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27 This chapter describes insights from practitioners on how to engage the entire agency in the performance management process and promote an agencywide performance culture. The most successful programs are those in which employees at every levelâfrom the CEO to maintenance crews, planners, design teams, or an information technology officer with no direct transporta- tion expertiseâhave a stake in the agencyâs performance and the condition of the transporta- tion system and understand the purpose, goals, and procedures of the performance management program. Many of the successful programs cited in this Guidebook began their journey towards perfor- mance management with a strong and visionary leader that saw the need for a program, built the necessary coalitions to implement it, and took a direct role in administering it. Most also were able to develop a performance culture and a commitment among agency employees to consider the performance of their agency as they conduct the daily business of the DOT. Many of the challenges that have precipitated performance management programs at state DOTs have been high-level challenges, such as a lapse in agency credibility or general mistrust between the DOT and the state legislature. These challenges often do not manifest themselves in the everyday activities of the many employees that perform the agencyâs work, who are some- times isolated from big picture decision-making and typically insulated from its impacts due to civil service regulations. Frequently, though, it is the conscientious conduct of the day-to-day business of the DOT that can help improve the efficiency of the overall agency. Though senior management typically set the long-range strategic directions for the agency, translating these directions into small, everyday actions, such as improving the change order approval process or analyzing alternative snow and ice control strategies, can save the DOT significant resources. There is a wide body of management research that suggests that in facing an organizational crisis, the behavior and dynamics of an organization fundamentally change. For example, the natural tendency of an organization in response to crisis is a shift toward greater centralization of decision-making authority. However, maintaining this type of response can lead to reduced innovation and a feeling among employees that they do not have a real impact on or a stake in the organizationâs outcomes. Thus, strong leadership is only truly effective in steering an agency if it is complemented with a collaborative approach and a proactive effort to build and maintain trust between agency managers and employees.1 As DOTs and other transportation agencies develop performance management programs, it is important that they provide meaningful engagement with agency employees, both by C H A P T E R 4 Performance Management Must Engage with Employees 1Mishra, Aneil K. âOrganizational Responses to Crisis: The Centrality of Trust.â Kramer, Roderick M. and Thomas Tyler (eds.) Trust in Organizations. Newbury Park, CA: Sage. 1996. pp. 261â287.
empowering them to improve the functioning of the agency and by holding them accountable for their individual actions and decisions in relation to the DOT. This is more vital than ever, given the financial challenges DOTs currently face that make it challenging for them to retain their best staff. 4.0 Senior Management Must Support the Program Strong leadership from a DOTâs chief executive or senior management is almost always a defining factor in the success of any DOTâs performance management initiative. Although per- formance management cannot be accomplished solely through a simple top-down directive, agency leaders must set the tone and demonstrate that measuring performance and instituting a performance-based decision framework is going to be a priority at the agency. The most effec- tive way to set the tone is to make regular use of performance data and reports. They also must understand and make use of the performance management system to make it clear to agency staff that it is the way the agency wants to do business. This means taking a direct role in the process, rather than delegating. It also means building support among the stateâs political leaders, so that the legislative process is in sync with the performance-based decision-making process in place at the DOT. For a variety of reasons, there are cases where an agency CEO is not the champion for per- formance management. This may occur due to management philosophies, a decentralized agency, or other reasons. Performance management is not necessarily doomed to failure with- out a CEO champion. Directors of appropriate agency divisions, such as maintenance, planning, or human resources, can still lead performance management initiatives within their own depart- ments. Likewise, in highly decentralized agencies, district managers may have the discretion to use performance management within their jurisdiction, and their successes might prove to be a model for the rest of the agency. Participate in the process. One important performance management leadership trait is a will- ingness to participateâdirectly and oftenâin performance-related processes such as meetings and preparation of measures results reporting. Numerous cases have highlighted the power of a CEOâs very presence in a periodic performance update meeting as a motivational tool that bol- sters the credibility of the program and at the same time drives employees to perform at their best. Of course, participation in the process is moot unless the CEOâs leadership also includes using performance results to guide decision-making. One of the hallmarks of Baltimoreâs Citi- Stat program has been weekly operational meetings that have focused on examining what the data say about agency performance. This approach, though not always on a weekly schedule, has been adopted by the State of Maryland for all of its agencies under the direction of Governor Martin OâMalley, who developed the CitiStat program as the Mayor of Baltimore. At the Indi- ana DOT, performance reports are reviewed at monthly management meetings. This sends a message that the system is important and helps shift the culture of the agency. Balance the big picture with the details. Because of the layered and multifaceted nature of most performance management programs, DOTs need to bring a mix of leadership skills to bear in developing the program and executing performance measurement activities. At a minimum, designing a successful program requires a âbig pictureâ vision to set the basic direction, ideally provided by the agencyâs CEO or another top-level executive. At the same time, a more prag- matic âget it doneâ focus on results, challenges, and specific measures is needed to turn this vision into a management framework and action plan. This is ideally provided by department heads, who represent the unique needs and attributes of their agency function. Finally, data needs and other technical details should not be an afterthought in the visioning process. 28 Transportation Performance Management: Insight from Practitioners
Performance Management Must Engage with Employees 29 Provide staff and resources to support the performance management pro- gram. Developing performance management programs requires staff time and resources to research appropriate measures, develop reports, and educate and inform staff about the effort. Although successful agencies make performance management part of the entire organization, not just a single office, they uni- versally have staff dedicated to helping develop and grow the program. A per- formance management office can provide support and education to other staff, and help advance the state of the practice, but should not be seen as the only implementer of performance management. As the former head of Ohio DOTâs Office of Quality and Organizational Development noted, âMy job was to make sure that I did not own quality.â Build support for the program with the stateâs political leaders. DOT executives should actively work to build support for performance manage- ment with politicians, to ensure that the stateâs transportation agenda is con- sistent with DOT activities and responsive to the needs that are brought to light through performance measurement. Political support is particularly important in cases where the DOTâs credibility in allocating resources and delivery projects may be compromisedâin a number of cases, this very chal- lenge was the driving force behind implementing performance management. It also is critical in states where certain transportation funding allocations are codified into state law, effectively taking the decision-making authority away from the DOT and giving it to the legislature. 4.1 Hold Staff Accountable for Agency Performance When employees understand that their job performance is gauged in part by the outcomes of appropriate performance measures, they are much more apt to see the âbig pictureâ in their work, and to find management strategies that influence results. Therefore a crucial component of performance-based management is cultivating an agency philosophy that stresses the idea that âweâre all in this together.â For example, Missouri DOT requires senior executives to sign a âchar- terâ that commits them to the use of performance measures in their work. Bring performance measurement into the routine of everyday activities. One key to success- ful performance management systems is the regular interaction of staff with leadership about the use of performance measures. Most successful programs have regular meetings where perfor- mance measure results are presented and discussed. Employees are challenged to explain prob- lems and propose solutions. These should not be exercises but real attempts to improve agency function. Nor should they be antagonistic, but rather conducted in the spirit of cooperation. Just as every agency employee should feel that they have a stake in the agencyâs overall performance, no manager should rise above responsibility when things go poorly. At the City of Baltimore, a central tenet of the CitiStat program is the biweekly agency meeting cycle, where leaders address short- and long-term trends, and problem areas are identified using performance data. These meetings involve an active two-way dialogue where agency heads present their performance data and respond to questions from the mayor and his assistants, with the assistance of tables, figures, and maps. Incorporate system performance into employee reviews. One way to reinforce the idea of shared responsibility for the DOTâs mission is to mandate that every employeeâs periodic perfor- mance review include measures of not only individual performance, but also transportation sys- tem performance as a whole. Staff reviews can take into account a diversity of measures such as bridge and pavement conditions, project implementation, safety improvements, and so on. Raises The Georgia DOT (GDOT) has initi- ated a performance management process called TRAQS to provide a scorecard in key areas. The GDOT has faced challenges implementing this system because performance management concepts were never communicated throughout the Department; too many measures (over 300) are collected creating a cumbersome system to communi- cate; and performance measure- ment efforts were driven too strongly by one group, causing the rest of the agency to lose a sense of ownership for and inter- est in performance management.
30 Transportation Performance Management: Insight from Practitioners and bonuses can be contingent upon that performance. Perhaps the most chal- lenging aspect of this point is holding these standards even to support employ- ees whose functions are not directly related to transportation performance such as information technology or accounting. These employees have a role in trans- portation system performance by way of their importance in maintaining agency performance and should be held appropriately accountable. Imple- menting system performance measures into employee reviews should be done carefully, however. Not all aspects of system performance can be easily addressed, and how staff conduct their work is as important as the final results. Using measures in this way may be controversial but can help focus staff on the ultimate goals of the agency that they are working to support. At the Indiana DOT, performance-based incentives account for 7 percent of the annual budget for employee salaries. Publicize comparative data across districts and functional groups. It is important to make performance data available on demand to all agency employees. One potential benefit of this is the ability of individual depart- ments or districts to see how they are doing, not only in general but in com- parison to the rest of the agency. Public availability of measure results may provide extra incentives to improve the way an office or agency functions and increase the accountability of staff. Both the Ohio DOT and the Virginia DOT are now using performance measures to help allocate funding to individual districts or regions. Using information on system conditions and estimated future needs, these efforts help in the effectiveness of resource allocation and draw attention to programs that districts may be using to achieve bet- ter results with their allocation. Virginia DOT has begun using statistical analysis of individ- ual agency programs to try to better understand what produces positive âoutliersâ for system performance. Be careful not to confuse accountability with punishment. Although performance manage- ment should call attention to challenges faced by the DOT and potential shortcomings of exist- ing approaches, the purpose of performance management is not to punish or humiliate staff. Instead, its value is in getting staff to examine the implications of agency decisions on system per- formance and an attempt to improve performance by using resources as efficiently as possible. Managers and staff will both want to be careful not to jump to conclusions about data and analy- sis that has not been appropriately tested and validated. 4.2 Empower Staff to Take Ownership of the Program Performance management programs must do more than just highlight agency problems. They also must provide opportunities for individual staff to take action. It is vital to create an envi- ronment where individual employees can have a positive impact on the way the agency operates. To accomplish this, employees should be kept apprised of program development, should receive training as necessary in the implementation of the program, should be provided full and regu- lar access to performance data, and should be frequently encouraged to recommend and enact solutions. An agencyâs most valuable resource is its personnel, and providing individual staff members with the information, the environment, and the confidence to take on challenges is the best strategy to encourage creative problem solving and foster a culture of shared responsibility. Vertically integrate data access and responsibilities. The same performance data that allows an agency to gauge its overall progress towards its goals also is useful to individual departments and employees in making short-term decisions. For this reason it is important to provide per- At the Ohio DOT, personnel reviews for all senior managers are required to include systemlevel performance measures to evaluate their contri- bution to system performance. Designed to create incentives for teamwork, specific measures are selected collaboratively by employ- ees and management. The use of systemlevel measures has encour- aged departmental managers to consider how they can improve fun- damental system performance. For example, the manager of the Plan- ning Division is measured in part on pavement quality. As a result, the planning division has increased funding and training to the districts to help ensure that they are meet- ing their targets in this area.
Performance Management Must Engage with Employees 31 formance data at many levels of the organization. Providing universal access to performance data goes hand-in-hand with widely distributing data report- ing responsibilities to the appropriate parties. Well-defined data ownership is critical to ensuring data integrity and consistency and was a weakness iden- tified by a number of case study agencies. At the Ohio DOT, all agency staff have direct access to the performance management data system on their computers. They can use standard queries to examine system performance or build their own, but all employees are able to make use of performance data in their daily work. Keep employees informed. As changes are implemented, performance management leaders must keep employees abreast of changes and ensure proper, timely training. Employees should comprehend broad agency goals, how their role relates to overall agency goals, and how performance manage- ment will affect them, as well as possessing a mastery of the technical aspects of the program. Many agencies, such as the Florida DOT, use agencywide newsletters as a regular conduit for information and updates about an evolving performance management program. At the Florida DOT, the performance management office keeps employees up-to-date on the incremental rollout of the agencyâs business planning process through a monthly newsletter called Perspectives on Excellence. At Pace, agency leaders took a proactive role in introducing employees to the new performance management technology, training them on it, and help- ing them to understand how it benefits not only the agency as a whole and its customers but also the individual employees. This went a long way towards placating employees, many of whom were initially suspicious that the pro- gram sought to increase worker surveillance and posed an increase in overall worker responsibilities. In fact, the program has helped provide data to counter unfounded complaints about specific drivers. Encourage creative problem solving. Performance measures work best when they encourage creative problem solving. Techniques to promote creativity among individual employees include reward- ing innovation, encouraging targeted risk tak- ing, and holding expositions where employees showcase their cost-saving or performance- enhancing solutions. Identify needed skill sets to support per- formance management. Defining measures and setting targets can help a DOT identify the skills its employees need in their daily work. Measures and targets give meaning to the efforts of employees and can help man- agement understand the relationship between specific skills and achieving results on these measures. At the Ohio DOT, staff indicated that performance management had improved their hiring process, allowing them to better identify what they needed from candidates for The Ohio DOT has taken strides to ensure that the whole organiza- tion participates and support the agencyâs strategic initiatives. The Ohio DOT has used several efforts to maintain this focus on quality, including the following: â¢ Establishing an Office of Quality and Organizational Develop- ment which acts as a central clearinghouse for all of Ohio DOTâs attempts at improving efficiency and working with dis- tricts and the central office to support efforts at continuous improvement. â¢ Taking employeesâ ideas seri- ously through a statewide initia- tive led by the governor to collect ideas from state employ- ees. Ideas are reviewed, and fea- sible ideas are assigned to a staff person or a team to implement. â¢ Recognizing employees for their independent efforts to improve efficiency through an annual event called Team Up ODOT that allows process improvement teams to showcase their work. The Missouri DOT (MoDOT) has been examining performance- based bonuses in its project delivery area, among others, under the Performance Plus program. This program rewards MoDOT employees for going above and beyond the call of duty to increase productivity in the departmentâs core business areas. The program began with a pilot project launched in April 2006 to reward construction project office employees for achieving a final construction cost within one percent above the contract award amount (or less) on projects in MoDOTâs Statewide Trans- portation Improvement Program. To date, it has yielded $37 mil- lion in cost savings at a cost of $500,000 in employee rewards. The success of the pilot program paved the way for Performance Plus to become a permanent program at MoDOT.
32 Transportation Performance Management: Insight from Practitioners a given position. The Virginia DOT has developed a program to retain individual knowledge in the face of significant retirement and to identify business units that âoutperformâ others in an attempt to replicate their success in other units. Include support functions in performance management. All agencies rely on key support functionsâinformation technology, human resources, accounting, and othersâto help the agency function. These functions often are not included in agency strategic planning and perform- ance management programs, leading to a lack of coordination between the missions of the agency and these important units. By engaging these functions in the strategic planning process, they can better understand the overall strategic direction of the agency and their role in supporting agency performance. Additionally, all units of the agency should be accountable for overall system per- formance. To this end, DOT executives should assist the agencyâs support functions to develop initiatives that better link their actions to fundamental agency outcomes. 4.3 Employee Challenges Are Inevitable Performance management means changing the way an organization conducts business. As these programs are implemented and individual accountability and responsibility is increased, it is common for employees to resist and sometimes leave the agency. In the wake of perform- ance management program implementation, resulting changes might include department reor- ganizations as well as staff turnover through attrition, early retirement, or, rarely, layoffs or termination. At one state DOT, 10 of 40 senior manager positions turned over in just 3 years as a performance management program was implemented. Although some DOTs have the ability to terminate managers who do not perform well, in the world of civil service it is often difficult to remove some- one from a position without the strongest evidence of nonperformance or moral lapse. Civil service rules provide a valuable protection for government employees that might otherwise be subject to politically motivated employ- ment decisions and potential corruption. As transportation agencies imple- ment performance management, strategic promotions for employees who engage in and take ownership of the process probably provides the best and most feasible path to ensuring strong staff support for the performance man- agement system. Changing from broad managerial authority to data-driven decision-making can be painful and disruptive when it occurs, but is often necessary for fostering the cultural shifts necessary when an agency funda- mentally changes its business practices. Agencies should work with whatever resources they can to provide (1) tools to reward individuals who champion performance management and (2) incentives for those who do not champion performance management to leave. There is a potential feedback loop whereby employees who support and promote performance management are rewarded and promoted, resulting in an overall strengthening of the agencyâs performance management culture. Fundamentally, an agency should first attempt to develop and train staff within the organiza- tion. Although organizational change can be a challenging process, efforts to train staff and build support for the program from within can help ensure a longer lasting effort, as described in Chapter 6. The Georgia DOT has developed a fairly extensive Employee Engage- ment Survey. GDOT conducts the survey each year. The survey has been used to identify specific behaviors managers need to exhibit in order to engage employ- ees. These behaviors have been integrated into the management review process.