In this article, Peter Nichols describes the role that performance measurement and benchmarking can take in improving municipal organizational effectiveness and efficiency.

Municipalities have historically recorded their financial expenditures for various functions, and tracked as well their staffing levels and facility and equipment assets. Those expenditures, employee figures, and physical assets represent the resources "used" -- or inputs required --to provide services. Over time, the tracking of those "inputs" has been expanded in some municipalities to include "outputs" as well, for example, the number of fire calls responded to, the kilometers of roads resurfaced, and the number of building permits issued. Those kinds of output measures assist a municipality to monitor the demands on its services and they provide indicators of the volumes of services delivered.

It is increasingly apparent, however, that those "input" and "output" measures provide insufficient information to council, to management, and to operational staff for purposes of assessing performance and establishing whether the municipality's goals are being achieved. The measures tell us little about the effectiveness or quality of the services provided, nor do they tell us whether the services are being delivered efficiently, that is, at least cost.

Such information is critical to efforts aimed at on-going organizational improvement. Private and public sector organizations alike are increasingly recognizing the importance of incorporating "outcome" and "efficiency" measures as an integral part of their planning and budgeting processes.

Outcome measures can include, for example, measures of client satisfaction, delivery responsiveness, or effectiveness in meeting program goals (e.g. reduced fire losses and property damage in respect to the fire department). Efficiency measures can include the dollar cost or the number of staff required per unit of output.

In identifying and using performance measures, it can be useful (but is not essential) to be able to compare results with other organizations or municipalities. This is referred to as "external benchmarking". A caveat to municipalities who are considering benchmarkng initiatives, however, is that the data collection efforts and comparability challenges can be daunting!

While external benchmarks can certainly be useful when reviewing the results of a municipality's activities, they are not a prerequisite to the implementation of effective municipal performance measurement systems. It is most important that municipalities track their own results over time and set their own specific targets using performance measures that are of direct relevance to them.

There are of course different levels of performance measures --ranging from high-level, policy-linked measures to very "nuts and bolts", operationally-oriented measures. It is recommended that municipalities move gingerly toward the adoption of performance measures by focusing initially at least on only a few key measures until staff understanding and support is fully secured and to avoid become bogged-down by the data gathering and measurement process.

"Tell me again why a municipality would want to develop and implement a performance measurement program?"
For a number of compelling reasons, but especially the following:

• to improve service and program performance;
• to clarify service objectives and priorities and by focusing efforts;
• to enhance accountability for results and to motivate staff; and,
• to rationalize the allocation and budgeting of resources within the municipality.

The on-going measurement of performance is an important element in the search for innovative or best practices because it provides a reference point for how well services are provided at present. The measurement process itself provides an enhanced understanding of how program and service activities contribute to results.

In the next article, we'll examine a potential process for developing performance measures and show how these must be tied to vision, goals, and objectives.