Management Information Framework

Performance Indicators

A users’ guide

Preface

This is a short factual guide to Performance Indicators. It suggests what to do before selecting indicators and explains the meaning of commonly-used terms.

The document was produced as part of the roll-out of the Management Information Framework (MIF) by a group working under the general guidance of the MIF Technical Issues group.

The design and implementation of the Management Information Framework is a key component of the Strategic Management Initiative (SMI) process.

The challenge at the heart of SMI is to establish a clear link between our day-to-day work as Civil Servants and the impact of our work on society. Performance Indicators are the means by which those links can be made. They can tell us what we are contributing as individuals and groups, what benefits we are getting from the resources we use and if those benefits are actually contributing to Ireland’s social and economic progress.

This present document will be followed by a more comprehensive text to be issued through the MIF Consultative Committee in Autumn 2001. It is the group’s wish to make that document as relevant and meaningful as possible. To that end, a working draft on which comments would be welcome has been circulated to Departments. It is envisaged that the final version will include practical working examples.

Introduction

Performance indicators are being increasingly used in the Civil Service, notably in the Performance Management and Development System (PMDS), the National Development Plan (NDP), the Programme for Prosperity and Fairness (PPF), the Quality Customer Service Initiative, Strategy Statements, business plans, annual reports, expenditure reviews and administrative budgets.

This short introductory guide is part of the rollout of the Management Information Framework (MIF). Its focus is on good practice in selection and on the characteristics of good indicators. It can be used, for example, for PMDS purposes (individual indicators) as well as for the MIF (organisational indicators).

This guide is aimed not only at those using indicators for the MIF, but at other users of indicators too.

Why use performance indicators?

The nature of the information needed to run the public service is changing.

Managers need more precise information about how efficiently and effectively they use resources.
Government needs to know if what is being delivered is having the desired impact.
The emphasis on quality service delivery, openness and accountability means that external reporting obligations are also changing.

We are operating in a results orientated environment

Performance indicators are a means to an end. They are a key component of the reporting structures to meet governance, accountability and management requirements. The ultimate end is achieving Government’s policy objectives (outcomes) through the delivery of efficiently and economically produced public services (outputs). Indicators help to measure how efficiently Departments provide their services and how those services are impacting on society. This information helps broaden the basis for decision-making and assists management and outside observers reach sound conclusions about performance.

What to do before selecting indicators?

Specify your objectives
What do you want to achieve?

Set your targets

Have you identified a target for each objective?

Identify the required outputs

What goods, service or condition do you need to produce or provide to meet your objective?

What outcome is to be achieved?

What is the desired impact on society?

Consult the intended users

Are users satisfied with the relevance of the information? Remember, users needs will vary.

Consult with others selecting indicators

If an activity or output is part of a chain, check with those selecting indicators for related areas, to ensure that the indicators are consistent.

Is the required information available?

Check that the information required to provide the indicator is available.

Do the benefits of the information outweigh the costs of collection?

Collecting data can be difficult, time-consuming and resource-intensive so time should be given to considering data collection costs and requirements.

The Characteristics of Good Indicators

Appropriate, Accurate, Comprehensive, Consistent, Manageable, Relevant, Timely, Verifiable, and Valid

Appropriateness - the user should be able to relate the information to the activity, output or outcome being reported. This helps the user form a view on results obtained.

Accuracy - data must be as error-free as possible. Where necessary, the level of confidence in the information should be clarified or the degree of error specified.

Comprehensiveness - all aspects of performance should be captured by the data. This may require a number of indicators, at both a quantitative and qualitative level

Consistency – indicators help users to compare performance over time. Achieve a balance between consistency and continuously improving indicators. There should be internal consistency in that where indicators are grouped, they should not deliver mixed messages on performance.

Manageability – cost effective collection of data, integrated within reporting structures, with results delivered in an understandable format. Responsibility for collecting, checking and processing the raw data should be established. Management should play an active role in ensuring data quality.

Relevance - indicators must provide information that the user actually wants. Advance consultation helps to ensure that the information provided is understandable and concise.

Timely – use the most recent data available and ensure that the data is available very soon after the period to which it relates. Ensure that the data is updated regularly and frequently.

Verifiable - stakeholders may need to be satisfied as to accuracy, objectivity and lack of bias. The results from a performance report should correspond to that from an independent examination.

Validity - indicators should cover actual performance. If it is necessary to focus on an intermediate outcome instead of a final outcome, that should be made clear.

Types of Performance Indicators

Strategic indicators - are we doing what needs to be done? These are high-level indicators about performance on policy objectives. They are usually few in number.

Effectiveness indicators - are we doing what we set out to do? They relate inputs and outputs to outcomes. They are used for external reports and for high-level internal management reports, including qualitative and quantitative data.

Quality measures - to what extent are the expectations of customers and stakeholders being met? They include among other things measures of reliability, accuracy, and courtesy.

Efficiency indicators - how efficiently do we use resources to produce our outputs? These indicators are mainly for internal use, to help guide resource allocation decisions by managers. They are predominantly quantitative, with a heavy emphasis on financial data, productivity and timeliness.

Activity indicators - how busy are we? These indicators provide information about throughput across a desk or management reports. They can be used also to compare workloads between similar offices or units.

Some indicators (derived indicators), built up from elementary data, are added together to produce a compound indicator. The use of several indicators may be required for a balanced view.

Financial data features prominently in performance reports.

Good reporting is about giving the right information to the right people at the right time.

Appendix

Definitions of terms used in Performance Reporting

The following are short definitions of some terms which users of performance indicators may encounter. Broader definitions of a fuller set of terms are in “Central Guidance: Performance Indicators and Measures” issued through the Technical Issues Subgroup.

Accrual accounts

These present financial results in terms of when revenue is earned and costs incurred as distinct from when cash actually changes hands. Revenues are matched with costs in the same period. The capital spend reported is the depreciation of the assets used in generating the outputs.

Cost allocation

This process attributes to each output, programme or project the full cost of all the resources consumed in producing it.

Economy

Economy indicators are about the cost of acquiring inputs.

Effectiveness

Effectiveness indicators relate inputs and outputs to outcomes. Are the outputs produced actually having the desired impact?

Efficiency

Efficiency indicators are about how inputs are used to produce outputs.

Input

Inputs are the resources used by the public sector to generate its outputs.

Key performance indicators (KPIs)

KPIs link to strategic goals. They are used in external reports, e.g. strategy statements. They could also feature in management reports.

Objectives

Objectives are targets for realising goals. They are SMART (specific, measurable, ambitious/attainable, results-oriented and time-bound).

Output

Outputs are the goods and services produced by the public sector in order to bring about the outcomes desired by government.

Outcome

Outcomes are the ultimate effects that the government wants to achieve through its policies.

Resource accounts

These combine an accruals-based account of all resources obtained and used with a system for reporting performance against stated objectives.

Strategic goals

Strategic goals are broad statements of an organisation’s intent. They focus on outcomes.

Value for money

Value for money appraisals trace the cost of acquiring inputs through to outcomes, combining economy, efficiency and effectiveness concerns.

Issued by the Technical Issues Subgroup – 2001. See also Central Guidance: Performance Indicators and Measures” available from the MIF Section, Department of Finance or elsewhere on this site.

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