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OCR for page 67
I-70 Dashboards and Scorecards In the private sector, once a target is set, companies do not universally agree on whether or how to link achievement of One of the more commonly used BI tools is COGNOS, the target with allocation of resources. The following four which is used as a dashboard for display of information about approaches are used in practice: performance measures related to core programs in an agency. COGNOS is the official management reporting tool desig- Allocate resources based on historical levels; nated for use at ADOT&PF, and is widely used in departments Allocate resources based on achievement of the target; throughout Hennepin County. Allocate resources on the basis of relative financial perfor- Hennepin County uses a combination of MS SQL server mance, such as return on investment for capital expendi- as its database platform and the COGNOS@ Metric Studio tool tures, and cost/benefit for operating expenditures; and for managing its Balanced Scorecard Information for each Use a hybrid approach. department in the county. Each department has its own score- card for performance measures related to their programs, and The easiest approach is to allocate resources based on his- managers in each department can easily monitor these on a torical levels, often including an increment or a decrement routine basis. Issues regarding performance can be addressed for inflation and economic growth. However, this is generally as appropriate with individual departments and measures can viewed as the least effective way to allocate resources since it be adjusted when necessary to ensure that all programs are can result in years of inertia and resistance to change and can functioning in the best interest of the public. perpetuate wrong resource allocations year after year. Many public organizations and departments allocate resources this Future Technology way, but private sector companies largely switched from this approach to a zero-based budgeting approach. In addition to current tools that are available, there are evolv- A second approach to allocating resources is to base the ing trends in the use of IT technology tools that will become resource allocation on achievement of the target. Those that hit more widespread in the future, such as the use of Extensible or exceed the targets get more resources. The logic is that the Markup Language (XML). XML offers different functionality target is a point on a continuum, and the more you exceed the than Hyper Text Markup Language (HTML). XML basically is target, the more value you add. Most private sector companies' used for storing and transmitting data, while HTML is used for personnel bonus compensation plans work this way. Exceed- displaying data. There are many benefits offered by using XML, ing the target is usually viewed as a performance worthy of but one of the main benefits is that it does not depend on spe- reward. Those that hit or exceed the targets get fewer resources. cific types of hardware or software for its use. With the global The logic is that going beyond the target yields little incremen- ability to use mobile phone service for accessing data and infor- tal value and that once a target has been attained resources mation, this functionality now offers another opportunity for should be diverted to the next highest-yielding endeavor. organizations to consider another method for timely transmis- A third approach is to allocate resources based on relative sion of data. In the case of a DOT, use of this technology is very financial performance, such as return on investment for capital beneficial for real-time traffic management systems. expenditures, and cost/benefit for operating expenditures. This Each of the examples from WSDOT, OOCEA, Hennepin method raises technical issues such as how to ensure consistent County, RCG Information Technology, ARDEC, ADOT&PF, cost/benefit calculations and when to consider expenditures as Mn/DOT, and future technology trends illustrate how criti- capital investments versus operating expense--for example, cal the use of technology is in providing the foundation for should repaving a roadway be considered a capital expense or standardized, quality data systems, which are sustainable over an operating expense? time, to meet the core business needs of the organization. A hybrid approach is often the most practical one to take. The use of technology and formal institutional arrange- For example, a hybrid approach might use all four approaches ments to support data management provide a strong platform under different circumstances as follows: for meeting the business needs of the organization in a timely manner. Allocate capital expenditures on the basis of ROI; Allocate operating expenditures on the basis of cost/benefit ratio; 4.7 Relationships to Target-Setting Allocate initial annual resources based, but offer bonuses and Resource Allocation based on achievement of a target at the end of a year; and This research indicates that the approaches used for target- Establish control levels so achievement beyond a certain level setting and resource allocation are somewhat different in the is not rewarded, in order to protect against lower optimiza- public and private sector. tion of resources, especially in capital-intensive operations.

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I-71 The public sector, likewise, may allocate resources based each area are responsible for monitoring the goals, targets, and on historical trends, or on the ability of a particular program success rates for their departments and use the balanced score- to meet agency goals consistently. Programs in the public sec- card method to monitor progress. Depending upon the pro- tor that demonstrate consistent success, however, are not gram, the indicators may show that additional resources or likely to receive monetary bonuses for employees, per se, but funding is needed in a particular area and the need is justified, they are able to receive continued funding from those who based upon the performance indicators. make the decisions on how funds are allocated. The City of Coral Springs, Florida, also has a very well- Many of the companies and agencies interviewed also recog- defined set of key intended outcomes (KIO) which are perform- nized the importance of integrating targets and measures into ance measures covering seven strategic priority areas. There the job functions listed in each employee's performance plan, also are specific sets of data collected to support the seven areas. in order to motivate the employees to work harder to achieve or Through monitoring the data reflected in the performance exceed targets. The employees gain a better understanding of measures and targets, the city can make improvements in the significance and relevance of meeting or exceeding targets, resources as needed, such as adding more fire trucks or person- when the targets become part of that employee's job duties. nel to respond to calls within a certain amount of time. The City The KSDE has a Data Quality Certification Program that holds itself directly accountable to the citizens of Coral Springs offers professional development training to its employees. The and the performance measures data plays an important role in program recognizes the contribution of individuals who enter ensuring that the needs of the citizens are met by the City staff. statistical data into databases for the school districts by present- There also are areas where performance measures data may ing framed certificates to them upon completion of the pro- be lacking and this has a negative impact on the agency's abil- gram and recognizing them on the agency website. The motto ity to allocate resources for that program. Without the data to for the program, "the data pays you and grades you," is a great indicate how a program is performing, it is difficult to get the motivator for employees to strive to provide the best quality necessary approval for funding and resources. data to the school districts. Hennepin County has indicated that while specific depart- Another example from the public sector of how target- ment areas may have excellent performance measures data that setting affects resource allocation is from WSDOT. WSDOT can be used to allocate resources, there is a need to have more was able to gain legislative funding support for continuing the data available on a countywide basis. Likewise, the MTC has Fish Barrier Removal Program by demonstrating to them the recognized the need to improve the connection between the increase in migratory fish population to be gained by removal use of performance measures and those who collect data for of the barriers. This fish population is important to the gam- the various programs and make funding decisions on data ing and fishing industry in Washington. When the measures programs. They want to have access to better data for mon- and targets were presented to the legislature, continued fund- itoring carbon dioxide emissions to comply with the Clean ing of the program was approved above others that also were Air Act. They also need better crash data in order to estab- competing for similar funding. lish performance measures to improve safety and reduce ARDEC collects performance data on finance-related indi- collisions in the Bay Area. cators, labor hours, revenues, purchases, human resource Whether all needed data are available to support perfor- information, and others. Its goal is to use this data to eventually mance measures and resource allocation most organizations manage the status and availability of staff at the work break- recognize the advantages of investing in data systems which down structure level. Even though ARDEC's priorities are provide good quality data to assess how their core business established by others, the organization uses its available data programs are performing. In the private sector, having high- to manage resources. quality data may not be a priority compared with other busi- The OOCEA is challenged with managing travel on the ness goals. Private companies tend to place more emphasis on expressways in the Orlando/Orange County area. Based on root cause analysis of problems in a particular area than on the data collected on travel times and reported in the monthly data accuracy. This does not suggest that bad quality data are Expressway Travel Time Performance report, the toll author- acceptable, but that the incremental cost of getting good qual- ity is able to determine when and where to add staff at toll ity data may not be worth the additional interpretive value. stations during peak travel times. Travel time performance Many public sector agencies however have been successful in indicators at OOCEA directly influence resource allocation. providing timely information based on quality data to the leg- One of the strongest examples of performance-based manage- islature or other state and local agencies, as well as the tax pay- ment comes from Hennepin County. There is strong support ers who have a say in whether funding for a particular program for performance management at the county administrative will continue or not. level and the strategic plan for the county includes goals estab- Each of the examples provided in this report illustrate how lished for each functional area in the county. The managers in the methods for defining targets and performance measures