MANAGING WITH METRICSA Primer for Local Government and Development Organizations

Dr. David R. Kolzow2016

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LET YOUR EFFORTS BE KNOWN BY YOUR RESULTS!

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You don't get any medal for trying something, you get medals for results. Bill Parcells

LET YOUR EFFORTS BE KNOWN BY YOUR RESULTS!• What kinds of results are stakeholders

and local leaders typically looking for in local or regional economic development?

• Is one organization in the community or region capable of meeting all these desired results or outcomes?

• Are some of the desired results sometimes unrealistic or unlikely to be achieved within a reasonable timeframe?

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OUTCOME-BASED PERFORMANCEPRESSURES ON DEVELOPMENT ORGANIZATIONS:

• Accountability – what are you doing with the resources we give you?

• Activities – why are you doing what you do?• Performance – how well are you doing what is

needed to be done?• Results – why aren’t we seeing the outcomes we

want? E.g., Where are the new jobs?• Funding – why should we continue to fund the

organizations at the level you request when our funding sources are diminishing?

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OUTCOME-BASED PERFORMANCE

• Is the development organization more likely to be held more accountable for what it is doing or for the results it is achieving?

To realize the outcomes you want, it is critical to recognize and experience the transition from our present thoughts, habits, and actions to new thoughts, habits, and actions. Darren L. Johnson

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OUTCOME-BASED PERFORMANCE

People and their managers are working so hard to be sure things are done right, that they hardly have time to decide if they are doing the right things. Steven Covey

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“However beautiful the strategy, you should occasionally look at

the results.”Winston Churchill

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MANAGING FOR RESULTSAchieving desired “results” in an

organization over the long run requires a commitment to determine the right “direction” and to execute the actions to get it there.

A race with no finish line!

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OUTCOME-BASED PERFORMANCE

• Improving organizational accountability

• Defining desired outcomes that can be measured

• Determining performance measures that can demonstrate progress and achievement

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MANAGING EXPECTATIONS

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If you align expectations with reality, you will never be disappointed. Terrell Owens

MANAGING EXPECTATIONS

• Expectations are your stakeholder's vision of a future state or action, usually unstated but important

• Should expectations be expected?• Why is it critical to know the expectations

of stakeholders in order to achieve the success of the organization?

• How should the development organization determine the development expectations of local leaders and stakeholders?

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MANAGING EXPECTATIONS

• What can the development organization do to improve the understanding of local leaders regarding realistic economic growth?

• Can these actions lead to changing expectations?

• Are customers and clients likely to have expectations regarding your organization?

• How do you find out what those are?• Can your organization also manage those

expectations?

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MANAGING EXPECTATIONS

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• What can the ED organization do to improve the understanding of local leaders regarding realistic economic growth?

• Can these actions lead to changing expectations?

MANAGING EXPECTATIONS

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• Are customers and clients likely to have expectations regarding your organization?

• How do you find out what those are?• Can your organization also manage

those expectations?

MANAGING EXPECTATIONS

What is the likely result if the ED organization doesn’t address the expectations for it?

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MANAGING EXPECTATIONS

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• When does it make sense to attempt to lower expectations for the development organization?

• How might that negatively impact the pursuit of a high level of performance?

MANAGING EXPECTATIONS• Managing expectations is about eliminating the

gap between what is expected and what happens

Promise only what you can deliver. Deliver what you promise.

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MOVING SUCCESSFULLY TOWARD MEETING EXPECTATIONS AND

ACHIEVING DESIRED OUTCOMES

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“Ninety percent of what we call ‘management’ consists of making it difficult for people to get things done.” – Peter Drucker

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OUTCOME-BASED PERFORMANCE

Demand for Accountability

Measuring Performance & Outcomes

Professional Excellence and Satisfied Customers

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WHAT IS OUTCOME-BASED PERFORMANCE?

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“Not how many worms the bird feeds its young, but how well the fledgling fliesUnited Way of America

ACCOUNTABILITY• Your organization will be held accountable,

so why not take the lead in ensuring that you are being held accountable for the right things.

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DESIRED OUTCOME

NEEDED ACTIONS

DECISIONS?

DOING IT!

OUTCOME-BASED PERFORMANCE

• Work with local leaders/stakeholders/Board members to establish desired outcomes from the activity of the development organization

• Develop measures for outcomes so that achievement can be demonstrated

• Decide which actions of the organization will lead to the achievement of the desired outcomes/results

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OUTCOME-BASED PLANNING• Outcome-based planning uses customer

and stakeholder needs and desired results as the foundation for designing programs.

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OUTCOME-BASED EVALUATION

• Outcome-based evaluation is a systematic way to assess the extent to which a program has achieved its intended results.

OBE focuses on the key questions: “How has our program made a difference?” “How are our customers and stakeholders better as

a result of our program?”

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OUTCOME-BASED PERFORMANCE

• How do we demonstrate what we are accomplishing?– Inputs – allocating our resources– Activities – our tasks and actions– Outputs – the level of activity

– Outcomes –• why we are doing what we are doing; • what kind of impact are we having; • what positive changes occurred as

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HOW WE KEEP BUSY

HOW WE MAKE A

DIFFERENCE

RESULTS-BASED PERFORMANCE: INDUSTRIAL SITE DEVELOPMENT

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Goal(Impact)

Adequate quality sites for higher skill employers

Outcomes 200 acres of fully developed industrial sites within three years

•

Outputs• Negotiations with 3 property owners for

site acquisition

Extension of water and sewer service•

Activities• Identification of three qualified

locations for industrial park development

Inputs• Access to funds for site development

GIS maps of region•

•

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Goal (Impact)

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OUTCOME-BASED PERFORMANCE

• Determining measurable indicators for outcomes and measures for performance takes time, trial and error, and research

• Managing for results takes a lot of effort, but it leads to desired outcomes and improved accountability

• An organization moving toward high performance is one that is constantly striving to improve and be more effective

DEVELOPMENT OUTCOMES

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A development organization ideally seeks to accomplish two sets of outcomes:

• Ability to demonstrate that the region’s economy and quality of life are improving.

• Ability to demonstrate that its actions are leading to improvement in the regional economy and quality of life.

DEVELOPMENT OUTCOMES

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• Why is it important for your stakeholders to know and understand the difference between the desired outcomes for the organization and for those of the community or region?

OUTCOMES VS. IMPACTS

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OUTCOMES

• OUTCOMES– results that an ED organization controlsIMPACTS -- results beyond the direct control of the community and its organizations

•

IMPACTS

Org. Control

External Events

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ECONOMIC DEVELOPMENT TENDENCY

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• Shoot at everything that flies; claim everything that falls.

IMPACT

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• IMPACT = EXTERNAL CHANGE• What significant positive changes have occurred in

the community or region?• Examples:

– Number of new businesses attracted– Increase in per capita or household income– Net gain in the number of total new jobs– Increase in housing availability– Decrease in the local unemployment rate– Increase in the size of the skilled workforce

– Are these changes important to the community’s stakeholders?

– How much direct control does the development organization have over these changes?

EXAMPLE OF DESIRED ECONOMIC IMPACT

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• 2,500 new primary jobs resulting in 4,875 total jobs, paying $37K annually

• Generate direct payroll totaling $172,975,000 annually from new or expanding businesses in targeted sectors

• Increase new capital investment by $150,000,000

• Encourage 25 new business startups with innovative or tech-related concepts

• Recruit 25 “best-fit” companies

ILLINOIS OUTCOMES (INITIATIVES)

Initiative 1: Strengthen the state’s ongoing business attraction, retention, and support initiatives:• Attract 75,000 new jobs to Illinois over the

next five years• Within these new jobs, achieve an average

wage of $57,200, 10 percent higher than the state average

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ILLINOIS OUTCOMES (INITIATIVES)

Initiative 2: Promote economic development on a regional level:• Record 90 percent satisfaction rate with

DCEO efforts among regional stakeholders• Increase business starts in each region by

10 percent

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OUTCOMES

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• Outcomes are about the “so what;” what changed as a result of what the organization did?

• Outcomes need to be:– Measurable– Attainable– Clear assignment of responsibility – Designed to improve the performance of the

organization

OUTCOME-BASED PERFORMANCE

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OUTCOME-BASED PERFORMANCE

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• Think about an important result expected of your organization.

• Be prepared to share it with the group and discuss whether this result is within the direct control of your organization or not.

• Discuss how you would measurethese results.

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OUTCOME-BASED PERFORMANCE

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“Is our community or region better off now because of our programs?”What’s our measure of “better off?”What are the results the community or region wants and how do we measure those?Is it clear just how our programs and activities are solutions for the desired outcomes?

CRITERIA FOR OUTCOMESWell written

outcomes are SMART:– S pecific– M easurable– A ggressive, but

Attainable– R esult-oriented– T ime-bound

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Before you can develop your strategies:

• Get down to a set of quantifiable strategic outcomes:

Improve Internet ServiceToo vague

Reach 100% penetration of access to high speed broadband internet service within the City.

More precise

• Make sure your outcomes have a direct relationship to your goals and your goals have a

direct relationship to your vision, mission, and values.

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OUTCOME-BASED PERFORMANCE

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• Outcomes -- the results desired• Strategic Planning -- how to achieve the

outcomes

ORGANIZATIONAL STRATEGIC PLANNING

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• What makes an organization’s plan “strategic?”Why is a written strategic plan important to assessing performance?

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THE EFFECTIVE STRATEGIC PLAN

Bottom line: the strategic plan should define the results desired and expected by the stakeholders

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Stakeholder Expectations

OrganizationPlan

Managing for Desired

Results

Economic Realities

Strategic Thinking

Demonstrating Results

Major Components of theStrategic Plan

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Strategic Plan

Mission

Vision

Goals

Outcomes

Why we exist

What we want to be

What we must achieve to be successful

Action Plans

Initiatives

Evaluate Progress

Measures Indicators and Monitors of success

Desired level of performance and timelines

Planned Actions to Achieve Outcomes

O1 O2

AI1 AI2 AI3

M1 M2 M3

T1 T1 T1

Specific outcomes expressed in measurable terms (NOT activities)

Targets

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THE STRATEGY-FOCUSED ORGANIZATION

MissionWhat we do

VisionWhat we aspire to be

Strategic Goals and Actions How we accomplish our mission and vision

MeasuresIndicators of our progress and achievement

WHO ARE WE?THE MISSION STATEMENT

• Brief description of the basic purpose of the organization, including the nature of the work to be carried out

• It guides basic decision-making for the organization, keeping decisions and policies focused on its core purpose

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MISSION STATEMENT√ Basic needs to be filled?√ Desired outcomes and achievements?√ Clients and customers?√ Core values?√ Organization’s uniqueness?√ Reason for existence?

How does your organization’s mission statement measure up to these preceding questions?

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MISSION STATEMENT

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• Who associated with the organization has the primary responsibility for determining its mission?

• How does the mission statement impact the strategic plan?

• How does the mission statement improve accountability?

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MISSION STATEMENT EXAMPLES

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The Illinois Institute for Rural Affairs seeks to improvethe quality of life for rural residents by partnering withpublic and private agencies on local development andenhancement efforts.-------------------------------------------------------------------------------The Jacksonville Regional Economic DevelopmentCorporation works to retain, expand, create and recruitjob opportunities for Morgan and Scott Counties.

LITCHFIELD E.D. MISSION STATEMENT EXAMPLE

Purpose

To increase the wealth of the community and improve the quality of life of its citizens.

Mission

The City's Economic Development Department provides a bridge between private and public sectors to assist with the economic growth of the community in areas of job creation and retention through recruitment and expansion of businesses and developments.

Economic Development Responsibilities:

Increase the job base while maintaining present jobs; Implement strategies that will aid in business attraction; Develop and maintain economic development related data and databases necessary for business recruitment; Develop and enhance partnerships with agencies, utilities, transportation, and other economic development allies; Coordinate financial and tax incentive packages

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PUTTING MISSION & VISION IN ACTION

• The Vision and Mission set the general direction for the organization– They are intended to help shareholders,

customers, and employees understand what the organization is about and what it intends to achieve

• But these statements are far too vague to guide day-to-day actions and resource allocation decisions

• Organizations start to make the statements operational when they define a strategy of how the vision and mission will be achieved

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FROM OUTCOMES TO PRIORITIES

• What should be the relationship between the expectations for the organization and its priorities?

• Who should set the priorities for the organization?

• How is this best accomplished?

• If the priorities of the Board and stakeholders are not in agreement with those of the organization’s executive director and staff, what should be done to remedy the situation?

ORGANIZATIONAL PRIORITIES WORKSHOP

Find a time and place that maximizes stakeholder participation in a workshop

Before or during the workshop, provide information and background to stakeholders so they can have a more realistic perspective

Structure the meeting/workshop/retreat environment so that priorities for the organization can be identified in an effective manner

Rank order priorities so relative importance of each can be determined

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FROM PRIORITIES TO GOALS

Issues and problems -- negative in nature; questions looking for answers

Key issues and problems can be translated into priorities, reflecting stakeholder desired outcomes

Goals -- positive statements about the future; reflect the achieving of a desirable condition or status

Start the action development process with problems and their causes; convert issues into goals for the written strategic plan

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FROM ORGANIZATIONAL PRIORITIES TO GOALS

• Goals should reflect the organization’s priorities as well as those of community.

• The organization plan should have no more than 6 or 7 goals.

• Goals should be less about maintenance of existing programs and more about setting new directions

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SETTING GOALS AND MEASURABLE OUTCOMES

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"Our plans miscarry because we have no aim. When a man does not know what harbor he is making for, no wind is the right wind." - Seneca (4 B. C. - 65 A. D.)

GOALS A broad statement of a result or condition you

want to achieve; the point of reference from which outcomes are set

Provide a frame of reference in day-to-day decision-making

Are not measurable (this is the purpose of outcomes)

Should not begin with a “verb” (e.g., promote, facilitate, communicate, etc.). Goals are not actions.

Must be stated clearly, concisely, & explicitly

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EXAMPLE: MCEDA Strategic Planning Goals

• Goal 1: The marketing and promotional efforts of MCEDA have successfully resulted in attracting new and diverse business investment and the creation of higher wage employment. This diversity builds on the mix of existing manufacturing operations, and expands the outreach to business and professional firms, office operations, distribution, and defense contractors.

• Goal 2: The educational and training system in Morgan County is continuing to prepare the local workforce for the job skills needed now and into the future.

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GOAL EXAMPLE:

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• Northeast Indiana is perceived by the regional, national, and international business community as a highly competitive location for business investment.

• The Partnership is generating an increasing number of qualified business leads each year as a result of its effective marketing effort and is converting a higher ratio of them into “wins” for the region.

• The Partnership is serving as the lead agency in the implementation of the Vision 2020 initiatives to build the product and capacity of the region for attracting business investment, with a special emphasis on the needs of the identified target clusters and industry sectors.

GOAL & OUTCOME EXAMPLE

Goal: The organization is adequately funded to achieve the implementation of its action plan.

Outcome: Within the next 12 months, the executive director and Board will raise $1 million in public and private sector monies for the organization’s funding over the next five years.

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MOVING FROM IDEAS TO ACTION PLAN

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“Strategies that don’t make use of identified strategic advantages, address key priorities, or resolve major problems aren’t really strategies, just nice ideas.”

What do you thinkwe ought to do?

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DEVELOPING AN ACTION AGENDA

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Strategic Actions: Possible actions that can be taken to address organizational priorities or resolve the causes of organizational problems

BASIS OF CHOICE FOR STRATEGIC ACTIONS

Plan’s goals and priority issues

Creating maximum positive impact for the plan’s programs

Amount & type of resources available

Responds to stakeholder expectations and desired results

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MOVING FROM PRIORITIES TO ACTIONS

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Develop consensus from the leadership on the priority development issues that need to be addressedResearch these issues and possible actions that can be takenDevelop a set of effective actions for each issue/priority

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GOAL, OUTCOME, & ACTION EXAMPLE

Goal: The organization is adequately funded to achieve the implementation of its action plan.

Outcome: Within the next 12 months, the executive director and Board will raise $1 million in public and private sector monies for the organization’s funding over the next five years.

Strategic Action: The Board will appoint a committee to design and implement a one-year fund-raising campaign using local volunteers.

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THE ROLE OF STRATEGY

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Sustained, superior performance is attained by utilizing a combination of effective strategies and excellent execution

StrategyEffective

Long Term SuccessExcellent SuccessUnlikely

FailureMaybe successful For a whilePoor

Ineffective

Execution

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STRATEGIC ACTIONS

Action words to avoid:

Promote Encourage Foster Pursue Enhance Review Continue to use Study Collaborate with Ensure

These words lack accountability

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PERFORMANCE METRICS

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Metrics can serve as road signs, but a strategic plan is the map. IEDC “Making It Count”

FROM OUTCOMES TO PERFORMANCE

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DESIRED OUTCOME PERFORMANCE

What do we need to do?

Measurable Results

• Outcomes should determine the purpose of strategic actions

• Effective performance should be driven by measurement

PERFORMANCE MEASURES –DERIVED FROM STRATEGIC PLAN

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Organization’sMission & Vision

Organization’sGoals

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DesiredOutcomes

PerformanceMeasures

Measurements Should:• Translate customer/stakeholder

expectations into measurable outcomes.

• Evaluate the “quality” of organizational processes.

• Track improvement.

• Focus efforts on customers.

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OUTCOME-BASED PERFORMANCE IN COMMUNITY DEVELOPMENT

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• Establishing measurable (but reasonable) outcomes that lead to the achievement of priority goals

• Setting standards for how you do your work

• Measuring and evaluating the effectiveness of your efforts to reach the goals, and

• Deciding how to change programs to improve effectiveness

PERFORMANCE CRITERIA

• “Traditional” development criteria are specific values that can be easily measured

• Examples:– Number of companies contacted– Completion of a strategic action by designated

date– Number of volunteers trained– Number of responses from an ad– Number of trade shows attended

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PERFORMANCE CRITERIA• Traditional performance measures don’t

necessarily relate to the desired outcomes, such as higher incomes or increased tax revenues

• Relevant performance measures lead to the achieving of desired outcomes; they measure and quantify progress

• Effective performance measures allow policy-makers to determine the success or failure of a program or activity

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PERFORMANCE CRITERIA• Examples of performance measures

leading to desired outcomes:– Percentage of customers/clients that are

satisfied with the product/service– Number of workers graduating from the

training program that received higher-paying jobs

– Awarding of incentives led to desired number of higher-paying jobs

– Business incubator generates a high rate of successful graduates

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MEASUREMENT: KEY TO PERFORMANCE IMPROVEMENT

What gets measured gets done, and what gets recognized gets done best. Maison Haire

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GOAL, OUTCOME, STRATEGY, PERFORMANCE MEASURE

• Goal: New business parks are in various stages of quality development.

• Outcome: A minimum of 200 acres of new business parks in the City are attractively developed over the next 24 months, and offer a variety of high quality options to meet the space needs of new and expanding firms.Strategic Action 1

• The organization will form a “Real Estate Action Team” to guide the organization in the planning and development of new business parks and commercial areas.

– Performance measure: Team organized and chartered with an adopted schedule of meetings

– Performance measure: Three meetings held in Year One resulting in an Action Plan for identifying feasible business park sites.

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OUTCOME BASED PERFORMANCE

• The goal is: an improved communication process is in place for informing the stakeholders about the achievements of the organization and for creating a stronger base of support for the organization’s programs.

• Develop a measurable outcome for this goal.• Develop a strategic action to accomplish the

outcomes• Develop a performance measure for the action.

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EVALUATION• An ongoing process that helps in decision-

making• Should be used to improve projects and

programs, not just measure results• Did we achieve our desired outcomes; if not, why

not?• Are we meeting our

customer’s expectations?

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EVALUATION• Accountability implies evaluation

• Goals define what you want to accomplish

• Outcomes provide measurable results

• Evaluation tells you what you have accomplished

• Activity does not necessarily equal progress

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Without Measuring, Decision-MakersHave No Basis For:

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Knowing what is going on in their organizationEffectively making and supporting decisions

regarding Investments, plans, policies, schedules, and structure

Specifically communicating performance expectations to staff or volunteers

Identifying performance gaps that should be analyzed and eliminated

Providing feedback that compares performance to a standard

Identifying performance that should be rewarded

ASSESSING PERFORMANCE

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• Stakeholders want to know more than just “what” you are doing as an organization

• They want to know “how well” you are doing it:– What is the quality of what you are delivering?– How does the customer/client feel about it?– Are you being efficient and cost-effective?– Is your work timely and accurate?– Does the organization radiate

professionalism?

CHALLENGE OF DEVELOPING PERFORMANCE METRICS

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• Lack of accurate and timely data.• Stakeholders’ misinterpretation of the data & pressure to

show “big wins” to investors.• Inconsistent metrics.• A lack of time and budget resources needed to collect

useful data. • A desire among many EDOs and stakeholders to quantify

everything, when quantitative data alone is insufficient to effectively capture the full range of an EDO’s efforts.

• Lack of a standardized reporting system that makes it difficult to select appropriate metrics.

• The need to devise metrics for emerging programs (e.g., sustainability).

OUTCOME-BASED PERFORMANCE

12 Steps to Achievement:1. Board involvement in crafting the

organization’s mission and setting priorities2. Developing the organization’s strategic plan3. Developing measurable outcomes 4. Determining indicators to accurately measure

outcomes5. Getting buy-in from key stakeholders6. Developing guidelines and surveying

customers/clients

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OUTCOME-BASED PERFORMANCE

12 Steps to Achievement (cont.):7. Gathering additional appropriate information8. Preparing periodic reports9. Documenting impact and change10. Board review of progress11. Adjusting the strategic plan12. Improving organizational performance

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MANAGING FOR RESULTSIf you don’t measure results, you can’t tell success

from failure.If you can’t see success, you can’t reward it.If you can’t reward success, you’re probably

rewarding failure.If you can’t see success, you can’t learn from it.If you can’t recognize failure, you can’t correct it.If you can demonstrate results, you can win public

support.Tom Peters

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CONCLUSION

What will you do different next week in your organization’s management as a result of our session?

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HOW DO YOU CONTACT Team Kolzow?

• Telephone:– 615-972-4801 – Dr. David Kolzow

• E-mail:– drkolzow@bellsouth.net

• Address: Team Kolzow, Inc.505 Leicester Ct.Franklin TN 37067

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