Benefits have been all the rage in central government for the last few years, and are now starting to reach Councils as portfolio and programme management methods take hold. In most cases, this is still confined to isolated business cases and programme planning. However, there is significant scope for using benefits thinking more widely, given the uniquely portfolio-based approach that our activities are already structured in, thanks to the LTP.
In particular, there is a real opportunity to incorporate benefits into a key element of our existing planning processes – the ever-popular performance framework, complete with KPIs.
A common complaint with these framework is around the ‘line of sight’ – the link from aspirational-level community outcome, through to the daily operations used to form KPIs (picking up stray dogs, processing consents, fixing potholes etc.) Worse, that link is often missing for our frontline staff – impacting performance, organisational culture and strategic alignment across the organisation.
What are benefits?
Benefits are, simply put, the positive changes created by organisational activities. The good stuff that happens as a result of us getting out of bed and coming to work.
In order to be considered a benefit, a change must meet the following four attributes:
- Someone benefits
- There is a positive gain
- We can attribute the change to something we did
- We can observe/prove the change.
Why do they matter?
To demonstrate a return
Council activities don’t always fare well by traditional “return on investment” metrics. (Also the reason there aren’t many private providers of pools, libraries and parks… they don’t make any money.)
However, we know that we do offer a return to the community, government and other funders for their investment – this return is social, environmental and economic, as well as financial. And just because the return seems less tangible, doesn’t mean we shouldn’t be measuring what we do achieve to assess whether we are delivering value for money. In fact, I would argue that we have a duty to demonstrate this return to our ratepayers and funders for their collective investment by way of rates, user charges, subsidies and other contributions. Benefits are a highly effective proxy for demonstrating this return
To focus on outcomes
One of the main criticisms of traditional Council performance frameworks is that they start with outcomes… but inevitably end up measuring inputs. While we can usually articulate the outcome we are hoping to deliver (safer buildings, connected communities, better quality of life), this thinking gets lost once we get to performance measures. Benefits provide a golden thread throughout the framework that require an outcome-focused measurement to match. If your KPI doesn’t measure your impact, it’s extremely difficult to tell a value story to your community, funders and Councillors.
To get better bang for our attention buck
Requiring Council activities to align with our overall vision and objectives means we inevitably focus our attention on the activities that offer the greatest contribution to Council’s objectives. From a performance measurement perspective, it means we achieve better value from our time investment, minimising the tendency to simply ‘measure what moves.’
Because government might give us more money
Identifying and monitoring benefits to understand performance is considered best-practice, with both NZ Treasury and the MBIE recommending a benefits-led approach to investment decisions. In an environment where Councils do not currently receive a share of the tax take and Councils remain subject to the generosity of central government funders, talking the same language and playing by the ‘rules of the game’ is a real asset when competing for scarce funding.
(Business cases are also critical here, and will be especially important for Councils hoping to get their hands on some of the Shane Jones fund. For more info, check out this handy summary on why Councils need business cases.)
Benefits Management in Practice
The number one application of benefits is to understand performance – at an organisation, programme, project or initiative level, the question is the same: did we achieve the positive change that we were seeking?
I was lucky enough to recently put benefits-led performance management into practice, working with one of my favourite Council clients. The brief was to redevelop the organisation’s performance management framework for FY19 and LTP18 – external, internal and business planning measures. Our initial objectives were fairly standard – simplify KPIs, reduce bulk, make reporting less onerous for staff and more interesting for Councillors.
Ultimately, we achieved all of those things and more, by applying some key principles:
- The performance management framework should be benefits-led – which requires an outcome-focused, community-oriented understanding of Council activities. We need to be able to articulate the benefit being delivered by our activities and ensure the metrics we track are an accurate demonstration of whether the benefit is being delivered.
- Reporting should be by exception – rather than a large volume of things tracking nicely, progress should only be reported to Council when there was a discrepancy (positive or negative). The tolerance for discrepancy is set at a group level and depends largely on manager discretion – enhancing the trust and agency in performance reporting.
- Measurement should be meaningful – if the measurement does not genuinely correlate to the benefit being delivered, we shouldn’t measure it (the obvious exception here being statutory measures.) This meant thinking outside the square a little and scrapping some ‘common sense’ measures that bore little relation to community impact.
- Continuous improvement – we won’t get it perfect first time, but we will keep getting better. All performance reporting now includes a follow-up for corrective actions promised in the previous round.
This project was a great success, using a collaborative workshop process to understand the current state of the organisation, and build organisational capability. By mapping the benefits that each Council activity delivered, we were able to have some robust conversations that led to:
- A sleek, fully aligned performance management framework that links community outcomes and strategic objectives through to levels of service and KPIs. Benefits provided the golden thread and created an accessible, genuine language that resonated with elected members and staff.
- A dramatically reduced reporting framework based on the information that Councillors find meaningful.
- A meaningful reference point for elected members, officers and the community to understand the value or return being generated by Council activities.