ITEM EX9

EXECUTIVE - 22 JANUARY 2002

PERFORMANCE MANAGEMENT

Report by Director for Strategy

1. Performance management has several definitions, so for the avoidance of doubt, in this paper the term ‘performance management’ refers to:

• processes for setting organisational goals, priorities and targets
• the arrangements for managing and monitoring to ensure that targets are achieved
• the ways in which we monitor employee performance.

2. The purpose of these processes is to ensure the Executive and managers have the information they need to work together to determine strategic objectives and priorities and then track progress against key targets.
3. The need to tighten performance management is one of the issues identified as an area for improvement in ‘Raising Our Performance’. This view is reinforced by the IDeA Peer Review Team (see report elsewhere on the agenda).
4. Addressing these issues is particularly important as the recently published Local Government White Paper announced plans for the grading of authorities based on their performance against various indicators. Those authorities adjudged to be ‘coasting’ will be required to agree an Improvement Action Plan against which their performance will be monitored and will therefore be subjected to more inspection and intervention, whilst also being excluded from greater freedoms. ‘Failing’ Council’s will face even greater intervention including the possibility of services being run by other authorities.
5. The Executive, at its meeting on 6 November, asked officers to develop proposals for strengthening the performance management approach. This paper provides a comprehensive plan for improving performance management at all levels within the organisation.
6. This paper recognises that performance management is most effective where managers are supported and guided to deliver continuous improvement for their services. Ensuring that all managers have this focus will be a major challenge for the organisation in the next year. However the immediate need is to create a clear framework within which managers are required to operate.

Current Position

7. The County Council Management Team (CCMT) adopted a performance management framework in 1997. However the framework has not been widely recognised by managers and in consequence its principles are not being applied consistently in all parts of the organisation. In particular there is room for more rigour in the setting of targets, the monitoring of performance against those targets and action to address deficiencies.
8. The Best Value review process has been commended by the District Auditor, but within the organisation it is regarded as bureaucratic and time consuming. The review programme needs to focus on work to support the Council’s strategic objectives and areas of concern identified by service users and/or performance comparisons with other counties.
9. In order to improve performance management the Council will need to address:

• Performance Management processes and
• Managerial culture

10. Performance Management Framework – A new framework has been developed (Annex 1) having regard to that used by Suffolk County Council, which was identified as ‘Council of the Year’ in 2001. In essence the framework requires:

• Clear priorities and SMART (specific, measurable, achievable, realistic and time bound) targets to be set at all levels in the organisation.
• Implementation planning and regular monitoring of progress against targets.
• A review programme which supports the key objectives of the organisation.
• Leadership from members and managers to ensure that the commitment to performance management is continuously emphasised and integrated into day to day management practice.

11. Target Setting – The County Council needs to set a manageable number of priority targets that relate to its strategic objectives and performance against these should be monitored by the Executive. A list based on the Council’s strategic objectives coupled with improvement targets from 10-20 of the key statutory Best Value Performance Indicators (BVPIs), is recommended. These should be monitored by the Executive at quarterly intervals. In due course PSA targets will need to be added. It should be borne in mind that this ‘top level’ performance monitoring will only cover a small, albeit important, part of the Council’s activities. Similar disciplines need to be applied at all levels of management and it is the responsibility of the Chief Executive and Directors to ensure this happens effectively.
12. Financial Management – Members already receive regular reports on financial performance, which identify potential over and under-spending. The information base will significantly improve with the implementation of the new SAP management information system (MIS) from October 2002. However more specific action is also required as the ‘Care Consult’ report on financial management in Social Services reveals. In line with the Peer Review recommendations there is a need to re-examine the devolved financial management arrangements. A review of out-posting arrangements is being initiated with a view to tightening financial management and improving the effectiveness of cost centre management.
13. Employee Management – Ensuring that employees work at the optimum level is critical to effective performance management. Carrying out annual appraisals and setting challenging performance targets is an important part of this role. The new MIS system will provide quality information about the workforce and this will help managers to manage employee issues more effectively. However all managers should be committed to improving the motivation of employees, ensuring that everyone has an effective appraisal and is set demanding but achievable targets, which relate to the Council’s priorities. CCMT will be addressing these issues.

Best Value

14. Currently we have a statutory obligation to review all of the Council’s activities over a five year cycle and the requirements of the review process are heavily regulated. In consequence the process has become inflexible and rather bureaucratic. However there are indications that the government intends to reduce the Best Value requirements to provide more flexibility. Proposals from Government are expected in the next few months. In the meantime the Audit Commission is encouraging us to be bolder in linking Best Value Reviews to priority objectives. In anticipation of changes in the Government’s requirements, a number of modifications are suggested:

• Review Programme – In the current year we have already reduced the number of formal reviews. This has freed up time to assist with other projects e.g. the new requirements for a Public Service Agreement (PSA). Furthermore it is anticipated that at the end of the year the Best Value Committee may want to commission further work to help managers implement recommendations made in last year’s reviews. For the year ahead it is suggested that the number of new reviews initiated should be limited so that resources can be concentrated on the key issues. A list of proposed reviews is attached at Annex 2, but it is anticipated that the Best Value Committee may be invited by the Executive to commission additional reviews as new needs arise. The Best Value Committee have asked for at least one of these reviews to be led by someone independent of the service under review and arrangements will be agreed with the Committee. In addition three co-opted members are being appointed to the Best Value Committee to bring a ‘critical friend’ view to these processes.

• Efficiency reviews – As part of the Council’s budget strategy there is a commitment to secure 2% productivity improvements that are either cash releasing, service enhancing or performance improving. It is suggested that each Director should ensure that his/her budget is reviewed and productivity improvements agreed with the Executive by the Summer 2002. These reviews will need to identify opportunities for funding any sums top-sliced from the budget to provide investment in ICT and/or other priorities. These efficiency reviews are also an opportunity to clarify the activities which must be given priority and those which can be discontinued or maintained with minimum effort. Where the Executive is not satisfied with the outcomes from reviews carried out within Directorates, consultants and/or staff from the Strategy and Business Support Directorates may need to be engaged to carry out an independent review. However, this should only be done in exceptional circumstances.

• Review Process

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  The review process will be streamlined by conducting some reviews over a short timescale. This will involve managers, review officers and other participants setting aside a block of time to devote to the study. This may be easier to programme, may result in less time committed overall and should result in changes being implemented more swiftly. A project plan including resource allocation should be agreed before the review is started. Best practice in project management will be applied in every review.

15. The performance management framework and an independent review process will create firm foundations from which to develop sound performance management. However it is important to recognise that the success of the County Council relies on managers accepting that managing performance is the most important thing they do and has a direct impact on service standards. To achieve this change in culture will take time and will require CCMT to:

• take responsibility for creating the right environment,
• lead by example,
• challenge service managers to tackle the priorities and to reduce effort on other areas of responsibility,
• delegate and monitor more,
• empower staff to try new approaches and take sensible risks,
• use partnership working to add value,
• ensure appraisals are carried out and done well in all services,
• address incidents of poor management .

16. The Executive will no doubt wish to keep the County Council’s overall performance under review. More specifically the Executive can give a lead on performance management by monitoring results against its key targets and supporting managers when difficult decisions are required to address performance deficiencies.

Conclusions

17. Improving performance is one of the most important changes the Council needs to deliver over the medium term. It is a complex area, which will overlap with the e-government agenda, and other aspects of the change agenda set out in ‘Raising Our Performance’.
18. This is not a high profile issue for the community, but it is fundamental to the success of the County Council. To sustain this programme it will be necessary for members of the Executive, the Chief Executive and Directors to work collaboratively together and to communicate the importance of this initiative regularly to all managers.

RECOMMENDATIONS

19. The Executive is RECOMMENDED to:-

1. approve the Performance Management Framework set out in Annex 1 to the report and invite the County Council Management Team to ensure that all managers are briefed on their roles in this regard and kept up to date with information about expectations and progress to improve performance management;
2. approve the Review Programme set out in Annex 2 subject to the views of the Best Value Committee, and invite Directors to carry out efficiency reviews (as proposed in paragraph 14) and report to the Executive therein by the Summer 2002;
3. ask the Director for Business Support to report to the Executive on arrangements for restructuring and refreshing cost centre management, ensuring effective use of the new Management Information System (MIS) system and for tightening financial monitoring and control;
4. approve the inclusion of the above actions in the ‘Raising Our Performance’ Action Plan.

STEPHEN CAPALDI
Director for Strategy

Background papers: Nil

Contact Officer: Stephen Capaldi, Tel: Oxford 815466

4 January 2002