CHAPTER 17 ________________________________
Comparing Local Performance Management in the United Kingdom and United States

Mandatory. The reason performance management (PM) is so much more widespread in United Kingdom local government compared to United States city and county government boils down to this one word. The U.K. Audit Commission was established to ensure that U.K. local governments (called councils) deliver the highest standard of service for the best possible value. It monitors local governments’ performance through the use of a mandatory set of national performance measures and a compulsory audit and inspection regime. The Audit Commission has this power because the U.K. central government provides the bulk of a council’s funding, whereas U.S. local governments rely predominantly on property and sales taxes.

U.K. government performance evaluation began in 2000 with the introduction of best value performance indicators (BVPIs). There were hundreds of BVPIs, which measured performance across all service areas. Local governments had to report their performance on the BVPIs to central government every year. They also were required to produce an annual best value performance plan that compared their performance on the BVPIs to that of other local governments.

Best value evolved in 2002 into the Comprehensive Performance Assessment (CPA), which not only examined the performance of individual council services but also included a corporate assessment, part of which involved scoring the council’s performance management skills on a 1 to 4 scale. Each council ended up with an overall CPA label: poor, weak, fair, good, or excellent.

As of April 2009, the CPA has been replaced with the Comprehensive Area Assessment (CAA), which shifts the emphasis away from individual councils toward partnerships that work between all public bodies involved in delivering local-priority outcomes. CAA comes with a new set of 198 national performance indicators that all U.K. councils must measure and report on.

Nurturing a Performance Culture

As a result of these continually evolving central government directives, U.K. councils have sharpened their performance management skills and in the process developed a range of relevant tools and approaches that nurture a performance culture. Here, we will look at six of these skill areas and contrast the situation with that at the local level in the United States:

• Creating a holistic performance management framework

• Aligning resources and activities with corporate goals

• Benchmarking against similar profile organizations

• Performance reporting to citizens

• Tracking performance in partnerships

• Using software to support the performance management process.

Creating a Holistic Performance Management Framework

Embedding a performance management culture requires staff engagement across the organization so that performance becomes an everyday priority. Critical to achieving this is a detailed framework specifying how performance will be managed in a practical sense and that links strategies, plans, policies, and indicators to enable monitoring of organizational performance. A good framework outlines the annual performance management cycle, synchronizing business planning and budgeting processes along with scheduling performance review forums or meetings.

A U.K. council performance management framework typically integrates three core elements—performance indicators, actions, and risks—into a holistic process with well-defined stages and a reporting/performance review cycle. A crucial element is communicating with staff and citizens by publishing performance data on the Internet. Over years, more and more examples have emerged of U.K. councils with high levels of staff engagement in performance management—from senior officers/managers and councillors/commissioners down to teams within departments—that are actively involved in managing operations in line with the council’s strategic plan.

The use of formal performance management frameworks (such as Baldrige, ISO, and Sterling) in U.S. local governments is voluntary, and only a small segment of the public sector has successfully implemented them organization-wide. Often, a single department or division will entertain such an endeavor; therefore, the jurisdiction never fully reaps the benefits of a participatory, holistic performance management framework across the organization or community.

Aligning Resources and Activities with Corporate Goals

A major focus of all Audit Commission council assessments is whether the council is actively managing performance of services in line with its stated corporate goals and priorities. Over the years, councils have become better and better at articulating what those priorities are and ensuring that performance is managed against outcomes in a balanced way. The connection between performance measurement and the council’s goals is sometimes called a golden thread.

Ideally, each individual’s work should be aligned to unit and departmental objectives, which in turn are linked to corporate priorities. Councils have developed processes in their annual planning cycles to ensure alignment of departmental and divisional objectives with corporate priorities. Widespread usage of scorecards (balanced and otherwise) provides the framework for maintaining multi-tiered performance updates driven by real-time, milestone reporting.

In the United States, a formalized approach to alignment that requires third-party evaluation of goals, objectives, and performance is not common. Often, U.S. local governments try to tie performance to their budgets, but that is where the effort ends. Service Efforts and Accomplishments (SEA) reporting, promoted by the Government Accounting Standards Board (GASB), provides a structured format for aligning performance results with priorities. And some communities (such as Maricopa County, Arizona; Charlotte, North Carolina; and Prince William County, Virginia) go to great lengths to internally ensure resource and goal alignment.

Benchmarking against Similar Profile Organizations

From an early point, the need to compare one’s own performance with others has been paramount in assessing U.K. councils’ progress. This benchmarking is considerably more practical in the United Kingdom than in the United States, because all U.K. councils are required every year to submit results to the Audit Commission on the same set of mandatory performance indicators. These data are then published online at www.audit-commission.gov.uk, where they may be downloaded for further analysis.

Progressive councils wanting to do more with benchmark data found the annual data update too retrospective, and the data didn’t necessarily include organizations of a similar profile and size. So many formed their own benchmark peer groups, started using software to gather data regularly, and produced more frequent performance reports.

By contrast, U.S. local governments don’t use a common set of performance measures, making sound comparisons amongst peers problematic. A number of benchmarking initiatives have developed, such as the International City/County Management Association (ICMA) and the Florida Benchmarking Consortium, but they face a number of challenges. Many entities do not understand the concept of benchmarking; it is difficult to ensure that participants use consistent data collection techniques or to access data for a similarly profiled peer group; and the cost to participate in benchmarking groups may be prohibitive. Nonetheless, most local governments that participate in these benchmarking exercises still find the efforts valuable.

Performance Reporting to Citizens

Visit any U.K. local government website, and you will find a variety of performance reports informing citizens about the council’s progress toward achieving targets. Both corporate and departmental/service-based data are available. The performance plans that are required annually as part of the regulatory regime present, in some detail, results relative to benchmark peer groups and aligned to corporate goals and objectives.

Often, reports are posted in a PDF format, but a growing number of councils directly publish data from their performance management software to their websites. These reports are generally interactive and visually engaging, displaying traffic-lighted gauges and trend charts that allow the citizen to drill down for more detail. By contrast, U.S. local government websites typically contain very little service performance information, aside from what might be buried in the annual budget document. Fewer still have strong visual presentation of performance results, let alone any dynamic facilities for citizens to drill down for further details.

Tracking Performance in Partnerships

Local governments rely on a variety of other public bodies to fully deliver local-priority outcomes. For some time now, U.K. councils have had to extend performance management to cover the work done by partnerships. When multiple organizations are involved, each with varying degrees of accountability, coordinating partnership action plans and performance measurement is a major challenge. U.K. councils formalize their multiple partnerships in a local strategic partnership (LSP) body that is responsible for developing and implementing a local area agreement (LAA). Many councils have developed internal skills to address the major issues, such as ensuring consistent information management across multiple organizations; managing performance indicators, risks, and action plans; and reporting performance in terms of both the individual organizations’ and the partner body’s priorities.

In the United States, intergovernmental coordination, let alone partnerships with non-governmental agencies, does not appear to have the same level of dedicated management direction as with U.K. councils. Perhaps the greatest difference is the ability to share management information on performance across multiple organizations—despite sharing similar goals and outcomes. The lack of mandatory performance achievement hinders improvement in U.S. local government partnership performance.

Using Software to Support the Performance Management Process

In response to their rigorous mandatory performance requirements, U.K. councils turned to performance measurement software to streamline reporting processes and deliver other efficiencies. Software is U.K. councils’ fundamental tool for engaging staff in performance management and ensuring a consistent approach to measurement and reporting across the organization and in partnerships. Analysis shows that U.K. local government has the highest adoption rates for performance management software in the world. More than 75 percent of U.K. councils use a packaged solution, as opposed to spreadsheet software such as Microsoft® Excel or an in-house solution.

By contrast, we estimate that at best five percent of U.S. local governments use a packaged solution, with a similar number relying on in-house systems—leaving approximately 90 percent of U.S. local governments using nothing or just Excel.

Within U.K. local governments, there is generally little support for the regulatory regime and the way it controls how councils operate. Nonetheless, despite the unpopularity of the Audit Commission’s requirements, few would dispute that they have led to better quality measurement. Importantly, those who ultimately pay for these entities—citizens—typically have much better access to relevant performance information in the United Kingdom than in the United States. The challenge of getting citizens in both countries more involved with that information, and using it as a trigger for action, remains.