Management consultant and regular LGC contributor John Seddon is critical of performance targets and their “dysfunctional” effects. He is right.
My view is that all targets are flawed, but some are useful. People talk about the perverse effects of targets, but in fact they are not perverse at all. They are predictable consequences of a top-down performance management culture that encourages staff to prioritise an inevitably flawed target over service to the public.
It is wrong, however, to dismiss targets out of hand. That they have the potential to make people accountable and achieve change is evident from the perceived urgency for governments to commit to emissions targets to address climate change.
Another example is the NHS. It is not fashionable to be sympathetic to politicians, but in 1997 the new Labour government found that 175,000 people in England -about 1 in 280 of its population - had been waiting more than nine months for admission to hospital.
Ministers were prepared to invest in the NHS, but were aware that simply providing more resources would not by itself change the way people work - and the system definitely needed changing.
Moreover, there was a perverse incentive in the system, as the length of the waiting list was a prime determinant of the demand for private health care.
It is clear that performance targets were instrumental in cutting this figure to 223 people by March 2004 when you consider that waiting times in both Wales and Northern Ireland, which chose not to use targets, stayed high throughout this period.
The benefits - and limitations - of targets can be illustrated using the example of Liverpool Football Club, which recently set itself a target to be in the top four of the Premier League.
Because this is an outcome-based target, leading to entry to the lucrative Champions League, and challenging (Liverpool were not in the top four at the time), it has the potential to motivate players, fans and financiers alike.
But suppose the chairman commissioned research which showed that the top four teams had at least eight corners per game and over 65% possession, and decided to introduce targets for these, too? That’s where the problems would start.
There is evidence that the regulators have learned some of these lessons. The Care Quality Commission allows NHS trusts to submit “extenuating circumstances” that might have affected their ability to meet a target.
The National Audit Office has reduced the number of public service agreement targets, while the Audit
Commission has provided more emphasis on supporting working across organisational boundaries with the introduction of Comprehensive Area Assessments.
But there is still a long way to go. The way forward is for organisations to take ownership of their own performance management within a culture of continuous improvement - not blame.
At the Sheffield Business School we have developed a ‘public sector scorecard’, an outcome-based service improvement and performance management framework for the public and third sectors. This focuses on delivering the outcomes that matter to service users and other stakeholders, including central government, through service improvement.
These include ‘lean’ and systems-based approaches, addressing organisational issues such as low staff motivation, poor partnership working, and resources, along with measuring the achievement of outcomes and evidence-based drivers of those outcomes.
The discussion on performance targets also provides insights on the potential hazards of performance-related pay. If performance-related pay is able to motivate staff to improve performance, then it can have a positive effect for both staff and the organisation.
However, if there is a blame culture, if staff do not perceive the system as fair, if it ignores risk, or if it is not based on the outcomes that matter to users, then ‘performance-related pay’ runs the danger of being more like its anagram … ‘mere end of year claptrap’.
Max Moullin is Director of the Quality and Performance Research Unit at Sheffield Business School and a Fellow of the Chartered Quality Institute and of the Operational Research Society