Five critical factors: preparing for success in implementing performance management: GFOA has identified five key factors typically present in successful performance measurement and management initiatives.

• Author: Kreklow, Steven R.
• Position: Solutions - Government Finance Officers Association

While many local governments now use some form of performance measurement, far fewer have successfully completed the transition to a performance management system--integrating performance measurement into the ongoing management of the organization. This transition is much more difficult than the initial development of performance measures. A study by the Governmental Accounting Standards Board found that only a third of the 489 local governments they surveyed believed that their performance measurement systems had improved program performance. (1) Two local governments from America's heartland provide some interesting insights into the process of implementing performance management systems that we can compare to GFOA's five critical factors for success.

WHAT FACTORS LEAD TO SUCCESSFUL PERFORMANCE MANAGEMENT SYSTEMS?

While each local government is unique in some ways, there are some general principles government finance professionals can use to guide their efforts. Through its research and consulting engagements, the GFOA has identified five key factors that are present in most successful performance management initiatives.

1. Active Leadership and Support from Top Management

   Performance management initiatives cannot achieve optimum success without energetic and sustained support from an organization's top managers. Organization leaders, including elected officials and executive managers, need to create and communicate a vision of how performance measures will be used and how managers, employees, and stakeholders will benefit. In successful implementations, leaders motivate departments to use performance measures for management and they sustain these efforts over time. For example, Robert Behn credits hands-on and persistent involvement by key representatives of the mayor's office as an important factor in the success of Baltimore's frequently imitated CitiStat system. (2)

   Cedar Rapids initiated its Managing for Results Initiative in large part due to the city council and city manager's frustration with an annual straggle over taxes and spending. Both the city council and city manager continue to drive the process forward through the annual budget process. WaterOne's performance management initiative was begun by the general manager, with the support of the board, as part of an effort to improve WaterOne's understanding of customer expectations, focus on customer service, and financial accountability to its ratepayers.

2. A Few Highly...