Welcome to the fmi igf WebinarThursday, November 8, 2012

1:00 PM EST

Performance Alignment: Linking Resource Management to Organizational Goals

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Webinar will be archived under www.fmi.ca

Speaker:

Mike HaleyLandmark – Intersol

Moderator:

Marcel BoulianneTreasury Board of Canada Secretariat

Performance Alignment: Linking Resource Management to

Organizational Goals

Presenter:

Mike Haley, Landmark–Intersol & Board Member FMI Halifax

Speaker Bio – Mike Haley

Since the early 90’s, Mike has worked with clients worldwide in the training, technology transfer and general application of performance and cost management concepts to the telecommunication, manufacturing, pharmaceutical, food processing, distribution, government and financial service industries. Public sector clients include a wide variety of Federal, Provincial/State and Municipal Governments such as Fisheries & Oceans Canada, the Public Health Agency of Canada, Health Canada, Transport Canada, Ontario Ministry of Finance, City of Charleston, the US Navy and various departments in the New Zealand Government.

Mike sits on the Board of PPX, the Performance & Planning Exchange, a Canadian non-profit centre of excellence for learning, sharing and developing expertise in performance and planning across the public sector. He has a M.Sc. from Dalhousie University and lives in Halifax, NS where he also serves on the board of the local FMI chapter.

Mike Haley leads the Performance Alignment practice at Landmark-Intersol, a strategic partnership between Landmark Decisions Inc. of Halifax and The Intersol Group Ltd. of Ottawa. The firms' focus is a methodology that brings sound concepts for integrated business management together with enterprise-class performance and cost modeling technologies all built on strong fundamentals of disciplined data management. In doing so, Landmark-Intersol help’s clients understand both their current performance environment and a means to develop a blueprint for enhanced organizational performance.

From Performance Measurement to Performance Alignment

…the adoption of practices and tools by _which an organization establishes __strategic and operational plans and then ___executes and adjusts these plans using ____performance measurement data.

Management

...the use of performance management techniques __for coordinating the activities and resources ___necessary to ensure all aspects of business ____management (i.e. planning, risk management _____and project management) are integrated.Alignment

…the definition & collection of data _used by organizations to track __progress against stated goals, ___objectives and intended results.

Measurement

OrganizationalPerformance

Maturity

• Senior Management & Employee Engagement

• Involvement in Development Process

• Clearly Defined Expectations

• Improved Change Capacity

• Enhanced Decision Making Capacity

• Results Against Expectations

• Resource Requirements (i.e. Value for Money or “Efficiency & Economy”)

• Support for Strategic Reviews

• Reduced Time & Effort on Planning, Reporting & Evaluation

• Departmental Reporting – RPP/DPR, PMF, Horizontal Initiatives

• Consistent Approach Across Department (“Economies of Scale”)

• Evaluations (“Built In” by design)

• Improved Compliance with Central Agency Requirements

• TBS Policies & Directives

• MAF Ratings & Action Plans

• OAG Findings / Recommendations / Action Plans

Why is Performance Alignment important?

Drives an Organizational Performance Culture Shift!

Driving Forces for Improved Resource Management in GOC

Revisions to the Management Resources & Results Structure (MRRS)• Introduction of Efficiency Indicators for lowest level programs in the PAA

• Development of standardized performance indicators for Internal Services

• New Results Management Component (RMC) System (~ technology enablement)

Continued Management Accountability Framework (MAF) Enhancements• Proposal for new “Integrated Management for Results” AoM

• Focus on use of MRRS information for decision making (~ technology enablement)

Standing Committee on Government Operations & Estimate (OGGO)) – Strengthening Parliamentary Scrutiny of Estimates and Supply (June ‘12)

• Move from O&M, Capital & G&C Votes to Program Based Appropriations

• Proposal to table Estimates and Report on Plans & Priorities on the same day

• RPP to contain 3 years of history, 3 years of forecast and variance analysis

• Development of a searchable online database (~ technology enablement)

Source: TBS Policy on Evaluation (2009)

Recent GoC Definitions on Linking Outcomes & Resources

Economy: minimizing the use of resources. Economy is achieved when the

cost of resources used approximates the minimum amount of resources needed to

achieve expected outcomes.

Efficiency: the extent to which resources are used such that a greater level

of output is produced with the same level of input or, a lower level of input is used

to produce the same level of output. The level of input and output could be

increases or decreases in quantity, quality, or both.

Effectiveness: the extent to which a program is achieving expected

outcomes.

Performance: the extent to which effectiveness, efficiency and economy are

achieved by a program

Core Issue #5: Demonstration of Efficiency and Economy

Assessment of resource utilization in relation to the production of outputs and progress toward expected outcomes

Directive on the Evaluation Function (April 2009)

EfficiencyTime, Quantity, Quality, Throughput,

Resource Utilization

EffectivenessSatisfaction, Reach, Benefits, Impacts,

Achieving Expectations & Targets

Costing Indicators that explain how costs are consumed in the organization.

RESOURCES

Process Efficiency & Cost

OUTPUTS

The Logic ModelVisualizing the Linkages between Resources & Outcomes

FinalOutcomes

EXTERNAL FACTORS

Output and Client Group Costs

CLIENTSDirect

Outcomes

Resource Utilization & Cost Efficiency

ACTIVITIES

EconomyBudget Variance,

Resource Capacity

Performance Indicators that populate the indicators of all dimensions of a measurement framework

Cause(Outputs)

Effect(Outcomes)

Line of Sight

The Logic Model as a Performance PlanA Foundation for Performance Alignment and Resource Management

Departmental,Business, or

Program Plan

StrategicOutcome

StrategicOutcome

Performance Plan(Logic model)

IntermediateOutcome

IntermediateOutcome

IntermediateOutcome

ImmediateOutcome

ImmediateOutcome

ImmediateOutcome

Output

Output

Output

Accountability Planning

(Business Structure)

Regions

Directorates

Cross FunctionalTeams

Branches

UnitsDepartmentalBusiness or

Program Structure

PerformanceIndicators

PerformanceIndicators

PerformanceIndicators

PerformanceIndicators

PerformanceIndicators

PerformanceIndicators

PerformanceIndicators

PerformanceIndicators

PerformanceIndicators

PerformanceIndicators

PerformanceIndicators

Aligning Project Management Practices

DepartmentalBusiness or

Program Plan

StrategicOutcome

StrategicOutcome

Performance Plan (Logic Model)

IntermediateOutcome

IntermediateOutcome

IntermediateOutcome

ImmediateOutcome

ImmediateOutcome

ImmediateOutcome

Output

Output

Output

Project ScopeIndicators

Strategic Projects

Operational Projects

Project RiskIndicators

Project ScheduleIndicators

Project ResourceIndicators

Project Management

Process

Establish ProjectResources

Define ProjectScope

Assess ProjectRisks

Develop Project Schedule

Aligning Risk Management Practices

OrganizationalBusiness or

Program Plan

StrategicOutcome

StrategicOutcome

Performance Plan (Logic Model)

IntermediateOutcome

IntermediateOutcome

IntermediateOutcome

ImmediateOutcome

ImmediateOutcome

ImmediateOutcome

Output

Output

Output

Risk ManagementProcess

IdentifyRisk Factors

Risk FactorIndicators

DevelopRisk Mitigation

Strategy

Risk Mitigation Indicators

Assess & Prioritize Risk

Risk Assessment Indicators

Strategic Risks

Operational Risks

Aligning Resources with Business Management Practices

Resource Management

Financial Management

Financial Indicators

Workforce Management

Workforce/HR Indicators

Asset Management

Asset Indicators

DepartmentalBusiness or

Program Plan

StrategicOutcome

StrategicOutcome

Plan Management Process

IntermediateOutcome

IntermediateOutcome

IntermediateOutcome

ImmediateOutcome

ImmediateOutcome

ImmediateOutcome

Output

Output

Output

Establish ProjectResources

Project Management Process

Define ProjectScope

Assess ProjectRisks

Develop Project Schedule

Risk Management Process

What’s missing?

Activities!

“ Questions can only be answered by analyzing the activities that are needed to attain objectives.” 1954 !

Insightful References on Resource Management ….

Doing Things Right - Operational Changes•Reduced Costs•Improved Efficiencies•Resource Capacity Planning•Resource Constraint Management

Doing the Right Things – Strategic Changes• Program / Services Rationalization• Business Process Design• Impact on Outcomes• Shared Service Opportunities• “Value for Money”

1998

GoC’s 7 Step Approach to Costing

6. Calculate & Validate Results

1. Define the Purpose of the Costing Exercise (scope)

7. Sign off

4. Define Cost Classifications (direct vs. indirect)

3. Establish the Cost Base (costs to be included)

2. Determine the Cost Objects (end result)

5. Select Cost Assignment Methodology

Source: TBS-OCG Guide to Costing (2008)

Output Costing Model

Visualizing, Calculating and Validating Economy & Efficiency

Ope

ratio

nal C

aus

e

Activities“What we do”

Outputs“What we supply & service”

Resources“What we pay for”

Service 1 Service 2

Visits Calls

Site Visit Support CallMonthly Update

Reports

Capacity

Labour Hrs Eq. Hrs

Capacity CapacityFieldPersonnel

Equipment CorporatePersonnel

Labour Hrs

Capacity = 4000Actual = 3800Building

SqFt

Throughput = Labour Hrs / Visit

Utilization = 95%

Fin

anc

ial E

ffect

Program Cost or “Cost to Serve”

Cost = $$$

$$$ $$$ $$$

Benefits of Output Costing Models

OutputCostingModels

OPERATIONS MANAGEMENTResource Allocations/SchedulingCapacity PlanningAlternative Program Delivery

FINANCIAL MANAGEMENT Planning & BudgetingTransfer PricingEfficiency Indicators & “Value for Money”

CLIENT MANAGEMENT Service StandardsUser Fee Pricing StrategiesCost to Serve

STRATEGIC MANAGEMENT Program RationalizationBusiness ScenariosShared Services

Limited resources dictate performance achievement & often establish future funding

Resources

DepartmentalBusiness or Program Plan

StrategicOutcome

StrategicOutcome

PerformanceIndicators

PerformanceIndicators

PerformanceIndicators

PerformanceIndicators

PerformanceIndicators

PerformanceIndicators

PerformanceIndicators

PerformanceIndicators Performance

IndicatorsPerformance Planning

(Logic model)

IntermediateOutcome

IntermediateOutcome

IntermediateOutcome

ImmediateOutcome

ImmediateOutcome

ImmediateOutcome Output

$$$Capacity

Activities

Output

Output

PerformanceIndicators

PerformanceIndicators

Output Costing Model

Linking Resources, Outcomes and TargetsAvoiding a Negative Performance Feedback Loop

Organizational goals & targets should drive resourcing requirements

but…

Technology as a Performance Alignment “Enabler”

Performance Information Enablement

Performance Understanding

Maturity

Aligned & AdaptiveA “Performance Culture”

Desired Path

Best Practice:Phased Approach

Education &Facilitation

IM/IT Software and/or Infrastructure Investment Adapted from

“The Performance Management Revolution”, Dresner, H. (2007)

Reactive but Apprehensive

Compliant but Lethargic

Evasive & Apathetic

Technology for Output Costing Models

Resources$$$

Capacity

Activities

Output

Output

PerformanceIndicators

PerformanceIndicators

Operations Process Model

Value of Performance Technology Solutions

• Paper based studies/exercises are dated the moment they are

printed and are too easily “forgotten”• Drives discussions & consensus on performance definitions &

terminology. Forces the standardization of meta-data and data

collection strategies• Makes performance “Real & Engaging” for all levels of personnel

by putting planning & reporting into the hands on “the masses”

(particularly the more technology minded employees)

Advice: Embrace Performance Technology!

Don’t wait until the end of the content

development process to think about using or

implementing performance software.

Contact InformationMike Haley | Performance Alignment Practice Lead

Landmark-Intersol | mhaley@landmark.ca+1.613.230.6424 x221 (o) | +1.902.499.5425 (c)

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Next Webinar:

THURSDAY NOVEMBER 28, 2012 at 1:30 EST (FRENCH LANGUAGE PRESENTATION)

Presenter: Daniel McMahon FCPA, FCA, President & Chief Executive Officer, Chartered Professional Accountants of Quebec

Topic: Mr. McMahon will describe the process that lead to the unification of the three accounting bodies (CA,CMA, CGA) in Quebec. He will also provide an update on the unification discussions in the rest of Canada.

Next English Webinar

WEDNESDAY DEC. 12, 2012 at 1:00 EST

Presenter: David McGuinty Member of Parliament

Topic: How parliamentarians use and view financial information provided to them by government financial communities.

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