This first appeared as a PATImes column in June 2006.

The 80 Percent Solution?
by John Kamensky

A recent conversation with a manager at the Social Security Administration alarmed me.  We were talking about the use of performance targets in individual performance management commitments.  He said the informal guidance in his agency is to commit to 80 percent of what employees think is achievable, so they’ll always reach or exceed their goals!  The objective of setting goals and targets is to increase performance, not dumb it down.  So have those of us who have promoted “managing for results” got it wrong?

A recent IBM Center for The Business of Government report by Dr. Shelley Metzenbaum, “Performance Accountability:  Five Building Blocks and Six Essential Practices,” takes on the tensions in the uses of performance measures.  To what extent should performance measures be used for enforcing accountability, in contrast to using them to improve performance?  Dr. Metzenbaum examines a number of cases, such as how the Department of Transportation’s highway safety office set challenging stretch goals for increasing seatbelt safety – with the encouragement of the deputy secretary -- but did not reach them.  After a few years, the House appropriations subcommittee chair used the office’s failure to meet these goals as his reason for eliminating executive performance bonuses for the agency.  This sent a clear warning message to other federal agencies – don’t set challenging stretch goals!

 Does the Use of Performance Goals Hold Back Improvements?

Does this example imply that the use of performance goals and measures to improve results is a faulty management strategy?  Dr. Metzenbaum says “Quite the contrary!  Goals and measures are among the most important tools public sector organizations can use to enhance both performance and accountability.”   However, she cautions that “they can provoke self-protective responses that interfere with performance and accountability gains,” especially if they are too tightly linked to potentially punitive consequences, such as pay or budget cuts.  If the wrong kinds of incentives are chosen, she notes, “performance management systems tend to backfire, discouraging workers, and even motivating them to cheat.” 

Moreover, she continues, “promising rewards to individuals in government agencies seldom works when the rewards are linked to attainment of specific targets, progress relative to peers, progress relative to the past, or per unit of product.”  Dr. Metzenbaum concludes, “less attention should be paid to incentives and far more to ensuring the active and effective use of outcome-focused goals and measures.”  She describes five basic building blocks for effective performance management, and six essential practices for which organizations and their managers should be held accountable.

Building Blocks for Effective Performance Management

Dr. Metzenbaum offers five building blocks for effective performance management that every public organization should put in place:

Building Block 1:  Clear, measurable goals.  Organizations need to set specific, challenging, outcome-focused goals that are then used to drive the performance of the organization.  While challenging, though, these goals should not be used to penalize agencies “for missed targets, provided experience-informed, cogent strategies have been developed and implemented to meet the goals.”  Dr. Metzenbaum notes that this is the philosophy of former New York City Police Commissioner Bill Bratton when he successfully led the city’s 80 percent reduction in the murder rate.

Building Block 2:  Measurement framework.  Put in place a system of measures that show progress and outcomes related to the organization’s goals.  Measurement motivates behavior, “because people enjoy a sense of accomplishment and take pride in a job well done,” Metzenbaum observers.  She says it “is far more constructive and effective when measurement is used primarily to answer performance-improving questions,” than if it is used for punitive accountability purposes.

Building Block 3:  One-on-one verbal feedback.  Dr. Metzenbaum notes that goals and measures are useless unless they are used by managers to manage, and the most effective performance management approach is via face-to-face verbal feedback.  “Well-delivered verbal feedback boosts confidence that a goal can be met,” she writes, and it “stimulates ideas and specific plans about how to meet it.”

Building Block 4:  Group feedback that encourages interactive inquiry.  When cooperation is needed among many parties to meet a goal, Dr. Metzenbaum suggests that “a forum that facilitates frequent interactive inquiry” is key to success.  She points to the use of CitiStat in Baltimore, and its expansion to cities and states across the country, as a concrete example of this building block.

Building Block 5:  Cautious use of  incentives.  As noted earlier, Dr. Metzenbaum advocates caution in the use of externally-provided incentives.  She notes that if improperly designed, they “introduce unhealthy fears that compromise discoveries that lead to performance gains.”  She details a checklist of design issues, such as: how an incentive system should be designed, who gets rewarded or penalized, and what gets rewarded or penalized

Essential Practices for Managers

The building blocks  by themselves don’t improve performance.  Dr. Metzenbaum identifies six essential practices that government organizations and their managers should be held accountable for, as well. She says managers should:

• Emphasize outcomes with specific targets.  Managers should set specific outcome-focused goals or targets, of which only a few should be challenging.  Managers should also establish specific targets when they have not been set by law or other sources; and they should proactively communicate these targets to the public.  “Goals do not need to be linked to any incentive – rewards or punishments – to be effective,” notes Dr. Metzenbaum.

• Master measurement approaches.  Managers should  understand the inner workings of the measures they use to gauge progress toward the targets.  This will improve chances that the measures won’t be gamed by lower-level employees.  Also, managers should communicate these measures to those who can influence progress (such as the budget office) as well as to the public.  In doing this, managers should example their organization’s measures for clues for improved performance:  look for patterns, anomalies, changes, and relationships in the search for what works, what does not, causal connections, and areas where more understanding is needed.

• Provide effective feedback.  Managers should use measures as the focal point for providing objective feedback to their employees.    Doing this will help others in the organization understand their roles in reaching specific targets, find specific ideas and practices that enable them to reach the targets, and obtain needed skills, resources, and authority to meet targets. “When goals and measures are simply placed on paper but never used, they are useless.  Feedback is essential to unleashing their power,” writes Dr. Metzenbaum.

• Create and use forums for interactive inquiry. Managers should create venues that regularly engage others with expertise and resources relevant to the attainment of specific targets.  Doing this in a lively interactive environment provides feedback, stimulates synergistic thinking, encourages planning and coordinating actions, assesses implementation efforts, and updates targets and action plans based on the best available evidence.

• Develop clear strategies for meeting goals.  In addition to setting long-term, outcome-oriented goals, managers must be held accountable for developing clear, long-term strategies and shorter term action plans based on the best available evidence and ideas.  Strategies are a manager’s best guess of what actions will improve measurable performance and should  be closely watched and revised over time.  They connect day-to-day activities to the achievement of long-term outcomes.

• Relentlessly follow through on implementation.  Successful mangers are relentless in following through on the implementation of strategic and action plans and assure that insights from experience are fed back into the development of targets, strategies, and activity selection on a timely basis.

While these practices and building blocks are important ways to manage the tensions between the use of performance measures for accountability vs. improved performance, in reality finding the balance will be something that is negotiated between those who want accountability – generally external to a program – and those who want to use performance measures to uncover areas where performance could be improved – generally program managers.  Dr. Metzenbaum, however, clearly comes down on the side of managers:  “It is far more constructive and effective when measurement is used primarily to answer performance-improving questions.”  And doing so will move agencies beyond the 80 percent solution!