Performance management Essay Example For Students

Performance management Essay A local council has just received approval for 15 million from the National Lottery to build a new Arts, Media and Cultural Centre but it needs to find the matching capital Money for the project. It has also to find the annual running costs of 1 million for the new facility at the same sound as it needs to reduce its total Leisure and Arts budget by 5 million. How can performance management and review processes assist with this complex decision and ensure that effective delivery of the project if agreed?The local council has three main problems to resolve from this scenario. These are:1. Matching the capital money and running costs of the proposed project. 2. Significantly reducing the leisure and arts budget, the sector in which the proposed project is in. 3. Keeping all major interest groups internally and externally from the project, relatively content. However, the problems involving the interest groups are virtually impossible to resolve. This is due to peoples contradicting needs; this creates the task of catering for each individual group’s needs, which is unobtainable. Therefore, the council must take an interest in the most significant party, the public; this includes the implications of the other major problems. Performance management and review can be an aid to this project, by analysing the various options and solutions and deciding on the best course of action. Each of the three main problems may be divided into a list containing various sub problems, which create the overall problems. Each of these problems must be solved by prioritising in order of importance, in order to produce the most effective solution to the project. Performance management has been defined as â€Å"a strategic and integrated approach to delivering sustained success to organisations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors: (Armstrong and Baron 1998). Another definition however is that performance management is the systematic design, collection, analysis and review of information. In order to manage there is a need to establish and quantify what may be managed and how. For the ability to use performance management within the project, it needs to be segmented into various sections that can possibly be measured over the duration of the project. The project has multiple objectives that need defining. These objectives are usually defined and the outcomes normally judged using the five E’s:Economy: The effective acquisition of inputs, largely a value for money concept. Efficiency: The ratio of inputs to outputs. The efficiency level will be increased if the output is consistent while input levels fall, or output is raised while input while input remains consistent. Effectiveness: The extent of goal acheivementEquity: Observance of criteria of fairnesss. This is probably the most significant condition for good performance. Electability: Political affirmation of good performance that will prove essential for survival. These five factors aid in providing parameters for judging performance. To enable measurements of the performance, the project needs to be subdivided into various sections known as milestones. To achieve the various milestones, the manager will need to create an action plan. This is a breakdown of what, where and when various activities are going to occur. There are many problems associated with public sector performance management. Some of these problems are as follows:? There are not enough targets to attain. ? There tends to be too many indicators. ? There is a lethargic reporting style, however the reporting systems tend to be loose. In the case of this project for the local council there needs to be a hierarchy of objectives, these must range from corporate to individual objectives. The corporate objectives for the local council may be as follows:1. To design, build and tender for the centre within the budget allocated and within any time frame allocated by the capital provider. 2. To allocate appropriate funds from the local authority budget to enable the project for the centre to proceed. 3. To increase, restructure or divert the revenue budgets of the local authority to accommodate the running of the centre. The examples of the objectives above are broad in context. This is deliberately to enable any changes through revenue and allocations of funds to the centre to be accommodated for within the objectives. There may be political issues involved within the development of obtaining these major corporate objectives. These may include the raising of tax, the proposed centre having to match the running costs or possibly the allocation of funds from other local authority departments. These objectives are not as narrowly defined as those from the private sector or if it were a PFI (Private Finance Initiative) project, this is due to the need to insure that all stakeholders may be taken into consideration. Although these objectives are corporate, they usually are allocated to an individual to oversee. This method within the public sector could cause problems within the board; these problems are due to the possibility of one-upmanship. Within the local authority, there are other objectives which must be satisfied, these link and are interdependent with the corporate objectives. An example may be that the Arts and Leisure Director needs to set out his objectives for achieving the design and building requirements. Example – Objective Carry out the Tender procedure within 6 months: Activity or milestoneActionDeadlineA.Appoint ConsultantBy End of Month 1B.Approve BudgetBy Start of Month 2C. Finalise DesignBy End of Month 2D.Send spending specificationBy Start of Month 3for TendingE. Evaluate TendersBy End of Month 4F.Appoint ContractBy End of Month 5G.Complete ContractBy End of Month 6The Milestones are time related, they can be measured and if slippage occurs, action can be taken to bring the plan back on schedule or negotiations can take place to approve an extension. Another example may be that of the Director of Finance or the treasurers objective, such as the following: 1. Reassign budget areas and make alterations to the allocations / Negotiate the Leisure and Arts Budget. The Church of Scientology EssayIf the project is successfully implemented the Performance Management does not stop as it can continue with the development of the Arts, Media and Culture Centre. With the evolution of the facility, new Performance Indicators can be introduced for further review. Examples of this are as follows. A performance indicator as a standard may be set for attracting X number of clients per Day/Week/Month etc. So X people per month could be the Performance Indicator to compare with the actual figure. The actual and the Performance Indicator can be compared and if they are not in sync, action to bring it into alignment can be devised and implemented. Similarly revenue/income can be considered as a performance indicator, based on collecting the 1million running costs. This again can be monitored routinely to see if the assumptions were completed, what the time of year effect is etc. Excessive use of Performance indicators, particularly those published externally, may encourage particular actions by public sector managers: 1)Tunnel Vision refers to the idea of managers being so concerned with reaching performance targets that they exclude other important areas. 2) Suboptimization is the problem of managers pursuing their own objectives and ignoring opportunities for the organisation. 3) Myopia is the problem of concentration on the short term with lack of concern as to what might happen in the long term due to simply trying to meet current performance targets. 4) Convergence – this is the problem of the objective being set as simply not to stand out as being a bad performer, rather than to try and do the best. 5) Ossification – the practice of avoiding innovation. 6) Gaming – This is altering the organisations behaviour so as to gain a strategic advantage. 7) Misrepresentation – This involves trying to ‘fix’ the figures, using such methods as creative accounting and fraud. Managers are also made sensitive to the indicators with which the electoral representatives are held to account. The idea that managers of public services leave their political views etc. at home, is widely discredited. People working in public sector organisations are not neutral, and tend to develop their own goals that may or may not be compatible with the goals of the organisation. There are also other problems with this approach that must be taken into account. There are a number of problems with comparability with other authorities in terms of the breakdown of standardisation of any performance management approach, the fact that ‘inputs’ vary between authorities (also different items under managerial control), the fact that if budget does not allow for maximum capacity it will lead to different unit costs for the outputs and it being hard to judge the true intangible ‘value’ of services. There are specific problems generated by an organisational resistance to stretch. After it has been laid down a while, staff learns to â€Å"fool the system† and creative accounting may also be used. These are further examples of staff pursuing self-interests rather than the interests of the organisation. Performance Management is a subjective means of managing projects using performance indicators and performance review. There are a number of interest groups and their views and interest are an important part of Performance Review. The key to successful implementation of Performance Management and Review Techniques to assist with the complex decision implementation of the new Lottery Funded Arts, Media and Cultural Centre and ensure effective delivery are as follow: (a) Ensure the objectives are realistic(b) Ensure all objectives link together(c) Ownership of the objective is paramount(d) Should not be used as a stick to control someone(e) Ensure all milestones are measured(f) Ensure the recipient of the objective knows how, when and where reviews will take place(g) Don’t review too often too quickly. Despite the mentioned problems, there is still a great deal of potential for performance management and review systems. A great deal of effort needs to be put into constructing a performance management system, but as long as the users are aware of the potential difficulties, many problems can be overcome. BibliographyArmstrong, M and Baron, A (1998) Performance Management: The New Realities, London Institute of Personnel and Development. Nutley, S and Osborne, S (1994) The Public Sector Management Handbook, London: Longman. Bevard, T, Davis, P and Green, J (1998) More For Less: Practical coping strategies for managing limited resources.