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June, 2007

Making Scorecards Actionable Newsletter # 27 (2007)

Content of Making Scorecards Actionable Newsletter # 27 (2007)

» Have a nice summer

» New dissertation on Performance measurement in Swedish healthcare

» How would you measure a consultant’s performance?



HAVE A NICE SUMMER

Finally, the summer has arrived in Sweden. In this Newsletter we would like to wish you a pleasant summer by summarizing a new Swedish dissertation on performance management in the health care sector and offer you some food for thought on the issue of measuring success in professional organizations.



NEW DISSERTATION ON PERFORMANCE MEASUREMENT IN SWEDISH HEALTHCARE

Beata Kollberg of Linköping University successfully defended her doctoral thesis on 11 May 2007. Balaced scorecard is one of the techniques she discusses, making frequent references to our Performance drivers and Making scorecards actionable.

Kollberg belongs to the Quality Technology and Management branch of the university’s new Department of Management and Engineering. The book consists of five previously published papers and a 90-page introduction and can be ordered from susanne.pettersson@liu.se (ISBN 978-91-85715-19-0). It builds on careful empirical studies of three hospitals using balanced scorecards and six teams introducing so-called flow models. The latter is a method recommended by Swedish authorities for monitoring lead-times, delays and waiting times in medical care.

Kollberg’s interest focuses on the introduction of new measuring practices as an innovation process, requiring extensive participation and careful guidance from management:

“…At a national level it is important to realise that national consensus of the interpretation of measures and terminology related to the performance measurement system is difficult to achieve, and that local adaptation of the system is necessary for the use of the measurements in the local improvement work. However, discussions and exchange at a national level contribute to create knowledge and to increased understanding of the system and its relation to other projects and concepts in the projects driving the development.

For management at a local level it seems important to create requisites for local adaptation of performance measurement systems by e.g. using existing techniques for visual displays of measurements and letting units develop their own scorecards. However, in order to decrease the risk of developing “islands of measures” without any connection to strategic decisions the local management is suggested to be actively involved in the development work. …” (p. 85)

As will be seen, these recommendations are very similar to conclusions we have made in our work. Maybe we insist stronger on strategy as a departing point, and management’s crucial role, but Kollberg later on also stresses this, advocating management’s participation in project meetings and forums, and how the performance measurement system should be discussed at management meetings. A goal for the development should be formulated and communicated.

Maybe her somewhat subdued discussion of management’s role reflects the healthcare environment, where performance measurement are rarely perceived as so central in leading the organisation as usually in business firms. According to Kollberg experience from clinical work should be represented in development projects and among the people driving the development, in order to achieve legitimacy among professionals. Administrative and social skills are also important, arguing for a group mixing different competence areas.

To the areas for future research advocated by the author, we like to add the role performance measurement systems may play in the overall resource allocation and control of healthcare organisations. Kollberg provides valuable insights from a number of local development projects, viewed as innovation processes, and identifies conditions that seem to make such projects successful. Measurement systems will be an important part of how an organisation views itself: its task, unique abilities and rate of success. How will this type of measures interact with other forms of control and leadership in shaping an organisation’s development? Kollberg discusses briefly (p.70) how “the professional, administrative and political domains’ view on health care” differ in language, interest and focus, and how “[w]hen implementing performance measurement systems in a health care organisation these worlds are confronted and need to be considered in order to make the system work in practice”. In other words: management in a healthcare organisation should reflect carefully on its aims before introducing a new measurement system, and not just consider it as one more tool for operational management!



HOW WOULD YOU MEASURE A CONSULTANT’S PERFORMANCE?

A common question we meet when we work with highly professional organizations is how to measure whether the employees are doing well or not. The trickiest setting is of course consulting organizations (be it management consultants, lawyers, designers, developers), where success can either be evaluated by the size of the individual’s billing, or … something else. But what is this “something else”?

As always when you are rooted in a “contingency approach” to strategy and management control, the way you control and measure an organization’s performance must be derived from that particular organization’s strategy. If the organization is a loose network of highly independent consultants, no immediate synergies are mandated. Instead, the satisfaction among the participants in this federative system is at the forefront. Belonging to a federation, is in itself, a choice of environment where mutual obligations and mandatory hierarchies are not appreciated. Instead, freedom to walk your own way and cooperate with others when you – yourself – find it worthwhile, is regarded valuable attributes of your context. When this is the situation at hand, the individual’s performance should mainly be assessed on whether they are delivering the financial contribution to the system or not. And if they do, no other contributions should be expected (and mandated) of them. If they wish to contribute to the others in the system with knowledge or client assignments, it will of course be appreciated – but if they don’t it should not be regarded as if they are not fulfilling their duties.

If, on the other hand, the organization is designed to distribute different responsibilities among different employees, billing volume is definitely not a good proxy for successful performance. If, for example, the company has decided to allocate client acquisition responsibilities to some consultants and client assignment delivery to others, and finally development of practices and processes to yet another group, these groups’ contribution must be expressed and assessed in different ways. For the client acquisition group, billing may be used to summarize the size of accounts they have created. This, however, only summarizes past performance. In order to capture what they are doing to create the future, some kind of summary of their acquisition activities and the pipeline should be disclosed. When it comes to the delivery team’s performance some kind of client satisfaction assessment and project efficiency measures should be used. The aim and scope of the client assignment has typically been defined by someone else, so the delivery team’s responsibility is to deliver this according to the client’s expectations (client satisfaction) at a reasonable cost (project efficiency). Finally, the performance of the practice developers should be assessed based on the degree to which their methods are used by the delivery teams or not, and how satisfied the consultants in these teams are with the tools and techniques that have been made available to them.

Hence, the process of evaluating knowledge workers’ performance, must be grounded in what kind of strategy the company has chosen. There is no universal performance evaluation system – these systems must be designed to cater the individual organization with information that is relevant to them. Thus, it is impossible to propose a general performance evaluation system, and consequently most generic reporting systems (like the profit-and-loss report) will not tell anything about whether the company is delivering its strategy or not. Therefore, these generic reports must be complemented with specific performance reports that align with the business strategy of the organization.






MAKING SCORECARDS ACTIONABLE NEWSLETTER is a bi-monthly update on our experiences and opinions on how scorecards and strategy maps can be made actionable – to help organisations realise their intended business strategies. The newsletter is compiled and distributed for free by the authors of the book “Making Scorecards Actionable – Balancing Strategy and Control”. Also make sure to check out www.makingscorecardsactionable.com to get up to date information about our seminars, to evaluate your organisation’s BSC skills according to our computerised BSC Analyser and to download presentations from the document archive.
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