Public Services Productivity Panel
PSP 5
17 May 2000
REFOCUSING PERFORMANCE MANAGEMENT: A BP AMOCO PILOT IN THE DEPARTMENT OF TRADE AND INDUSTRY
The findings of a practical study of how to develop a robust performance management system in a complex public sector organisation is the latest report published by the Public Services Productivity Panel. The Panel has been established to identify ways to help the Government improve productivity and efficiency across the public sector, and is chaired by the Chief Secretary to the Treasury, Andrew Smith. In this report, Panel member Byron Grote of BP Amoco has worked with management and staff of the Energy Group of the DTI to refine their systems, drawing on those in place in leading private sector organisations.
The report's description of the work, and practical lessons on how to improve the performance management systems which underpin organisational performance, will be of use to managers in all parts of the public sector.
Byron Grote said:
?This collaboration between the Energy Group of the DTI and BP Amoco has demonstrated that there are definite similarities between the private and public sectors in the area of performance management. A key success factor was that the work built on existing processes rather than starting from scratch. I believe that the lessons from the DTI will be useful to many other public sector organisations.?
The Chief Secretary to the Treasury and Chair of the Panel, Andrew Smith commented:
?The Productivity Panel studies continue to provide practical ideas and new approaches for public sector managers. I am very grateful to Byron Grote for producing this report, which has described how a complex policy-making part of government can improve the rigour of its performance management systems through more focussed objective setting and more robust performance review processes. The practical description of how to tackle difficult issues will be extremely valuable to all public services which aspire to improve their ability to meet the growing expectations of customers and citizens.?
The Secretary of State for Trade and Industry, Stephen Byers, responded:
?The work by Byron Grote within the Energy Division of the DTI has provided an excellent framework for use throughout the DTI, and will enable Ministers and senior managers to set aspirational targets, turn those into measurable objectives and targets, review progress clearly, and reward those who succeed. The framework will be vital to a modern DTI which is in turn vital to increased competitiveness and higher levels of sustainable growth in the national economy.?
Key conclusions of the report are:
- The performance management system developed within the Energy Group is transferable to the wider public sector;
- Success in developing systems is significantly enhanced if work builds on existing processes rather than being seen as a completely new initiative.
The refined system has some particular advantages:
- The emphasis on a team approach, within which individual accountability for achievement of objectives is assigned;
- Welcome attention to celebrating success, something which is all too often forgotten in public and private sector organisations;
- An opportunity to discuss and agree actions to deal with risks and uncertainties;
- Staff can hear and discuss, in a regular and structured way, how their work fits in the wider context.
The report's key recommendations include:
- Leaders should communicate relentlessly the high level aspiration of the organisation to all staff;
- All objectives and targets should be transparently linked to the high aspiration of the organisation;
- An individual should be assigned accountability for delivery of each objective and for reviewing progress to achievement;
- Face-to-face performance reviews involving three staff layers in the organisation should be introduced;
- Those exhibiting the correct performance behaviours should be appropriately rewarded.
- Senior management of the DTI will now adopt more widely the techniques developed in the Energy Group.
NOTES TO EDITORS
The Government's intention to form the Public Services Productivity Panel was announced in the Pre-Budget Report on 7 November 1998. Further details were announced on 8 August 1999. The Panel is chaired by the Chief Secretary. Its terms of reference are "to advise the Government on ways of improving the productivity and efficiency of Government Departments and public sector bodies". The panel reports to the Cabinet Committee (PSX), chaired by the Chancellor.
Byron Grote is Executive Vice President of BP Amoco and Vice Chairman of the Productivity Panel. Other outside members of the Panel include John Makinson, Group Finance Director of Pearson plc, Dame Sheila Masters of KPMG, John Mayo, Finance Director of Marconi, Clare Spottiswoode, Associate Partner at the PA Consulting Group, Andrew Foster of the Audit Commission and John Dowdy, a Principal with McKinsey. Panel members contribute their time and expertise for free and are independent of the Government.
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