high. • Values: Embodied in the symbol E3I, values help BNA [Nashville International Airport] complete its mission through: – Exercising: Its assets—staff and facilities—should be kept in top shape. Staff should have the skills to per- form their duties with the flexibility to meet highest professional and ethical standards. Its facilities should be optimally managed, made secure and maintained for their entire life cycle. – Intersecting: It should be a center of the Middle South’s ideas and activities, and support its communities. – Enterprising: It should have an entrepreneurial mindset—innovative and financially efficient. – Entertaining: It should have a beat and rhythm. Passionate about customer service and it should be a wonderful place through which to travel. Strategic Planning and Performance-Measurement Systems Strategic planning is crucial to the success of a performance-measurement system indepen- dent of airport size. Management needs to measure success at attaining the airport’s vision and mission and align organizational direction so that departmental activities and measures merge into a unified effort that achieves the vision and mission. The approach to performance-measurement by San Antonio International Airport also builds on strategic planning. The former director initiated a quarterly planning process that was to eventually drive performance based on an integrated airport strategy. The airport established strategic goals and some outcome-based performance measures and targets. These strategic goals are reviewed quarterly in a management retreat exercise. Current strategies for San Antonio International Airport are to optimize assets, maximize financial performance, invest in employees, improve customer experience, and identify and reduce risk. At Tampa International Airport, the Performance Management Program was developed to 1) share the mission and vision, underlying strategic initiatives, and organizational goals and objectives with its employees, 2) provide a mechanism to assess the efficiency and effectiveness of Authority activi- ties based upon quantifiable information and the results of strategies developed to enhance activity performance, and 3) ensure Authority accountability for performance.19 Minneapolis–St. Paul International Airport included the performance-measurement system as part of the strategic plan development. The airport started by defining its framework and aligning it with the airport’s strategic plan. It then selected performance measures, developed tracking and data-collecting processes, and set timetables and formats for data and reporting. The strategic plan is reviewed annually at the beginning of the fiscal year. This process involves revising the airport’s vision, mission, and values; conducting an environmental

Task 5: Identify Long-Term Goals A performance-measurement system that focuses on the wrong measures can undermine an airport’s mission, vision, and values by perpetuating shortsighted business practices. For this reason, airport management should ensure that its performance-measurement system supports the critical elements of its strategic plans. The first step in establishing performance measures is to extract from the airport’s mission, vision, and values a set of long-term objectives. Long-term objectives are measurable statements that specify outcomes the airport proposes to achieve over perhaps 5 years (but sometimes over 20 years). For example, a long-term objective could be “Maintain Federal Aviation Regulation Compliance.” In this case, outcome measures would be, for example, number of runway incur- sions, number of federal fines, number of recurring deficiencies, and security costs per enplaned passenger, among others. Outcome measures are the “yardsticks” airports use to measure its suc- cess. Outcome measures are sometimes referred as to KPIs or effectiveness measures. They pro- vide feedback on the quality and efficiency of services or on the intended performance of the organization. Outcome measures indicate accomplishments or results that occur (at least par- tially) because of actions taken and services provided. Strategic Alignment Strategic alignment means aligning airport resources and activities with the mission, vision, and long-term goals as illustrated in Exhibit II-2.1. Setting Outcome Measures There are at least five considerations that need to be addressed when setting outcome measures: (1) degree of control over measures, (2) selection of good end-outcome measures, (3) selec- 50 Part II: Building a Performance-Measurement System scan; and finally reviewing the foundation of the performance-measurement system by evaluating strategic goals, corresponding annual and long-term key initiatives, and key performance measures. Dallas/Fort Worth International Airport implemented a good internal process for developing the strategic plan and selecting measures that consisted of a series of six 1-day sessions that included top executives down to the level of assistant vice president. Dallas/Fort Worth International Airport used an outside consultant to facilitate the process. The executives did an external scan of the environment and considered the views of customers and stakeholders as they were perceived, but did not involve stakeholders or the board of directors directly in the process. The vision, mission, primary business goal, key results, and beliefs were developed collaboratively by the executive vice presidents and vice presidents of the organization. The assistant vice presidents provided input on the strategic objectives and initiatives. Once the strategic foundation was established, a formal performance-measurement system was developed. Worksheet 4. Confirm the Airport’s Mission, Vision, and Values This worksheet is intended to confirm the airport mission, vision, and values and their “measurability” to be used later in setting long-term objectives and identi- fying staff involvement in the strategic process and buy-in of overarching per- formance measures.

tion of leading indicators, (4) when to set end-outcome measures and targets, and (5) data sources and availability. Degree of Control Often the most important airport outcome measures are at least partly outside of the airport’s control. An example is on- time performance. Airports can’t control the weather or flights that leave another airport late. The same can be said of cost per enplaned passenger. Airports influence, but do not control, the number of passengers that move through their facilities. The first strategy for addressing the issue of control is to choose performance measures over which the airport has relatively more control. For instance, cost per operation might be more control- lable than cost per enplaned passenger. Another strategy is to choose a measure that is part of a series of more controllable measures. For instance, service quality is a subjective, customer perception. Controllable measures of it could be, for example, terminal cleanliness, concession quality and variety, and security timeliness. However, airports may need to accept that some important measures aren’t fully controllable. Clearly no airport should adopt a performance measure it doesn’t influence. If the measure is important (net rev- enue, for example) and if the airport can mitigate the effects of random environmental varia- tions (e.g., cut costs when revenues or passengers decline), then the airport should consider adopting the measure. Selection of Leading Indicators Airports seek performance measures with leading indicators that predict future change in other measures. For example, when airlines maximize revenues by replacing fuel weight with extra cargo load and airplanes are refueled at each destination, an increase in fuel sales at airports where the mix of in-transit passengers is relatively high implies that the number of in-transit passengers is increasing as well. Airports should try to identify and measure leading indicators that support long-term objectives the airport wants to achieve to better prepare for adverse situations. When to Set End-Outcome Measures The reason for setting end-outcome measures early in the performance-measurement process is so that an airport can be clear about how success will be measured and thereby plan and align strategies and activities to achieve success. Without clear goals and measures, planning becomes little more than a catalog of ongoing activities, some supporting the airport’s mission, some with little or no impact, and some that may even conflict with the mission or with each other. Strong, mission-based goals and clear success measures focus airport planning on what is needed to achieve results. Data Sources and Availability Fundamental performance measurement questions go beyond “What should we measure?” Almost as important a question is “What can we measure?” and “Where can I obtain the data?” A path many organizations have taken is to begin with all possible indicators to track long-term objectives and then narrow that list through a realistic and practical discussion of data sources and accessibility. To be accessible, information often needs to be standardized, normalized, and otherwise usable for benchmarking and other purposes. For a comprehensive list of common areas of measurement at airports and corresponding performance measures, please refer to the Compendium of KPIs at the end of this guidebook. Plan to Achieve Results (Step 2) 51 Source: The Performance Institute20 Exhibit II-2.1. Strategic alignment. Airports often don’t fully control key results that they seek to achieve.

52 Part II: Building a Performance-Measurement System Document Performance Measures. Documenting performance measures is crucial to validating accuracy. Many airports reflect strategies, goals, initiatives, and per- formance measures, along with targets and results, in their strategic plan. Others even publish the annual performance activity on the Internet to keep their stake- holders informed about airport progress. Concentrate on Outcomes. While everything should get measured, airportwide performance measurement should concentrate on outcomes, that is, the changes the airport wants to make in its environment. That’s where you will find out if what you’re doing is achieving your goals. Make sure you know the outcomes you want your airport to achieve and tie your other measures to them. Cascade and Align Your Measures. The board or airport director doesn’t neces- sarily need to see all measures every month, although they should have the abil- ity to drill down to supporting information and assessment. Provide them with the information they need to make decisions that improve performance. Give other managers and employees the information they need to manage their work. That does not mean excluding employees from airport-level outcome information; far from it, they need to know how the airport is doing so they can see how they fit in. Cascading airport goals and measures down to division and individual-level performance plans through the performance-measurement sys- tem moves the strategic plan from a high-level blueprint to a much more useful operational plan. The entire organization, including support functions, needs to be aligned with enterprisewide outcome measures. Strategic alignment allows for prioritization of work at the individual level, where daily decisions on resource allocation actually occur. Developing Long-Term Objectives and Outcome Measures Once the mission, vision, and values are set, the next step in strategic alignment is to set the long-term objectives and outcome measures that will achieve them. These long-term objec- tives, in turn, will be supported by the airport’s strategies, activities, and human and budget resources. As an airport owned by the Town of Leesburg (the Town), Leesburg Executive Airport subscribes to the Town’s strategic plan. Leesburg Executive Airport management crafts strategies to satisfy the financial and business environment objectives the Town has set for the airport—a 100% occupancy rate of all of its facilities (hangars, terminal space, tie downs) and revenue recovery costs. Airport management monitors its financial and operational performance measures to ensure that the Town’s goals are met. Currently, the

Plan to Achieve Results (Step 2) 53 airport has 100% hangar occupancy, 99% office space occupancy, and 100% tied-down occupancy, and rev- enues cover costs. Mahlon Sweet Field in Eugene, Oregon, has identified three overarching strategies, with corresponding targets and action plans, and tracks performance measures to monitor core processes. Broad objectives are developed through collaboration between airport management and the city performance-measurement manager and aligned with the high-level strategies. Exhibit II-2.2. shows Mahlon Sweet Field current strate- gies and outcome measures. At Toronto Pearson International Airport, the strategic plan is based on the Balanced Scorecard concept developed by Kaplan and Norton. In this approach, the airport’s vision leads to three strategic themes, which are based on core organizational values and beliefs: (1) global competitiveness, (2) gateway development, and (3) corporate sustainability. These themes, in turn, lead to a number of broader strategic objectives grouped into four perspectives: financial, customer service, internal processes, and learning and growth. The Integrated Corporate Plan sets out specific initiatives with defined targets and measures for achieving each strategic objective. Dallas/Fort Worth International Airport has a good strategic plan with a clear mission, a vision, a primary business goal, and four strategic goals. The primary business goal is to “Grow the Core Business,” and the four strategic goals are the following: Keep Dallas/Fort Worth International Airport Cost-Competitive, Create Customer Satisfaction, Deliver Operational Excellence, and Foster Employee Engagement. Each strategic goal is broken down into objectives and each objective into initiatives. Each strategic goal is supported by “Level 1” outcome-based performance measures with a target for the current fiscal year. All information is gathered internally, except for customer service data that come from the ACI International Benchmarking Survey and the employee engagement survey. Following is a list of measures by goal/strategic focus area: • Primary Business Goal: Grow the Airport’s Core Business: – International Passenger Airline Destinations – Number of Passengers (total and O&D) – Landed Weights (total and cargo only) • Strategic Focus Area 1: Keep Dallas/Fort Worth International Airport Cost-Competitive – Total Airline Costs – Airline Cost per Enplaned Passenger (CPEP) – Revenue Management (parking revenue per originating passenger, concessions sales per enplanement, commercial development acres leased, natural gas wells in production) – Underlying Bond Ratings • Strategic Focus Area 2: Create Customer Satisfaction – ACI Survey Rank–International – ACI Survey Rank–Over 40 Million Passengers • Strategic Focus Area 3: Deliver Operational Excellence – FAA Safety Compliance – Environmental Compliance • Strategic Focus Area 4: Foster Employee Engagement – Employee Engagement Index Score – Wellness Program Participation

Task 6: Identify Short-Term and Intermediate Objectives Based on the airport’s long-term objectives and conclusions from the environmental scan performed in Step 1, you should be able to identify short-term and intermediate objectives to determine the success of activities—initiatives, projects, and programs—proposed to achieve the long-term objectives. Short-term objectives are milestones to end-outcome measures. For example, if your long-term objective is to be the least costly airport in your region in 5 years, you need to first set short-term objectives to gradually reach this long-term objective. Some exam- ple short-term objectives might be to reduce CPEP by 3% annually, reduce FTE overtime expenses by 2% annually, and increase AIP funding by 7% annually. Intermediate outcome measures, like end-outcomes, focus on results. Intermediate out- comes, however, may have a shorter time horizon. Many airports hope to see improvements within 1 to 2 years. These measures focus on the results of several activities, products, or services supporting a coherent strategy. Intermediate outcome measures can determine the success of one department or several departments working together on a common goal, for instance, pro- viding customers with an “easy experience.” Elements that contribute to “an easy experience” might include effective signage for getting to the airport, quick access from parking/car rentals to the main terminal, and short waiting lines. These elements involve the efforts of several dif- ferent departments within the airport. Examples of some long-term objectives, end outcomes, intermediate outcomes, and short- term objectives are provided in Exhibit II-2.3. 54 Part II: Building a Performance-Measurement System Strategies Outcome Measures Recruit and retain air service providers that meet regional needs Increase the number of passengers using Mahlon Sweet Field by 2% annually Establish a sustainable Air Service Development Fund with $$ in annual contributions Develop airport facilities and infrastructure to accommodate operational, safety, and security requirements and to meet projected demand Within 4 years meet airfield development needs as identified in the new Airport Master Plan Within 4 years complete the projects identified in the terminal rehabilitation plan Annually meet FAA and TSA safety and security mandates Provide the products and services needed by customers at Mahlon Sweet Field Maintain a satisfaction rating from customers of 80% that they are able to find the products and services they need Source: Mahlon Sweet Field, Eugene, Oregon Exhibit II-2.2. Mahlon Sweet Field strategies and outcome measures. Worksheet 5. Identify Long-Term Goals Through this exercise, airport managers will confirm long-term objectives directly related to the airport’s mission, vision, and values. They will identify current measures and leading indicators to monitor the attainment of these long-term objectives and will be positioned to recommend key performance indicators that could improve measurement results. Remember to measure results, not efforts.

Plan to Achieve Results (Step 2) 55 Long-Term Objective End Outcome IntermediateOutcome Short-Term Objectives Improve Customer Service Customer value Increase responsiveness Reduce customer complaints Improve cleanliness Increase security timeliness Increase information messages Customer care Improve airport accessibility Increase signage to and from airport Reduce parking fees at daily parking garage Increase shuttle frequency Improve ground access availability Service quality Increase number of carriers serving the airport Reduce aeronautical revenues Increase number of direct destinations served Offer competitive airfares Excel in Social Responsibility Promote local arts Promote local businesses Airport economic impact Community donations Scholarships in aviation Secure DBE contracts Employ handicapped and elderly citizens Hire volunteer greeters in the busy season Environmental Stewardship Environmental quality Air quality Emissions per aircraft movement New generation fleet vs. old fleet Water pollution Water consumption per passenger Amount of deicing used Noise pollution Noise complaints Noise levels Reuse and recycle % of water recycled and used Total weight of recyclable waste Source: Infrastructure Management Group Exhibit II-2.3. Examples of some long-term and short-term objectives and intermediate and end outcomes. Set Short-Term and Intermediate Objectives Short-term and intermediate objectives are the immediate desired result of activities entrusted to divisional and departmental levels. Periodic monitoring allows for timely correction. Activi- ties are roadmaps to achieve short-term and intermediate objectives and contribute to the attainment of long-term objectives. In addition to end-outcome measures, Leesburg Executive Airport tracks performance to improve services and remain competitive. Measures include land rent, hangar space, fuel sales, land leased, personal property tax, user fees, landing fees, and tie-down fees among other service fees. Airport management also conducts exter- nal benchmarking on business activity with the following seven peer airports located within a 45-minute drive:

56 Part II: Building a Performance-Measurement System Fredericksburg Shannon Airport, Stafford Regional Airport, Winchester Municipal Airport, Manassas Regional Airport, Warrenton-Fauquier Airport, Eastern West Virginia Regional Airport-Shepherd Field, and Charlottesville- Albemarle Airport. Mahlon Sweet Field in Eugene, Oregon, has defined 17 performance measures that monitor core processes and the total system. Core processes include operating and maintaining the airfield, providing traveler sup- port facilities and services, providing general aviation facilities and services, and planning and developing regional air service and facilities. The total system, on the other hand, is oriented to the efficiency, effective- ness, financial performance, and customer satisfaction generated by Mahlon Sweet Field (see Exhibit II-2.4). Mahlon Sweet Field also benchmarks its goals and objectives against similar airports and uses its performance measurement and external benchmarking to determine how it compares with peers. Mahlon Sweet Field also uses these comparisons to provide a sense of comfort to the Airport Advisory Committee. Effectively, the airport is able to use its performance-measurement strategies as a mechanism for annual and periodic performance improvement focused primarily on customer service. At Tampa International Airport, the standard operating procedures manual identifies measurement areas that guide staff in selecting and modifying measures proposed for the following fiscal year. The areas and number of measures per area are the following: • Administration and Information Systems: 18 measures • Construction: 8 measures • Finance: 19 measures • General Aviation: 14 measures • Human Resources: 33 measures • Internal Audit and Performance Measurement: 10 measures • International Commerce: 7 measures • Legal Affairs: 9 measures • Maintenance: 23 measures • Operations: 23 measures • Parking: 19 measures • Planning, Development, and Environmental: 18 measures • Police: 12 measures • Properties: 23 measures • Public/Community Relations: 14 measures Measures related to capital investment projects are added to the list above, which is currently monitored externally through the Construction Industry Institute (CII) benchmarking study. These indicators relate to the financial impact and performance of completing a capital project from inception, such as: • Soft versus hard costs, • Percentage of internal costs capitalized to projects, • Change order percentage over original contract value, • Amendment percentage over original contract value, • Days from approval to issuance of notice to proceed, • Percentage project completed on schedule, • Percentage project completed on budget, • Percent original project contingency released at end of project, and • Days from substantial completion to contract closeout. In addition to general end-outcome measures defined at Minneapolis–St. Paul International Airport, each division and department has developed its own measures to track its performance. Exhibit II-2.5 depicts the different performance-measurement levels.

Plan to Achieve Results (Step 2) 57 Division and department measures are developed by unit leaders with managers and employee input. Employee input allows employees to be directly involved in the performance-measurement system and encourages sincere interest in achieving organizational goals. Each division tracks close to 100 measures. Often, performance measures are budget driven to meet Government Finance Officers Association (GFOA) requirements. When high-level measures aren’t achieved, departments analyze underlying components to find the cause of the unsatisfactory performance and take corrective action. Core Processes Short-Term and Intermediate Measures Operate and Maintain the Airfield Landing fees per 1,000 lb of landed weight Total aircraft operations Meet FAA safety requirements Provide Traveler Support Facilities and Services Customer satisfaction rating or quality and importance of terminal services Airline passenger-related revenue per enplaned passenger Meet TSA security requirements Provide General Aviation Facilities and Services Change in based aircraft Gallons of fuel sold Plan and Develop Regional Air Service and Facilities Market demand for air service Demand triggers as identified in the Airport Master Plan Percent of regional trips through Mahlon Sweet Field Total System Short-Term and Intermediate Measures Effectiveness Number of passengers using Mahlon Sweet Field Percent of regional trips through Mahlon Sweet Field Efficiency Average airline cost per enplaned passenger Financial Operating expense per enplaned passenger Customer Satisfaction Customer satisfaction rating of signage, cleanliness, and appearance of the terminal Number of Mahlon Sweet Field passenger top 10 destination markets receiving direct service from Mahlon Sweet Field Source: Mahlon Sweet Field, Eugene, Oregon Exhibit II-2.4. End-outcome measures at Mahlon Sweet Field.

58 Part II: Building a Performance-Measurement System Worksheet 6. Identify Short-Term and Intermediate Objectives Airport managers will be able to identify short-term and intermediate objectives and corresponding measures that the airport could adopt to achieve its mission. Source: Infrastructure Management Group Exhibit II-2.5. Performance-measurement levels at Minneapolis-St. Paul International Airport.

Once measures are set, the airport needs to set responsibilities for each objective, initiative, and measure and then hold people and their groups accountable for monitoring and reporting their progress and ultimately achieving their goals. Step 3 of the performance-measurement process includes Task 7: Set Measurement Responsibilities and Task 8: Develop and Test a Per- formance Measurement Reporting System. Task 7: Set Measurement Responsibilities Responsibilities should cascade down through the airport so that every employee knows and is managed on what he or she is expected to contribute to achieving the airport’s goals and objec- tives. Ideally, each objective, initiative, and measure will have a name attached to it. Establishing and Deploying an Accountability Structure Successful deployment of an integrated performance-measurement system is strongly related to developing a culture of accountability at all levels in the airport. The accountability structure forms the centerpiece of the entire system. Without accountability performance measurement is purely symbolic and unable to drive change and improvement. The willingness of airport management and employees to be held accountable for their performance is essential in manag- ing the performance-measurement process. Airport leadership needs to assign three types of responsibility for measures. In smaller air- ports, some or all may be assigned to the same person. First, charge the Core Team to coordi- nate reporting measurement results to airport management. Second, assign departments and their leaders the responsibility to achieve each measure. Third, each office should assign a des- ignated point of contact, who is charged with providing office performance information to the Core Team. 59 C H A P T E R 3 Create the Reporting Structure (Step 3) Task 7. Set Measurement Responsibilities Task 8. Develop & Test a PMRS Step 3 Create the Reporting Structure• Communicate with your staff • Motivate and set accountability • Recognize performance • Start simple • Allocate Resources An engrained culture of accounta- bility at all levels in the airport is key to the success of the performance- measurement system. You need someone to run performance measurement, someone to achieve each result, and someone to report the data.

Creating a culture of performance accountability requires showing staff and managers that both they and the airport can benefit from such a culture. It is important for management to communicate positive aspects of the initiative. It is crucial for staff to understand how the performance-measurement system benefits them. It is also important to reward successful performance clearly and publicly. Involve managers and staff in all aspects of the process, listen- ing to their concerns and communicating the benefits of the program. It is vital to communicate that management appreciates and will reward successful performance, accepts that organiza- tional failure can occur despite everyone’s best efforts, and will use performance measurement as a tool to indicate areas for improvement and possible savings rather than using it to blame and punish any responsible party. Employee Buy-in Employees will show little interest in and ownership of a performance-measurement system if it is developed by senior executives without employee involvement and feed- back. Employees and their managers are the ones who directly contribute to the input, output, outcome, performance, process, and every other aspect of organizational opera- tion. When employees have input into all phases of creating a performance-measurement system, buy-in is part of the process. As shown in Exhibit II-3.1, involvement, accounta- bility, commitment, and ownership are all integral parts of a well-developed performance- measurement system. Often employees do not know their role in the performance-measurement system and the impact of their behavior on performance. When developing a performance- measurement system, involve everyone. While executives are the ones who should establish strategic goals and corresponding macro-level measures, department leaders, in collaboration with staff, should develop micro-level measures and decide on specific targets in order to meet the objectives set by the executive team. “People involvement in the process brings about ‘buy-in’ which brings about commitment.”21 The methods and timing of employee involvement should be individually tailored depending on the size and structure of the airport while recognizing the following: • Involvement creates ownership, which increases loyalty and commitment, thereby increasing accountability. • Since employees will perform according to a set of performance metrics, it would be prudent to give employees a say in the development of the system that will drive their performance. Managing Change Change management is challenging in any organization and by no means unique to airports. Senior management, however, needs to move beyond blaming employee resistance for the fail- ure of a performance-measurement system. Lack of employee buy-in may be true at some air- ports, but management needs to look at causes. Certainly, resistance can be expected initially at most airports. Strong leadership that involves employees in change and that recognizes success should overcome that resistance. Where resistance continues, one should look at other common factors, such as lack of executive commitment, absence of clear goals and direction, or even sys- tem inefficiencies such as poor design and choice of measures. Strong leadership can eradicate these underlying problems. One way airport managers overcome resistance is by introducing the new system organizationwide with “top-to-bottom” explanatory meetings and presentations illustrating how each employee plays a significant role in the performance-measurement system and how their actions will affect the overall results. 60 Part II: Building a Performance-Measurement System Creating a culture of performance accountability requires showing staff and managers how they will benefit from the system. Source: Infrastructure Management Group Integrated PM System Exhibit II-3.1. Performance- Measurement System Key Organizational Components. Without a culture of performance and accountability, per- formance mea- surement may fail. Recognition of success and employee involve- ment supports change.

Resistance to change is also more likely to occur when the senior management team con- stantly changes. In such cases, employees are frequently asked to accept and adapt to the new management’s initiatives, which eventually becomes an inconvenient routine. Employees that have worked in the organization for a long time are especially resistant to accepting new pro- grams and feel they can persevere through any new reforms because they will be short-lived. Create the Reporting Structure (Step 3) 61 Communicate. Sharing results with employees and letting them know how their work aligns with airport goals is critical to employee buy-in. Employees should be able to view strategic organizational and division results along with their own individual measures. Most importantly, twice a year reviews with supervisors as well as informal feedback have been observed to provide true accountability and improvement at the division, team, and individual level. Employee Reward System Recognizing and rewarding positive performance is a key incentive for performance improve- ment. A reward system can greatly support employee buy-in. It may not be necessary if the organization has encouraging and positive leadership together with organizational character that portrays strong commitment to the organization’s established values and sincere concern about the good of the organization and the benefits it provides to the public. However, that kind of organizational character is rare in any industry or organization. Although many airports do not have an airportwide, performance-based reward system, many airport leaders believe that system’s incentives can encourage performance improvement. In particular, those airports that experience challenges with employee buy-in to the performance- measurement system believe that a performance-based reward program could transform employee attitudes. Motivate and Set Accountability. Motivation and accountability, more than pure compensation, are the core rationale behind fully cascading measures at all levels. Gallup’s Q1222 survey reports that employee understanding of their connection and contribution to corporate goals is the single highest long-term factor in engage- ment and motivation. While financial incentives can provide a short boost in engagement levels, only strategic alignment and the associated feedback from management provide long-term gains in productivity, effort, and other engage- ment measures. Pay for Performance Pay and bonuses can be an important part of an airport’s system to motivate and reward performance by individuals, teams, and even the airport’s employees as a whole. Coupling recognition with a pay increase or a bonus says to an employee or team that his or her contri- bution was worth considerably more than a simple “pat on the back.” Rewarding airport employees as a whole when the airport meets its targets is a way of focusing everyone on what

the airport seeks to accomplish and encouraging people to work with each other across orga- nizational “stovepipes” to accomplish mutual goals. Some airports use bonuses and pay to reward performance. Over the years, a number of lessons have emerged on how to design a good pay-for-performance system, one that actually motivates performance: • Look at pay as part of the overall system the airport will use to motivate performance. Pay alone is not an especially good motivator. Link pay to performance and to other motivators, such as recognition, more responsibility, job enrichment, the inherent value of what the air- port is trying to accomplish, and the simple satisfaction of a job well done. • Make sure that employees see pay for performance as rewarding excellent performance, not as a way of punishing inadequate performance. Employees (and supervisors and managers) have a keen sense of the probability that a change can benefit or harm them, and they will react accordingly. • Make performance criteria objective and measurable. If people perceive that performance standards are applied arbitrarily or capriciously—that the boss’s favorite or the smooth talker is being rewarded rather than the performer—then they will resist pay for performance. • Involve employees and their unions in setting up pay for performance. Listen to their con- cerns and address their suggestions. If key employees and their unions are on board, pay for performance can succeed. 62 Part II: Building a Performance-Measurement System Recognize Performance. If you want to maximize performance, you need to rec- ognize good performance by individuals, teams, and even the airport as a whole when it meets its performance goals. Compensation and pay for performance can help as part of an overall approach to motivation that includes recognition, increased responsibility, increased trust, job enrichment, promotion, and even the value to an employee or team in knowing that they’ve done a job well, that they’ve helped the airport serve its community’s needs, and that the airport has acknowledged their contribution. Set Measurement Responsibilities One of the most important factors for performance-measurement system success is the orga- nization’s joint pledge to the system. Often, airport employees find it hard to accept and real- ize the benefits of a performance-measurement system. They could show little interest and ownership if a performance-measurement system is developed by senior executives without employee involvement. Many times, managers do not explain to employees their role in the performance-measurement system and the impact of their behavior on performance. While developing a performance-measurement system, involve everyone in the process. Dayton International Airport did not escape the challenges of implementing a performance-measurement sys- tem; however, having a solid strategic foundation and a clear understanding of the airport’s positioning and vision were critical in overcoming these challenges. With 203 full-time employees, it took Dayton International Airport a year to gain employee buy-in at all levels in the organization, including from employees at the mana- gerial level who showed some skepticism due to the drastic change. Employees embraced the changes once

Create the Reporting Structure (Step 3) 63 they saw positive results from the system and understood what was in it for them. Lessons learned at Dayton International Airport are the following: • It is important to bring external stakeholders into the process to obtain support. • It is important to clearly communicate to staff members that an airport strategy with defined objectives and direction improves efficiencies when decisions need to be made. Knowing in what direction to move simpli- fies the decision-making process, thereby reducing thinking time. The basic question employees should be asking themselves when in doubt is: “How does this action play into the strategy?” • Staff members need to know what is in the performance-measurement system for them in order for them to embrace it. People follow success and their buy-in is a reflection of it. • A strategy is as much about a set of initiatives you will fully embrace as it is about divesting yourself of others. • Employees look for more than compensation in a job. In the words of President Roosevelt, it is the “joy of achievement and the thrill of creativity” that provides them with ultimate job satisfaction. With approximately 600 full-time and 400 contract employees, it took Tampa International Airport 3 years to attain employee buy-in at all levels. In order for employees at lower levels of the organization to embrace the performance-measurement program, management allowed them to define measures and implemented a performance-based reward program—an employee incentive program (EIP). Probably the most challenging endeavor was to make employees understand that failure was tolerable. Staff at top levels of the organization also posed some resistance, and it was not until they could see the use of the results to identify areas for improvement and the benefits of internal benchmarking that the performance-measurement program was embraced. The current level of employee buy-in and participation in the system at Tampa International Airport required a high level of strategy and planning to implement and achieve. The program is an example of a well-defined performance-measurement system and contains the critical elements that are necessary to succeed: • Communication • Training • Staff Buy-in • Community Involvement • Knowing Your Customers • Transparency • Reward Program • Quality Control Employee Rewards and Pay for Performance Recognizing and rewarding positive performance are key incentives for performance improve- ment. A number of airports have experienced success through rewarding performance. Management employees at the Greater Toronto Airport Authority (GTAA) can earn a pay-for- performance annual bonus in addition to salary. The program was developed to focus and link employee behavior and performance with the corporation’s achievements and the strategic plan. Goals are cascaded down from the CEO and aligned to corporate strategy. Each level of management is entitled to a target percentage performance-based bonus made up of corporate (i.e., “team”) achievement and individual achievement. For 2009, corporate achievement represents 45% of

64 Part II: Building a Performance-Measurement System the bonus, and personal achievement the remaining 55%. Corporate achievement is defined and evaluated by the following corporate performance measures: • Revenue Over Expense. This performance measure links pay to the achievement of the overall corporate budget for the current year. • Cost per Enplaned Passenger. This performance measure links pay to the achievement of (lowering) the air carrier rates and charges objective as set out in the strategic plan for the subsequent year. This is meant to be a forward-looking goal. • Airports Council International’s Airport Service Quality Rating. This performance measure links pay to the achievement of a prescribed (higher) overall passenger satisfaction score as measured by the ACI Quality Service Index score for the current year. • Quality Management Initiatives. This performance measure links pay to support for the airports process (continuous) improvement quality enhancement program The individual portion of the bonus is defined by achievement of the employee’s annual goals. These goals are developed to fall in line with the strategic plan, departmental objectives, and PROACT principles—Positive, Reliable, Objective, Action-oriented, Controllable, and Timely. Individual success is reviewed and determined by immediate senior staff and approved by the CEO. This program ensures that the goals of the organization are translated top to bottom through all departments and sub-groups. An example of how goals are translated and documented for one department of the airport is presented in Exhibit II-3.2. Management at Memphis International Airport recognized the difficulty in ensuring that airport employees were aligned with the long-term vision and direction of the airport. To foster buy-in, Memphis International Airport implemented several employee performance-reward programs. The awards are sought and recognized as prestigious commendations in the organization and include the following: • Employee of the Quarter. Non-management employees can be nominated by anyone in the organization, and the winner is selected by a committee of seven to ten people led by the Human Resources Department. The winner receives $250 (less tax), a medallion, a letter of congratulations, a certificate of achievement, and a personalized banner. • Employee of the Year. From the four selected employees of the quarter, one employee of the year is chosen. The selection process replicates the dynamics of the Employee of the Quarter. The award consists of public recognition at the airport’s annual banquet and a larger monetary incentive. • Annual Larry Cox Excellence in Management Award. This award is only open to managers and directors. Each year, nominees’ names are embossed on a commemorative plaque that hangs in the airport. The winner gets a monetary award as well as a crystal trophy and is recognized at the airport’s annual banquet. Tampa International Airport recognizes employee contributions with the EIP, which is tied to the financial per- formance of the Authority and achievement of board-designated goals and objectives. The performance of the Authority in relation to budget numbers and goals directly affects what, if any, incentive payment is to be made. The EIP award is based upon a potential performance bonus. The actual portion awarded depends upon how actual performance compares to projected numbers and whether performance has met the goals that are assigned to each department. This system is designed to be a team effort with each employee receiving the same amount.

Task 8: Develop and Test a Performance-Measurement Reporting System For an airportwide performance-measurement system to be successful, the Core Team, work- ing with the Airport Director and leadership, needs to create a performance reporting structure and operate it to provide useful information to senior level staff as close to “real-time” as possi- ble. While the term “real-time” has multiple definitions for different businesses and functions, as used here, it means simply to provide performance information to decision-makers in time for them to take timely action. Frequently, this real-time demand requires balancing the best possible measure or analysis with the ticking clock. In short, real-time measurement is required to perform critical business functions. This rapid data flow provides continual proactive com- munication to leadership and employees within an enterprise. While airport leadership seldom makes a snap strategic decision based on a real-time per- formance indicator on a dashboard, many lower-level decisions are made continually. Airports already provide second-by-second data on flights and safety, providing further real-time analyt- ics is a logical next step. A highly functional performance-measurement reporting system (PMRS) provides up to seven key functions: 1. Dynamic strategy maps that graphically represent program and initiative performance and the relationships among them. Create the Reporting Structure (Step 3) 65 Source: Toronto Pearson International Airport *Operations and Customer Experience 1 2 3 4 5 6 7 8 ID Goal OCE*-1 Corporate Financial: 2009 revenue under expenses of $69.9 million or better. OCE-2 Corporate Financial: 2010 budgeted airline cost per enplaned passenger of $38.37 or less. OCE-3 Corporate Customer Service: Maintain a standard of service and facility offered by Toronto Pearson as measured by the "overall satisfaction index" of the annual ASQ survey. (3.70-3.90) OCE-4 Corporate Learning & Growth: Demonstrate the GTAA's commitment to learning and growth of its people by delivering: a) Quality management training to all GTAA employees; b) Training on leading adaptive change to all management employees. x OCE-5 Develop and implement a new Night Flight Management program in cooperation with Corporate Affairs and Marketing. OCE-6 Develop and implement a new protocol to replace TFAP. OCE-7 Implement Phase 2 of SEMS. OCE-8 Develop and Benchmark a new Passenger Information Services program in the terminals. OCE-9 Optimize Airside Safety program. x x x x x x x x x x Exhibit II-3.2. Departmental goals: operations and customer experience. Worksheet 7. Set Measurement Responsibilities This exercise takes airport managers through the necessary steps to increase involvement among employees, set a system of accountability, and establish measurement responsibilities. Real-time measures allow decision- makers to take timely action.

2. Analytic capabilities that enable quantitative and qualitative data to be “sliced and diced” in order to provide predictive and “what-if ” scenarios. 3. Tools that foster a culture of performance measurement so that individual product or ser- vice performance can be “rolled up” and measured in the context of strategic priorities and outcomes. This includes bringing performance indicators to life so that they can become part of day-to-day management. 4. The capability to align results to funding (budget-performance integration), to provide evi- dence where funding increases can have direct, measurable impacts on activities. 5. Evaluation of direct and indirect costs associated with programs and use of technology that allows for cost management activities to be reported to internal and external stake- holders. 6. Tools that are interoperable with existing airport data systems, including those found in reporting, planning, and budgeting functions. 7. Strategic communication tools like dashboards and scorecards that provide managers and employees line of sight from the airport level down to individual functions and departments. The PMRS should allow points of contact to retrieve information needed from other depart- ments and ensure that there is a common source for and interpretation of data. For example, should the snow removal expense be monitored as a separate item for benchmarking pur- poses, or should it be included in repairs and maintenance expense under operating expenses? Either approach is valid; the Core Team needs to ensure that a single approach is used. Key issues, especially in the first airportwide performance-measurement system cycle, include the following: • Selecting the software the airport will use to gather and report performance information to leadership. Will the airport use off-the-shelf software such as MS Word, Excel, and Power- Point, or will the airport purchase specialized performance software that can provide real- time data access, simple and intuitive data presentation, and database integration capabilities? Chapter 6 in Part II of this guidebook discusses capabilities, advantages, and disadvantages of specialized performance management software. • Designing the structure of the PMRS as the Core Team designs the structure of airport objec- tives, activities, measures, and responsibilities into its PMRS. The Core Team will also have to determine how to drill down from top levels (e.g., long-term objectives) to associated measures, activities, and responsibilities and how to highlight performance problem areas for leadership’s attention. • Populating the PMRS with objectives, activities, measures, and responsibilities. While this is a mechanical exercise, the process of inputting data and correctly linking it can prove complex and time consuming. 66 Part II: Building a Performance-Measurement System Start Simple. The first time you develop an airportwide performance-measurement system, use relatively simple tools such as MS Word, Excel, and PowerPoint to collect data and report results. For smaller airports, these tools may be all you need. The sample dashboard depicted in Exhibit II-3.3. is a PowerPoint docu- ment that displays useful information on a hypothetical monthly customer satisfaction measure that airport decision-makers could use to improve performance.

Note that the simple dashboard provides the measure, the responsible person and office, sup- porting initiatives, measure status, and useful discussion. Note also that the graph provides two leading indicators that suggest the airport may not achieve its customer satisfaction target unless action is taken: 1. Monthly customer satisfaction peaked 4 months ago and is declining. 2. This month, for the first time in months, monthly customer satisfaction did not meet the target. Finally, the airport and its Core Team need to think about how to report information and present it to senior executives in easy-to-understand ways that focus executives on performance issues and decisions. The difference between a jumble of statistics and useful knowledge is the difference between confusion and decisive action. The Core Team needs to think early in the performance-measurement cycle about the reporting system it will use to provide knowledge to executives. Create the Reporting Structure (Step 3) 67 Allocate Resources. The airport needs to recognize that good development, measurement, and management of performance reporting takes funding, time, and work. There are, however, ways to reduce the effort. Before implementing it, beta test the system you will use to report performance measurement to leadership. Better yet, beta test it repeatedly, and if possible, test it with the airport director. Work out the kinks before going live so that when the system is exposed to the airport leadership as a whole, it works as it should, providing them with the information they need to manage performance in an unobtrusive way that focuses on discussion and action, not on system failures. Source: The Performance Institute23 Exhibit II-3.3. Customer satisfaction dashboard.

68 Part II: Building a Performance-Measurement System Performance Reporting Systems The systems used to report airport performance are diverse. The most common approach is the dashboard and its variations. The PMRS should be a comprehensive system that reports the overall performance of the airport and serves as a repository and tracking mechanism for data. Performance-measurement data at San Diego International Airport are compiled from several sources, e.g., financial application software, external vendor databases, and individual MS Excel spreadsheets. These data are gathered and downloaded either electronically or manually into the Authority’s Enterprise Resource Planning (ERP) system. Having the data centrally located makes them readily available to be extracted and presented on the QPR software dashboard. Performance data collection does require a more systematic and rigorous process to ensure the data’s accuracy and timeliness. Most Authority operational and financial data are collected monthly for reporting purposes. The data are entered into the ERP system from which the QPR application can readily extract it and display/report the results. Performance data from customer surveys are reported quarterly while employee survey results are reported every 1 to 2 years. Dayton International Airport has adopted measures that allow for both internal and external benchmarking. For Dayton International Airport, internal benchmarking compares performance trends based on previous experience to gain an understanding of what the airport is doing better than it did before. External bench- marking is used to identify industry trends. Selected measures were chosen based on indicators the industry embraces as important and indicators that other airports use to allow for proper comparison. As shown in Exhibit II-3.4, Dayton International Airport’s Balanced Scorecard reflects a total of 26 measures selected according to what the airport industry is measuring in the following areas: • Cost Performance • Revenue Performance • Concessions Performance • Efficiency and Effectiveness • Customer Service Performance measures at the corporate, departmental, and sub-departmental levels at Toronto Pearson Inter- national Airport are prepared for each strategic objective and initiative and are categorized by one of the four Balanced Scorecard areas. Each measurement area is built on the department-level measures that in some cases may have only a soft correlation or be relevant under several overarching strategic themes at the same time. Selection and prioritization of measures assessing overall corporate performance are largely determined by executive team requests. Most of the measures are budgetary figures; however, measures incorporate a mix of qualitative and quantitative metrics because certain important aspects of operations, such as process efficiency, cannot be quantified. There are three key measures that the board considers critical in its assessment of the organization’s overall performance: airline cost per enplaned passenger, the ASQ level of ACI’s ASQ Survey, and revenue under expenses ration. If the targets for these three measures are not met, the organization as a whole will not have met the desired level of performance for that year. Targets are in the process of being developed for all measures. Targets for performance measures are set through a consultation process at an executive level with considerable research. For example, if the executive team is concerned about whether a target for ownership costs (rent) of 12% of airport revenue is feasible, SPAD will run a model to estimate how such a target would affect various operational areas and whether it is reasonable and achievable. Organizational standards also play an important role in the performance-measurement system. According to GTAA, the governing body of Toronto Pearson International Airport, if organizational standards are set low, the improvement in performance will be minimal as well. Nashville International Airport and the Metropolitan Nashville Airport Authority (MNAA) are in the process of establishing performance measures related to performance excellence. The current 28 airport measures were

Create the Reporting Structure (Step 3) 69 Ke y Performance Measures FY 07 Goal Cost Performance Actual % Change Actual % Change Actual % Change Meet "Target" Budget 95% of Approved Budge t 65% 46% 60% 58.33% 68% 58% Total Airline Cost Per Enplaned Passenger * $12.00 $8.42 43% $8.42 43% $8.42 43% Total Operating Costs Per Enplaned Passenge r $22.70 $18.40 23% $13.88 64% $16.12 41% Total Operations & Maintenance Costs Per Enplaned Passenge r $8. 4 6 $7.11 19% $5.92 43% $5.22 62% Operations & Maintenance Costs Per Terminal Square Foo t $16. 2 7 $6.24 161% $6.15 165% $5.30 207% Public Safety Costs Per Enplaned Passenge r $2.25 $2.64 -15% $1.88 20% $1.81 24% Fire Safety Cost Per Enplaned Passenge r $1.94 $1.86 5% $1.73 12% $1.50 29% Soft Costs of projects 20% 11% 82% 0% 0% 0% 0% Revenue Performanc e Non-Airline Revenue to Airline Revenu e 50% 51% 2% 49% -2 % 51% 2% Total Non-Airline Revenue Per Enplaned Passenge r $12 $16.46 37% $12.99 8% $12.93 8% Cargo Space Leas e d 100,000 s f 0 0% 0 0% 0 0% Concessions Performanc e Total Concessions Revenue per Enplaned Passenge r $5.00 $5.62 12% $5.44 9% $5.58 12% Total News & Gifts Revenue Per Enplaned Passenge r $1.62 $1.42 -12% $1.40 -14% $1.50 -7 % News & Gift DBE 25% 25% 0% 25% 0% 25% 0% Food & Beverage Revenue per Enplaned Passenge r $3.65 $3.84 5% $3.67 1% $3.72 2% Food & Beverage DB E 3% 0% -100% 0% -100% 0% -100% Parking Revenue Per Enplaned Passenge r $7 $9.60 37% $9.08 30% $8.82 26% All Other Concessions Revenue Per Enplaned Passenge r $0.20 $0.37 85% $0.37 85% $0.36 80% All Other Concessions DB E 3% 1.46% -51% 1.46% -51% 1.46% -51% Efficienc y & Effectivenes s Change Order Costs /Project Cos t s 5% 0 100% 0 100% 0 100% Number of breaches of airport security pl a n 0 1 -100% 0 100% 0 100% Number of violations airfield/runway incursio n s 0 0 100% 0 100% 0 100% Customer Servi c e Customer Satisfaction-Parking & Signag e 85% 70% -18% 70% -18% 70% -18% Customer Satisfaction-Appearanc e 85% 70% -18% 70% -18% 70% -18% Customer Satisfaction-Concessio n s 85% 72% -15% 72% -15% 72% -15% Customer Satisfaction-Complaint Response Ti m e 72 hour s 72 hours 100% 72 100% 72 100% *Based on DAY Preliminary draft with residual Method of Rates & Charges Q1 FY 07 Performance Q2 FY 07 Performance Q3 FY 07 Performance Source: Dayton International Airport Exhibit II-3.4. Dayton International Airport 2007 Balanced Scorecard.

70 Part II: Building a Performance-Measurement System Worksheet 8. Develop and Test a Performance-Measurement Reporting System This exercise is intended to help airport managers to define the PMRS and the necessary resources for a successful implementation. created using the Balanced Scorecard approach. Nashville International Airport continues to use these mea- sures, shown in Exhibit II-3.5, as it transitions to measures supporting performance excellence. Exhibit II-3.5 identifies the performance measures for areas of results adopted by MNAA. Strategic or “Change the Business” measures are either a C or B. “Run” or “Operate the Business” metrics are designated as R or B. This distinction creates the capability to actively monitor the change effort underway as MNAA changes or creates management processes on the performance excellence journey. MNAA is currently evaluating 290 sources of data to identify key measurements that will directly support key work processes. Once completed, MNAA will use the appropriate data to calculate a service quality index as an aggregate measurement of the performance of those key work processes and as the indicator of how the air- port is serving its customers. Finally, MNAA implemented a performance projection process. Central to the process is the need to financially project performance based on the changing economic environment. The pilot model is a projection of the rates and charges.

Create the Reporting Structure (Step 3) 71 Source: Nashville International Airport Category Metric Who? 4.1 Test Level Trend Comparison Importance 7.1 Products By customer Segment! Services Space conversion metrics PDC R Space Changes Counts of Properties R - Square Feet converted Maintenance R - Functionality Upgrades R - Maintain versus new? R Inspect/Maintain Compliance Maint/OPS R Space Safety Metrics Safety R - Corrective Action Counts Maint/OPS R - Corrective Cycle Time Maint/OPS R Secure Space Compliance DPS/OPS R - Safe feeling (PAX survey?) CACS B - Access Control Metrics DPS/OPS R Manage Contracts Properties R Partnerships Partner Services provided Properties R Comm Relations Contacts CACS R - Activites focused on Community CACS R 7.2 Customer Focused By Segment Outcomes Satisfaction - Dissatisfaction CACS B X - Perceived Value CACS B - Loyalty (Retention) CACS B 7.3 Financial & Market PAX - Revenues Fin B X Outcomes PAX - Market Penetration of Bus Dev R X - Air Services (License PI) R - Partners Revenues Properties R X X X - Air Services - Cost/EPAX CIU R X X X - No. non-stops, total dest Bus Dev R 7.4 Workforce Education Level HR R Engagement Six Sigma Participation CIU B Satisfaction Performance Review over time HR R Development Emp Opinion Surveys HR R - Training Hours HR R - AOC & Spec Training HR R - Recognition Reward Counts HR R - Staffing Report DPS/OPS HR R Capability Turnover DPS/OPS R Capacity Termination Report Data CIU R - Vacancy Report HR R - % Payroll to Employee Benefits HR R X Climate Safety Report HR R X - Safety Comm Actions Safety R - Occ Injury Trends Safety R - OSHA 300 Safety R - Personnel Change Log Safety R - Salary Survey HR R Emergency Preparedness All R 7.5 Process Effectiveness TNCPE Recognition Process All C X - Work System Changes CIU C - KWP Process Metrics CIU C - MNAA Service Quality Index CIU C - Support Process Metrics All B 7.6 Leadership Action Plan Implementation All B Strategy Strategy Implementation CIU B Ethicial Reported Breaches of Ethics Legal R - Employee Survey of Ethics HR R - Corrective Actions to Breaches Legal R - Audit Results HR R X Fiscal Audit FollowUp Progress Legal R - Financial Statement Issues Audit R - External Audit Issues Audit R - Financial Statement Risks Fin R Citizen Community Support Time Donated CACS R - Percent Workforce Involved CACS R - Resources Contributed CACS R Metric Coding R=Run Business C=Change Business B=Both Exhibit II-3.5. Metropolitan Nashville Airport Authority results metrics.

72 C H A P T E R 4 Act and Measure (Step 4) Task 9. Implement & Measure Task 10. Baseline Measures & Set Targets Step 4 Act & Measure Task 11. Report & Analyze In this step, the airport will implement the performance-measurement system. The airport will measure its performance, including measures for initiatives, strategies, and activities. As part of the process, the airport will develop a baseline of its measures; in other words, measure where it is today and set targets for the future to identify improvements and trends. Finally, the airport will report and analyze performance data that will be used in the decision-making process. Step 4 includes Task 9: Implement and Measure, Task 10: Baseline Measures and Set Targets, and Task 11: Report and Analyze Performance Results. Task 9: Implement and Measure Implementation Implementation is probably the most challenging phase in the performance-measurement sys- tem. Airports should be prepared to allocate sufficient time for staff to embrace the new system, maybe longer than expected, before reporting its success. Due to their complexity, larger airports might require longer periods of time than smaller airports—usually 1 to 3 years. At smaller air- ports, implementation could take up to 12 months. There are a number of key elements to success- ful implementation. The most critical elements include the following: • Good structural alignment, especially communication across “stovepipes” when different parts of the organization are involved in or affect implementation. • Good project and program planning so as to use human and other resources effectively. • Good budgeting that addresses mission-critical needs, allocates sufficient resources to accom- plishing proposed initiatives, and uses resources efficiently. • Responsibility and accountability and a culture that encourages and rewards them. • Employee buy-in based on a consensus on performance expectations for employees, employee accountability, and employee understanding of how their actions affect the airport’s mission and goals. • Allocate time to implementation • Deliver a clear message of performance-measurement system objectives • Collect the necessary performance data • Set challenging but achievable targets • What information to make public

Act and Measure (Step 4) 73 • Motivating, recognizing, and rewarding good performance and correcting performance that doesn’t meet the mark. • Learning about and seizing opportunities, identifying and addressing issues and barriers, and changing direction when necessary to improve performance. • Stakeholder outreach as an important part of both learning and communication. • Performance management to ensure monitoring and reporting are occurring on schedule. Structural Alignment The airport’s structure can greatly help or hinder performance. Performance indicators are usually the result of multiple processes and departments. In most large organizations a “silo effect” exists, where the organization is very effective vertically within its departments, yet may not focus on outcomes that require cross-departmental cooperation. Generally, outcome measures rarely involve the efforts of one department; enabling airport- wide improvement in areas like service quality, customer satisfaction, and even IT, requires cross-functional teams to succeed. Therefore, horizontal information is as critical as vertical information not only to improve outcomes, but also to benefit from other departments’ learning experiences. Transparency and Communicating Performance Measures to Employees While today’s business environment emphasizes financial transparency to shareholders and reg- ulators, performance transparency to employees has also become increasingly important. Trans- parent organizations tell employees, stakeholders, and partners what success means in quantitative terms. The best organizations tie what each individual is asked to achieve directly to objectives and measures of airport performance. While performance measurement is an organizational effort, prioritization and integration of the measures into daily activities is done by the individual. In addition, greater transparency can encourage better conversation on what drives the airports’ per- formance, and should be the first order of business in the quest to discover what really matters. Key transparency issues that organizations pursue through performance measurement include the following: 1. What is our most effective path to enhanced revenue and sustainability? Without accurate strategy measures, surprisingly few people can answer this question correctly. In a transpar- ent organization, no one has to guess how the airport makes money or how their jobs affect bottom-line performance. 2. Why do our customers do business with us? What are the reasons customers use the airport and not an alternative? Price? Convenience? Quality? Need? Aesthetics? Habit? Lack of choice? Customer-focused measures can reveal behaviors and lead an airport not merely to keep pace with customer expectations but to stay ahead of them. 3. What makes our airport or travel experience worthwhile and truly different from others? What’s in the airport’s cultural and behavioral patterns that give it a competitive advantage? These issues should be understood through key performance indicators and become the focal point of resource investment and management attention. Throughout the public and private sectors, connecting and aligning employee strengths to the goals of the organization is seen as increasingly important and critical to success. Performance Management Finally, measure-based performance management is in itself a key to successful implementa- tion. Without decisions that improve specific activities and outputs (products and services), it is difficult to improve end results. Activity and output measures often simply indicate whether tasks were accomplished and how much output was produced. However, they can also improve In general, outcome measures require cross- functional teams.

efficiency by assessing schedule, cost, and quality. In short, is the airport producing quality ser- vices on schedule (including meeting interim targets) and on budget? More importantly, are the activity and output measures the best mix to achieve strategic goals and the airport’s vision? 74 Part II: Building a Performance-Measurement System Allocate Time to Implementation. Selling a new methodology to the staff might not be that easy. People need time to embrace the change and adjust to new requirements. Clearly Communicate the Objectives of the Performance-Measurement System. Ensure that the staff that will participate in the system understand the performance-measurement system objectives and performance data and what the system will do for them. Data Collection Data are the bedrock of any performance-measurement system. Data supporting the chosen performance areas and measures are gathered from various airport departments and, in some instances, from outside parties such as airlines, contractors, and concessionaires. The data col- lection process can be well established and seemingly effortless or quite cumbersome. Typically, smoother data collection processes, those requiring less time and money, have a centralized data location, i.e., an ERP system data warehouse. (In small organizations, the centralized data loca- tion could be a department where data resides, or there could be a person who is responsible for the data.) Ongoing, smooth communication among departments plays an important role in reducing the time and effort expended to collect necessary information. Directly related to acquiring data is management’s ability to make time-sensitive and assertive decisions based on data. One advantage of data collection and performance monitoring is the abil- ity to predict situations and contribute information that allows executives to make sound decisions proactively, rather than reacting after the fact. If data are not readily available when needed due to infrequent collection, inability to retrieve existing data, or time-consuming reports that delay delivery of data and make data confusing, managers will not be able to respond quickly to oper- ational issues. Airports can choose to collect and monitor data more often, for instance daily rather than monthly, when the nature of the measure allows. However, more frequent collection/ monitoring might require more resources and be burdensome to employees. Airport management needs to decide if frequent data collection is more beneficial for the organization. One way to improve data collection is to create a very simple and clear data request format. Employees with various statistics can provide data faster and with fewer resources if the request for information is specific, does not alter over time, and the data are already in the required format. On the other hand, far from having difficulty collecting data, some airports have too much data and do not have the knowledge to use the data well. Collecting data is not an end in itself. Collected data must be useful for determining whether or not goals have been achieved. Perfor- mance measures should not be established because data are available and convenient. Only nec- essary data should be collected, and not all data should be provided routinely to all levels of management. Furthermore, data provided to senior management should be limited to those measures that senior management can act upon in order to improve performance. Timely, useful infor- mation leads to timely adjustments to improve perfor- mance. Data to be collected must be useful to determine the achievement of goals.

Act and Measure (Step 4) 75 More importantly, the quality of collected data is more important that the quantity. Data that contribute to the performance-measurement system should be aligned with strategic initiatives in order to measure goal attainment. Other relevant data can be collected at a departmental level and tracked with the aim of improving processes, but should not necessarily be part of the air- port’s performance-measurement system. Another factor determining whether to collect data on a measure and how data should be col- lected is the degree of control the airport has over the measure. Usually, measures over which the airport has a higher degree of control are the ones for which it is recommended that data be collected; however, there are some exceptions to this. Airport management needs to review per- formance measures regularly and decide whether the measures are still useful enough to the organization to expend resources on collecting information for them. The quality of collected data is more important than the quantity. Collect the Necessary Performance Data. Do not overwhelm your staff with collecting performance data that will not be used. Not all available data will be relevant to your performance-measurement system. Being precise and remaining focused will simplify the data collection process. Maximizing Data Integrity and Accuracy Data need to be collected, managed, and analyzed in a uniform and consistent manner, and data need to be validated or verified as accurate independently or through sampling. Data Consistency Inconsistency in data, whether within one airport or across several airports (in benchmark- ing), is a serious obstacle to using performance information for better decision-making. Some of the issues that can undermine an airport’s ability to collect consistent, accurate data over time are the following: • Definitional Issues: As data requests move through organizations, an understanding of what data are actually being requested can be lost. Use of “data dictionaries” that define in exact terms what the data are, explain where they can be located, and identify the knowledgeable data “owner” can help clarify which data are actually needed. • Inaccurate comparisons: Over time, comparisons between one group and another or one time period and another can become inaccurate. Normalizing data between groups and time periods becomes essential as the processes and products being measured change. • Rules and Ownership: Individual spreadsheets, e-mails, and other data transfer methods can contribute to a situation in which there is a lack of ownership and control over data. Unifor- mity and consistency demand strong controls over information and data collection. Validating the Data Generally data collection efforts lack an independent process for validating and verifying accu- racy. Some organizations assign data validation to a specific department, such as finance. This office investigates three aspects of collected data: • Validity (Do the data accurately represent what they are intended to portray?) • Reliability (Are the data consistent and replicable?) • Integrity (Can the data be altered or manipulated?) While a fully independent verification and validation may not be possible at all airports, efforts to keep this process independent from the data source are essential.

Achieving Performance Integration To maximize airportwide performance, it needs to be integrated, not only throughout the air- port but also with the performance of other organizations that help achieve the airport’s mea- sures. Integration can be internal and external. Internal Integration In addition to integrating performance across line organizations (“stovepipes”), good per- formance measurement recognizes the contributions of support services (HR, IT, Finance, etc.) to program performance and ensures that these contributions are well documented and man- aged. The struggle to measure or justify the cost of a new technology system, a new training pro- gram, or an enhanced recruiting effort is a consistent and increasingly important theme in most organizations. Once a new support service is approved, finding ways to measure the outcome on an ongoing basis is also critical in order to retain corporate support for the service. External Integration In an airport environment, multiple independent organizations operate together for success in areas like safety and customer satisfaction. Integrating common outcome level measures between the airlines, TSA, and others is a crucial part of a successful performance-measurement process. Such work is already underway in areas like the Aviation Direct Access Screening Pro- gram (ADASP) and Visible Intermodal Prevention and Response (VIPR) operations to enhance perimeter security. 76 Part II: Building a Performance-Measurement System Integrate perfor- mance across departments and with supporting external organizations. Implement and Measure Success is measured by comparing performance data to performance targets. Data are gath- ered from airport departments and, in some instances, from outside parties such as airlines, contractors, and concessionaires. Airports that have tracked and reported information for a long time using an ERP system central data warehouse and/or designating a department or a person to be responsible for data experience smoother data collection processes that are less expensive and time consuming. At Minneapolis–St. Paul International Airport there is an abundance of data collected in various departments and levels. Staff members in the Strategic Planning Department centralize data for selected measures and pro- duce a performance-measurement results report to deputy executive directors and the executive director, who later presents it to the board. Data collection has been standardized over time using a periodic data request and submission format that has proved to ease the data collection process. Depending on the type of measure, departments collect data daily, weekly, or monthly. More frequent data reporting helps to identify issues as they occur and improve response time. An MS Access database is the most common platform for storing and analyzing information in the departments. There are two internally developed MS Access–based databases for the budgeting and planning process. Customer satisfaction data are mainly received from ACI’s ASQ program results and the internal airport Cus- tomer Service Assurance Center, which provides data on customer complaint records, phone logs, road traffic delays, safety concerns, and so forth. To ensure a comprehensive performance-measurement system approach, data at Toronto Pearson Interna- tional Airport are collected for various periods, from all organizational units, and from various external sources, including airlines (about passengers), government agencies, and tenants (about customers). The SPAD department organizes and centralizes data for reporting purposes. Micro-level data stay with individual units and are not shared across the organization. Data that impact several departments, such as financial informa-

Act and Measure (Step 4) 77 Task 10: Baseline Measures and Set Targets By now, the airport should be implementing its plans and programs and using its measures (“yardsticks”) to assess achievement of its goals, objectives, strategies, and activities. The next step is to baseline each measure. This is done by determining where the airport is today in terms of achieving a particular goal, discerning any trends in achieving that goal, and then revisiting the goal and setting a realistic target for what the airport will achieve and by when in relation to the goal. The baseline is the starting point (normally, last year’s results) from which you will make improvements. The target is the level of improvement the airport will make within a specific timeframe. Airports should set long-term (5-year) targets and interim, annual targets. For the current year, consider reviewing performance monthly or even more often. An extreme exam- ple is runway friction, which, during icy conditions, will be tracked constantly. On-time arrivals may be tracked hourly to measure the impact of traffic peaks. Delays also will not be spread evenly over the year. Examine the airport’s actual performance and variations as you set interim targets. That way, you’ll know success or failure is not just a result of extraneous factors such as the time of year. Finally, targets should be set in collaboration with the person or department responsible for achieving the target and approved by the airport director. Start by identifying a baseline, where you are today. Look at trends. For instance, has on-time performance been improving or is it getting worse? Have security violations been declining as well as airfield violations? Has concession quality and variety improved? Then set your long- range target to reflect the improvement you plan to make based on your plans, programs, and budgets. Make the targets challenging, but realistic (such targets are often referred to as “stretch” targets). Then work back toward the present to set interim targets for key dates in the interim, for example, the end of each fiscal year. If you are not meeting interim targets, you are less likely to meet long-term targets. Another way to set targets is to benchmark within the airport. Often, the airport will have sep- arate teams, perhaps in different departments, providing similar tasks or services. Compare their performance. Is there a team or teams that are performing significantly better than others? Con- sider setting that team’s (or those teams’) performance level as a goal for the entire airport. Addi- tionally, find out why some teams perform better than others. Apply what you find out to improve the performance of other teams. tion (costs), are collected centrally and are accessible to various people within the organization. On the other hand, data that affect only a limited number of business units, such as data from customer survey results, are available only to the unit responsible for the activity. Currently, no central data warehouse exists; therefore, one of the challenges experienced by GTAA is data gathering from various sources across the organization. GTAA aims to improve system efficiency in an effort to sustain employee support in the process. Worksheet 9. Implement and Measure This worksheet assists airport managers in identifying and implementing a com- prehensive, tailored, performance-measurement system evaluating the current level of effectiveness at the airport of several implementation elements. In order for mea- sured results to be meaningful, they need to be compared to a baseline of previous performance.

Task 11: Report and Analyze Performance Results It is not enough to merely collect data. Data must also be reported and used by management to improve performance. Further, the need to rapidly integrate business intelligence and KPI data has increased in the face of a quickening business cycle. As airport customer demands grow and competitors move to meet the traveling public’s needs, measuring performance is only as important as how fast measurement data can reach decision-makers. Senior executives will need to decide the timing and frequency of reporting and how it will be provided. Reporting should be kept short and easy to read and understand. Managers should be able to examine the data and fairly quickly obtain an explanation of why variances occurred and what action was taken to improve those deviations. Monthly and quarterly reports are usually prepared by the Core Team and submitted to the airport director and senior executives. The major value of having performance data available regularly is that it empowers senior executives to identify potential problems in advance and take a more proactive approach to resolving them. Thus, data obtained from interim reporting should be incorporated into decision-making. However, each airport should establish its own schedule. 78 Part II: Building a Performance-Measurement System Set Challenging but Achievable Targets. Unrealistic targets are detrimental to a performance-measurement system. If targets are set too low, it is likely that orga- nizational goals will not be achieved within the expected timeframe. If targets are set too high, they will negatively impact your staff. When setting up targets, be reasonable and take into account the resources available to achieve them. Baseline Measures and Set Targets Identifying a baseline level for each measure is important. Identifying a baseline starting point and setting targets for improvement allows an airport to track measures from the base- line level of where the airport is today. The goal of the board of directors at Memphis International Airport is to operate under a business model that improves efficiencies by reducing costs. Therefore, the goal of Memphis International Air- port from an operations perspective is to keep rates and charges on a level base. Management’s position is that if the airlines do their job and the airport does its job, the natural outcome is a level, continuous line. Baseline measures are established based on a proven record of past performance. When a measure deviates from this baseline, management revisits the process to improve efficiencies. Worksheet 10. Baseline Measures and Set Targets On completion of this worksheet, airport managers will be able to identify cur- rent measures’ baselines and set targets, stating the improvements the airport will have to make and what level of improvement it will achieve on the measure in a pre-determined period of time.

Act and Measure (Step 4) 79 Finally, the Core Team needs to develop schedules, formats, and requirements. The Core Team also needs to provide access to the PMRS, explain and demonstrate it, and train employ- ees in how to use it (particularly when specialized software is involved). If the airport director and leadership are going to use the software, they also need to be provided with access and training. Year-End Reporting While interim reporting helps managers adjust processes and programs during the year, year- end reporting and analysis are the basis for reporting performance on reaching those targets and for making more fundamental changes—at a minimum, setting new targets. Year-end report- ing is also the basis for performance awards, payouts, and reports to the public. Therefore, year- end reporting needs to be more carefully documented and validated than interim reporting, with better explanation and analysis of what happened and why. It is also important to tailor year- end reporting to multiple audiences—the airport’s management and employees, the airport’s “community” of stakeholders, and the public at large. Year-end reports are generated by the Core Team and submitted to senior executives. At a min- imum, analysis accompanying year-end reporting needs to convey the following information: • The performance results and how they compare with baselines and targets for the year, • The actions taken during the year to achieve the target, • Reasons the target was or was not achieved, and • The impact that the reported performance results will have on the long-range outcome they support. Yearly reporting focuses on the annual report and associated financial reports. Yearly reporting often supports the following year’s budget, determines baselines, and justifies capital improvement projects. Information on baselines, capital improvement project data, and so forth is usually made public at city hearings, in annual reports, and on the Internet. What Information to Make Public. Many airports, like businesses, prefer to keep information private. Yet commercial airports are usually public entities, and per- formance information is often made public in the annual report and elsewhere. In fact, extensive airport information is already available to the public from FAA, U.S. DOT, and other sources. Financial data for even small commercial airports are available in the FAA Compliance Activity Tracking System (CATS) online at http://cats.airports.faa.gov/. The Bureau of Transportation Statistics keeps online “airport snapshots” of 400 airports, with information on operations, passengers, cargo, air carriers, market shares, and on-time performance. U.S. DOT also tracks average airline fares at airports. One reason to make information public is to allow benchmarking and adoption of airport best practices. Airports should develop a communication plan for all audiences addressing the type of infor- mation that will be provided to each audience, the interim reporting and the venue, and the type of year-end reporting.

80 Part II: Building a Performance-Measurement System Report and Analyze Performance Results Reporting the results of the system is essential to communicating the progress of the airport toward its goals and to monitoring trends. Likewise, timely and accurate review of perfor- mance data is an invaluable source of information in airport planning. At Dayton International Airport, information is summarized in different forms and presented in the following forms and venues: • Biweekly management meetings to discuss strategies and tactics that involve the Finance, Safety, Engineer- ing, and Operations departments and the Director and Deputy Director of Aviation. • Monthly financial updates (expenses and revenues) presented to the Director. • Quarterly budget overview reports presented to the city. • Once-a-year budget hearings in which performance measures and goals are presented to the city and to the Airport Council as guiding facts to legitimize additions to the budget. With all of this information in hand, the scorecard is updated quarterly to show progress through the course of the year. This information is widely available to staff members, but lower-level staff members often don’t show interest, preferring to fully concentrate on their work. At Minneapolis–St. Paul International Airport, performance is monitored by managers as needed and reported to executives weekly. Once a week, senior staff members from each department and division meet with the executive director to update information and discuss any issues and concerns. As part of the staff meeting, performance measures are reviewed to discuss any noticeable trends. These meetings are crucial in ensuring smooth communication because the division directors become aware of issues in other operational areas that may affect their own operations. Open communication and the approachability of the executive director help to bring attention to problem areas sooner rather than later. Even though communication across various organizational divisions and departments is satisfactory, employees are continuously encouraged to further improve information sharing. Airport management believes that sharing information among all levels of staff and all departments is key to operational efficiency and performance excellence. External reporting of the airport’s performance data is done in the Minneapolis–St. Paul International Airport strategic plan. Exhibit II-4.1 presents performance indicators from the 2008–2012 strategic plan. Tampa International Airport has a comprehensive and effective airportwide performance-monitoring process. Reports on the airport’s adopted measures are reported to the executive director annually (or more frequently) by the Performance Management and Internal Audit department. Quarterly organizational goal reports are prepared by staff and submitted to the deputy executive director; a copy is also given to Performance Manage- ment. Goals not completed by the end of the fiscal year are carried over to the next fiscal year and continue to be reported on until completed. Successful completion of goals is a performance dimension of the responsible director’s annual performance evaluation. Departmental performance measures are reported monthly by man- agers to the performance project manager, who in turn reports to the executive director quarterly. The fourth quarter report is a summary of the year. Tampa International Airport developed a series of reports to internally monitor and report airport performance: • The Initial Form describes efforts and tasks to accomplish each goal and the planned completion date. Elements of the form are the goal description, timeline, inputs, outputs, outcomes and measurement, goal number, and the responsible department and director. • The quarterly Goal Status Reporting Form reflects the progress of goal achievement. It states the goal num- ber, quarter and goal, the process and date of completion, original goal completion date, approved revised

Act and Measure (Step 4) 81 Source: Strategic Plan 2008–2012,1024 Exhibit II-4.1. Minneapolis–St. Paul International Airport performance indicators as published in 2008–2012 strategic plan.

82 Part II: Building a Performance-Measurement System date, status (on-schedule or late), the baseline data, quarterly changes, explanation for late goals, and point of contact information. • The Goals & Objectives Completion Reporting Format provides documentation that supports the perfor- mance measured. Elements are the goal number, responsible director, description of the goal, process com- pletion date, original goal completion date, approved and revised goal completion date, explanation for late goals, outputs, outcomes, and measurements. This report is submitted after the end of the fiscal quarter in which the goal was completed. • The Quarterly Summary Report contains a summary of all measures reported in the quarter and a Balanced Scorecard with the target, actual results, and comments organized by department. This report is prepared by the director of performance management and internal audit and submitted quarterly to the executive direc- tor and deputy executive director. • The Year End Report summarizes the EIP by department with a year-to-year comparison of goals and objectives completed late, on schedule, and dropped, and EIP award. This report is prepared by the director of perfor- mance management and internal audit and submitted to the executive director and deputy executive director. Worksheet 11. Report and Analyze Performance Results Upon the completion of this worksheet, airport managers will be able to define the reporting mechanisms necessary to secure effective, real-time measurement data.

83 C H A P T E R 5 Manage Performance Measurement (Step 5) The final step in the performance-measurement cycle is for the Core Team to manage the air- port’s performance-reporting system, assess the current performance-measurement system, and coordinate the annual process of establishing new performance goals. Step 5 includes Task 12: Manage Performance Players and Task 13: Initiate a New Performance-Measurement Cycle. Task 12: Manage Performance Players The size of the airport and the complexity of the performance-measurement system will affect the structure of the Core Team. Large airports will probably identify a Core Team, and each department will identify a point of contact who provides performance information. Smaller air- ports may assign a single individual to coordinate performance planning, measurement and information gathering. In general aviation airports with only a handful of employees, the airport director may handle the entire performance-measurement function. In any case, there should always be one person or group in charge of the performance-measurement system, and this per- son or group will collect data from other departments and report to the airport director. In managing the performance-measurement process, the Core Team should • Set and confirm what is to be reported including data and explanations, deadlines, formats, requirements, and responsibilities. • Document the performance-measurement process and provide it to the team (all points of contact). • Remind the team of deadlines early and often, check in with them, and push them when they fall behind, preferably before deadlines are missed. • Review monthly and quarterly reports to ensure data quality is adequate and requirements are met. • Validate the accuracy of submissions and the objectivity of accompanying explanations of when and why performance is going off track. The best way to test the validity of reported performance is to conduct an internal audit each year. The Core Team and the finance department (if different) should collaborate; finance will • Communicate with staff • Plan ahead of time Task 12. Manage Performance Players Task 13. Initiate a New PM Cycle Step 5 Manage Performance Measurement

be intimately familiar with audit requirements and procedures. For information, see the discus- sion of data integrity in Step 4. 84 Part II: Building a Performance-Measurement System Communicate. Especially at larger airports, the Core Team should meet with points of contact early and often. Involve points of contact in setting requirements. Inform them about why performance is being measured: senior executives want it, and employee participation helps the airport meet its goals. Recognize inherent tensions; for example, employees always want more time to report, and manage- ment always wants information sooner. Recognize that you will not please every- one, but that you can create a reporting system that provides good, timely information to management. Give points of contact space to air their concerns and address them when possible. Finally, as the end of the year approaches, meet with the team to prepare for year-end reporting and changes for the new year. Worksheet 12. Manage Performance Players This worksheet provides a template for evaluating reported data with the aim of securing the quality and timeliness of performance data. Task 13: Initiate a New Performance-Measurement Cycle Once the airport has set performance goals and targets; developed and executed activities, strategies, and initiatives; and is measuring and evaluating the results; it is time to begin plan- ning a new annual performance-measurement system cycle. Initiating a new planning cycle each year does not mean everything in the performance- measurement system will change. The airport’s mission and vision are not apt to change for years. Long-term goals and end-outcome measures rarely change; however, the airport’s environment changes and should be monitored constantly. Strategies and activities can change as often as annually. Interim targets may need to be reviewed and possibly reset even when set in the context of a long-range target. At a bare minimum, targets set earlier for the upcoming year should be revalidated or reset. Among the topics to evaluate in 2- to 5-year cycles are the following: • Was any environmental change identified that needs to be addressed? • Do any of these changes affect long-term objectives? • If so, how do they affect end-outcome measures? Interim and short-term measures? • Do results from performance data show gaps in performance improving over time? • If not, does any performance measure need to be adjusted/changed? • Do baselines need to be updated? • How about targets? • Was data reporting carried out in a timely fashion? Did it allow for immediate corrective action? • Is reported data sufficient to identify leading trends? • Is performance data available to airport staff at all levels? Using evaluation techniques to confirm or alter performance measures is essential to the air- port’s continuing improvement. With no “check” on strategic impact, measures may become

static and eventually pointless. Validate connections between leading and lagging measures and confirm that current measures are still the best set to measure progress on current objectives. Manage Performance Measurement (Step 5) 85 Plan Ahead of Time. The Core Team needs to begin planning for the new performance-measurement cycle well before completing the current cycle in order to have a new performance framework in place when the new cycle begins. In other words, the Core Team will have to start planning before they have year-end results. The Core Team will need to estimate what will be accom- plished by year’s end and use that estimate to work with the airport director, management, and others to identify areas for improvement and set new targets. The Core Team will coordinate the change process and should gain airport director approval on how to proceed to prepare for a new performance-measurement cycle (see Exhibit II-5.1). The following steps are recommended: • Scan the airport’s environment and performance. Gain airport director agreement on what needs to change and on how fundamental changes should be in the upcoming year (e.g., an update of some activities and interim targets or a whole new performance-measurement system). Source: Infrastructure Management Group Step 1 Prepare to Plan & Measure Assess the Need for PM System Step 2 Plan to Achieve Results Step 3 Create the Reporting Structure Step 4 Act & Measure Step 5 Manage Performance Scan Airport Environment Confirm Mission, Vision, & Values Identify Long-term Goals Identify Short-term Objectives Measure Performance Set Measurement Responsibilities Performance Players Develop & Test a PMRS Implement & Measure Baseline Set Targets Measures & Manage Coordinate Change Environmental Assessment Define Change Develop a new PM System Change targets, activities, strategies Airport Director Approval Commit to Report & Analyze Exhibit II-5.1. The change process.

• If a decision is made to develop a new performance-based strategic plan, go back to Step 1 by reaffirming senior executive commitment. • If the airport will keep the performance framework, but will change annual targets and some activities and strategies, then go back to the airport’s offices for recommendations on new tar- gets and activities, and start from Step 2. Even though the Core Team has briefly scanned the environment, the airport should plan to formally reach out to stakeholders and employees during every performance-measurement system cycle. If you have set both long-range and intermediate targets, your focus may be on validating the interim targets set for the next year. You will also need to plan for communication and outreach to stakeholders and employees. 86 Part II: Building a Performance-Measurement System Initiate a New Performance-Measurement Cycle Performance measurement is a cyclical process. Each year, the airport should coordinate changes to the performance-measurement system that are made necessary by the changing environment and airport accomplishments. The performance-measurement system at Minneapolis–St. Paul International Airport is updated in the annual review and update of the strategic plan. At the beginning of the fiscal year, management is directed by the executive director and the HR division strategic planning department to initiate the process for future strategic planning. The airport reviews the organization’s vision, mission, and values; conducts an envi- ronmental scan and a SWOT analysis; and reviews and evaluates the strategic goals, annual and long-term key initiatives, and key performance measures. The Metropolitan Airports Commission Executive Board reviews the strategic plan draft and provides input to the strategic plan components. The directors decide on strategic goals for the next 5 years, covering the follow- ing key performance areas of the organization: • Long-term financial viability, • Enhancement of customer service, • Improvement performance through the leverage of resources and technology and development of human capital, and • Increased effectiveness through strengthening relationships and partnerships with neighboring communi- ties, regional businesses, and governmental agencies. Further, each strategic goal is linked to long-term and annual key initiatives, each with performance measures. Thus, the performance-measurement system is aligned with the airport’s strategic goals and initiatives. The performance-measurement system at Toronto Pearson International Airport tracks airport performance toward established strategic plan goals. In an effort to continuously maintain a successful and competitive airport, the process is cyclical, with scheduled reviews and updates of the strategic plan to adapt to a changing environ- ment. Exhibit II-5.2 illustrates the update process. At Nashville International Airport process improvement results are monitored through the Listen, Leverage, Learn (LLL) meeting at the beginning of each wave of projects. Performance measurements are integral to airport performance review. The CEO conducts quarterly reviews of each department’s performance with the department head. They dis- cuss budget performance, performance metrics, and departmental action items and audits. In these reviews, they may change the metrics, benchmarks, or goals in response to current business conditions, either internal or external. The level of analysis involves responsibilities, timing, decisions, and improvements. The data obtained from the different processes are updated annually to assess performance and used in the yearly strategic planning, resource allocation, budgeting process as a planning input.

An eight-section package is prepared for quarterly meetings that consists of (1) budget performance charts, (2) a performance-metrics trend graph with goals and benchmarks, (3) process behavior charts, (4) a table of metrics covering current Month–YTD and previous year Month–YTD, (5) equal employment opportunity participation, (6) small, minority and woman-owned business enterprise (SMWBE)/disadvantaged business enterprise (DBE) participation, (7) status of strategic business plan action items, and (8) outstanding items from internal and external audit reviews. As needed, corrective actions are formulated and reported in subsequent quarterly reviews. The purpose of performance analysis and review is to improve performance in relation to metrics. Executive and senior staff members compare results to benchmarks and strategic plan targets. Performance then is translated into corrective action, prioritized, and either implemented or put into the idea bank for LLL. Chosen opportunities are translated into actionable projects and the appropriate teams are formed. Root-cause analysis is performed by the team, and the innovation or improvement is defined and deployed through department heads. Manage Performance Measurement (Step 5) 87 Source: Toronto Pearson International Airport Exhibit II-5.2. Toronto Pearson International Airport annual review and planning cycle. Worksheet 13. Initiate a New Performance-Measurement Cycle Upon completion of this worksheet, airport managers will be able to identify the strengths and weaknesses of the current performance-measurement system and environmental changes and use that information to plan for and launch a new performance-measurement cycle.

88 Performance-measurement software does more than just provide charts, graphs, and other displays. Well-executed performance software connects departments, monitors and cleanses data for accuracy and consistency, and implements a structured process for collection, analysis, reporting, and decision-making. While it is easy just to focus on what appears on the screen as a report, the true power of these increasingly sophisticated tools lies in their ability to tell an accu- rate and meaningful story and to answer the questions management asks. This chapter discusses the following • Understanding software-based reporting, • Key characteristics of effective performance-measurement software, and • Considerations when purchasing performance-measurement software. Understanding Software-Based Reporting Automated reporting can allow the performance-measurement team department the ability to distribute every report type: high-volume reports for many stakeholders, individual ad hoc queries, widely distributed business reports, centrally authored reports with self-service cus- tomization, and other custom reports. They also allow the performance-measurement group to draw on any available data source through the use of a single metadata layer. The benefits of automated reporting include the following: • Ensuring a single, reliable version of the truth. Common data definitions ensure specificity and objectivity of the numbers. This means more time is available to make important deci- sions because less time is spent debating the validity of the data. • Interfacing with all data sources. The most robust scorecards can connect to almost any available source and are not limited to proprietary reporting packages that only answer some data questions. Having the widest possible access to multiple data sources makes it easier to move forward with fully integrated enterprisewide performance management. • Making better decisions rapidly. Frequent data updates and self-service reporting can give an airport the needed indicators in a much more timely fashion. • Meeting the information needs of all users. Modern scorecard software can deliver informa- tion over the web, on mobile devices, and by populating documents through common inter- faces like Microsoft Office. However, performance measurement and management, budgeting, forecasting, and modeling have often required separate reporting tools for different capabilities and styles of reporting. The reporting tool is often dictated by the structure of the underlying data. This underlying data formatting, often called metadata structures and their designated data architectures, makes it hard for IT departments to ensure data consistency. Maintaining multiple reporting C H A P T E R 6 Current and Emerging Technology for the Performance- Measurement Process

Current and Emerging Technology for the Performance-Measurement Process 89 applications across various departments also has created high costs, both in purchasing and upkeep. Each reporting application has its own performance limits, which forces networks to work at the lowest common denominator. Another common issue has been the end-users switching back and forth among applications and piecing together data in spreadsheets to answer performance questions. Technology and database staff members in both the public and private sectors have struggled with a constant backlog of requests for new and modified reports because most reporting solu- tions have an “all or nothing” approach to functionality or because they don’t allow business users to create or modify reports themselves. For business users, the right reporting software is simply the tool that allows them to study, cross-reference, and understand the data in a way that makes sense. The right reporting software allows access to relevant information quickly and maintains confidence in the objectivity and consistency in the indicators and the background data. The KPIs are presented in a sensible con- text that may be flexible and changeable based on the department that is presenting the infor- mation. Ultimately, good software can allow airport executives to make informed decisions rather than lose time debating what action to take because of unclear data. On the other hand, from a technology perspective, IT’s impact on an organization is to reduce the cost of doing business through efficiency gains and increased productivity, according to CIO Magazine’s 2004 “State of the CIO” survey. From this perspective, it is the reporting efficiencies provided by automated reporting that are most attractive. Efficient enterprise reporting involves a single reporting software application that reduces the complexity of the reporting environment for the technology staff while delivering more for the organization’s business users. A complete performance management solution should • Recognize and accommodate different kinds of users, • Provide complete coverage for all types of reports, and • Access all enterprise data, regardless of the source. Key Characteristics of Effective Performance-Measurement Software In today’s environment, business intelligence and performance-measurement software over- lap and intersect. Airport technology staff should examine business intelligence solutions when determining the proper performance tool. To that end, the most powerful and useful scorecards include these standard business intelligence capabilities: analysis; scorecarding; event manage- ment; and extract, transfer, and load (ETL) data loading functions. Scorecards transform data into a small number of easy-to-read indicators with targets. Typical characters of scorecards include the following: • Quick information. Scorecards show the most vital information in a condensed and easy to understand format to indicate performance versus targets • Understand strategy and goals. Scorecards show everyone what’s important, what’s expected, and the relationship between strategies and goals for individual departments. • Accountability. Scorecards feature drill down mechanisms that allow each part of the organiza- tion to measure its performance. • Connect departments. Scorecard metrics, like outcome-based strategies, are interdependent. Scorecards highlight cross-functional relationships. Modern business intelligence software can develop a huge range of reports—from simple inven- tory lists to high-volume billings and high-impact business dashboards. A major stumbling block Maintaining data consistency is a major asset to automated systems. The right software depends on specific airport needs. What’s most important is unique to every organization.

has been that some software tools cannot be integrated into existing infrastructures or process data from other systems. The ability to integrate software tools into existing infrastructure without cre- ating a need for additional security, data storage, or other redundancies has become a major fac- tor in determining suitable solutions. As the business environment becomes increasingly graphically oriented, the ability to create reports containing any number of report objects—charts, cross tabs, and lists, as well as images, logos, and live, embedded applications—has also become an important factor in software. These objects allow organizations to extend the boundaries of traditional reporting, giving them unprecedented ways to view their business performance. Reports can be built with mul- tiple data queries. Modern software tools make departmental reporting a much easier process. Complex enter- prise reporting can become standardized and understandable. Ultimately, the best software can extend the power to create, distribute, and modify reports to everyone across an organization. All airports investigating performance software should look for a software that allows reporting from a single source and provides advanced authoring abilities that match user needs while operating on a web-based architecture. Considerations When Purchasing Performance-Measurement Software A list of questions to consider before purchasing any performance-measurement software should include the following: Is the software compatible and interoperable with the airport’s existing enterprise archi- tecture? Any software purchase should align with the airport’s overall enterprise architecture (EA) or its standards for aligning technology resources to improve business performance. For performance-measurement system software, in particular, it is critical to take into consideration the following five aspects of the architecture to allow for full integration of information and information technology: • The business architecture drives the information architecture, • The information architecture prescribes the information systems architecture, • The information systems architecture identifies the data architecture, • Data architecture suggests specific data delivery systems, and • Data delivery systems (software, hardware, and communications) support the data architecture. The hierarchy in the performance-measurement system model is based on the notion that the airport operates a number of business functions; each function requires information from a number of sources; and each of these sources may use one or more operation systems, which in turn contain data organized and stored in any number of data systems. Therefore, any software purchased needs to work smoothly with this overall architecture. If the airport’s software will need to interact with TSA, FAA, or any other federal organization’s technology or data, the software may also need to interoperate within the Federal Enterprise Architecture, a common methodology for technology acquisition, use, and disposal for all federal agencies. More information is available from www.whitehouse.gov/omb/e-gov/fea/. How well does the software automatically move data in and out of the system? The automated data transfer portion of the performance-measurement system process is key to any performance- measurement software system. How the software accomplishes this process is critical information for software purchase decision-making. Almost all major software vendors use one of two processes: ETL or comma separated values (CSV). 90 Part II: Building a Performance-Measurement System Well-designed graphic displays of data are better understood and more meaningful to most decision- makers than many other forms of data presentation. An airport’s IT enterprise architecture refers to the structure and flow of data and information.

Current and Emerging Technology for the Performance-Measurement Process 91 The more robust and increasingly popular ETL process has major advantages, including the following: • Retention of metadata. This is a major point because analytical applications of performance measures are highly dependent on proper understanding of metadata. • Ease of use. Most ETL tools are based on a graphic user interface (GUI) and have reposito- ries; the tools have increased ease of use and ease of modification. • Built-ins. ETL tools have built-in objects to handle recurring tasks such as aggregation, so these do not need to be coded and recoded. The more traditional and still widely used CSV process works well with File Maker and spread- sheets. It is a more basic approach but can be the best way to transfer a large volume of spreadsheet or database information between programs without worrying about special file types. It is important to ask any vendor to show examples and demonstrate how their system validates and handles increasing volumes of data, which may require designs that can scale from daily batch delivery to multiple-day microbatch to integration or real-time change-data capture for continuous transformation and update. How well does the software handle automated workflow processes and approvals? A straight- forward but important component of performance-measurement system software is its ability to handle the workflow process of data input, adjustment, analysis, and use through proper author- ization assigned by users. Managing authorization to manipulate the data, approve the data, and adjust the data is part of the performance-measurement system workflow process and should be automated and transparent. How secure is the software? In the security-conscious airport operating environment, data security is a primary issue for performance-measurement system software. Asking the vendor how it secures the ETL or CSV data transfer process as well as the security of the data warehouse itself is extremely important. Secure password protection, encryption, and other standardized procedures are essential. The possibility of interacting with TSA, FAA, or other federal data repositories signifies the need to understand the federal IT security procedures as well. The Federal Information Security Management Act of 2002 (FISMA) was meant to bolster computer and network security within the federal government and affiliated parties, including airports and contractors. The performance- measurement system software may be required to comply with FISMA and therefore will need to undergo the following security procedures: • Determine system boundaries of the performance-measurement system software • Determine system information types and perform categorization • Document the system’s reach and breadth • Perform a risk assessment on the software and related processes • Select and implement security controls • Certify system and test • Accredit system through federal guidelines The vendor should be screened for FISMA knowledge and previous compliance. Will the data be housed on-site or remotely? Related to security, as well as cost, is the ques- tion of on-site or off-site data housing. A critical question in this step is how willing the airport is to accept responsibility for the day-to-day handling of the software and the data. Smaller airports with fewer technical and financial resources may opt for the Software as a Ser- vice (SaaS) model. In this model, the performance-measurement system software is licensed for use as a service provided to customers on demand, reducing the cost and burden of installation ETL has enhanced the utility and ease of performance management soft- ware. It is a major feature to consider when purchasing.

and upgrades. This would also reduce airport responsibility for handling other aspects of soft- ware and data such as end user licensing agreements, software maintenance, ongoing operation patches, and patch support complexity. The SaaS model also can ensure security at a remote, hardened location but can reduce the airport’s ability to have full control over every aspect of the software code. Larger airports and those airports with a dedicated technical staff may opt for the on-site model, where software and data are hosted on airport servers. This more traditional approach requires a higher up-front cost, and the airport needs to ensure that a full technical specifications manual is provided so that airport personnel have full control over all aspects of the software. Deciding to host data and software on site means assessing how this decision will affect the air- port’s security needs, emergency power needs, and other operational requirements. How does the software handle data cleansing and data quality? Some performance- measurement system software provides data cleansing as part of the standard application while others require additional purchases. When multiple users are entering data, there is a risk that information will be inconsistent and of poor quality, which can cause the software to fail to rec- oncile identical datapoints. Data cleansing is vital for data quality and incomplete cleansing can raise three large issues: • Processes performed using defective data in the source databases will provide invalid results, which will cause the airport to incur the costs of measurement failure, discarded information, and rework. • The uncorrected data will have the potential to corrupt the data warehouse, as changed data are propagated from the source over time. • Reports that should be equivalent, consistent, and trustworthy will not be, causing confusion, lack of trust, and ultimately disuse of the system and process. What type of data processing system does the software use? Vitally important in the world of performance-measurement system software is the type of analytical processing that drives functionality. Asking and understanding what type of analytical processing drives the software is important; different airports may require different processing methods. The increasingly popular OLAP (online analytical process) utilizes a data cube to allow rapid analysis of data. Some popular software tools use an arrangement of data into cubes to allow for fast, sometimes nearly instantaneous analysis and display of large amounts of data. This arrange- ment also allows users to match and analyze customized and changing sets of data depending on their needs. Another type of analytical process is ROLAP (relational online analytical processing). Soft- ware uses ROLAP to access the data in a relational database and generate structured query lan- guage (SQL) queries to calculate information at the appropriate level when an end user requests it. ROLAP may not always be as fast as OLAP, but it can be a better alternative when dealing with data in existing, predetermined hierarchies, which is often the case with financial data. Be sure to ask the vendor which process is used in its software and understand which process best fits the airport’s specific needs. How does the software handle reporting? The most visible and therefore very critical aspect of performance-measurement system software is the reporting function. How the reports are created, what they look like, how customized they can be made, and how easy they are to inter- act with are all aspects of this vital question. Some software requires custom-built reporting, which can be awkward and hard to decipher. Missing symbols, difficult-to-decipher colors, mangled text, and other problems are often seen in custom-built reporting tools. 92 Part II: Building a Performance-Measurement System Storing data in secure, off-site facilities lowers costs and can enhance reliability; however, it is not always considered a secure solution. Data cleansing is vital for reconciling inconsistent or inaccurate data; however, it may not always deal with the underlying data issues in other systems. Software utilizing OLAP uses a data cube to create a faster, richer, and more customized analysis of all data points.

Wizard-driven reporting allows for the use of pre-programmed reports to create the appropri- ate reports for an airport’s specific needs. Requiring airport personnel to write SQL script to cre- ate reports requires that personnel have the technical knowledge necessary to do so and can cause the airport to incur higher technical costs. Ask the vendor how reports are created, what they look like, and how they are modified to ensure that the final performance-measurement system reports capture the intent of the performance- measurement team and satisfy executive decision-makers. Current and Emerging Technology for the Performance-Measurement Process 93

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TRB’s Airport Cooperative Research Program (ACRP) Report 19: Developing an Airport Performance-Measurement System provides guidance on developing and implementing an effective performance-measurement system for airports. The report’s accompanying CD-ROM provides tools designed to help users complete the step-by-step process for developing an airport performance-measurement system as presented in ACRP Report 19.

The CD-ROM is also available for download from TRB’s website as an ISO image. Links to the ISO image and instructions for burning a CD-ROM from an ISO image are provided below.

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