- Report Published -
|The Concept of Benchmarking for Future Government Actions|
|Joint Legislative Audit and Review Commission|
|HJR 107 (Regular Session, 1994)|
|There has recently been a renewed emphasis and effort at all levels of government to improve the efficiency, effectiveness, and accountability of both government programs and funding. This emphasis has resulted in a number of different initiatives at the local, state, and federal government levels. Moreover, many private sector organizations have taken management actions designed to achieve similar results. These initiatives have ranged from focusing on and improving program and process outcomes to improving the manner in which governments and private organizations serve their citizens and customers. A mechanism that has come to the forefront in meeting these objectives is benchmarking. |
House Joint Resolution 107 (HJR 107) of the 1994 General Assembly Session directed the Joint Legislative Audit and Review Commission (JLARC) to study the concept of Virginia benchmarks for future government actions. A number of factors cited in HJR 107 appear to have provided the impetus for the present study: measuring results rather than inputs, making better use of existing resources, and setting program and budget priorities.
Benchmarking may have the potential to address many of the concerns cited in the study mandate. One type of benchmarking, performance measurement, tends to focus on the outcomes of programs or processes, and attempts have been made by both state and federal governments to link these results to budget decisions. A second type of benchmarking, best practice benchmarking, which is more commonly associated with the private sector, is a management practice that focuses on emulating best practices in outstanding organizations. This type of benchmarking could also help State agencies make better use of existing resources.
Although the distinction between the two processes may not always be clear, the goals and objectives of the processes are typically clearer -- organizational improvement with a greater focus on outcomes. Nonetheless, the extent to which the benefits of these management practices exceed potential drawbacks should be carefully evaluated before implementing them on a statewide basis in Virginia. Significant findings of this report include:
• While the benchmarking initiatives implemented in many states are ambitious, the extent to which the established goals can be met within existing resource levels is not clear at this time. The sustained commitment of decisionmakers is also essential to the success of these initiatives.
• A framework for benchmark activity currently exists in Virginia. As a result of the 1991 JLARC report on the State's executive budget process, the 1992 General Assembly directed the Department of Planning and Budget (DPB) to implement a performance measure pilot project. Moreover, DPB has also concluded that a number of agencies utilize both performance measures and strategic planning.
• Best practice benchmarking holds potential for State agencies in Virginia. There are likely many functions that State agencies could benchmark, thereby learning new and innovative methods used by both private and public organizations that could be adapted for use by the State. Therefore, State agencies, with guidance from DPB, should implement best practice benchmarking.
• Finally, based on findings from the DPB performance measure pilot project, additional services in the form of a clearinghouse-type database, on-going technical assistance, and an interagency task force could be utilized to improve both the results and sustainability of any benchmarking or performance measure processes.
Benchmarks on a Statewide Basis May Not Be Feasible at This Time
States with a statewide benchmarking or performance measure process have typically linked them with the goals and objectives developed through a comprehensive strategic plan. For example, Oregon's benchmark process is based on and develops from its statewide strategic plan's vision and subsequent goals. Chart: Oregon's Planning Framework for Benchmarks. At this time, Virginia does not have a statewide strategic planning process in place, and recent reductions in DPB's budget and staff will likely affect the State's future centralized planning capacity. Moreover, a number of the statewide benchmarking processes reviewed by JLARC staff have been required by statute and have apparently received strong support from both the Governor and the Legislature.
While there are a number of benefits attributable to statewide benchmarking or performance measures such as increased citizen awareness, greater agency focus on outcomes, and improved intergovernmental cooperation, there are also costs associated with the processes. In Oregon, $800,000 was appropriated for FY 1993 through FY 1994 to the agency that administers its benchmark process.
Further, the ability of a state to achieve a large number of challenging benchmarks at one time is debatable. For example, Oregon's attempt to achieve more than 250 benchmarks at one time maybe too ambitious. If a number of benchmarks are not achieved, the credibility of the process could be diminished. Finally, because these processes are relatively new, their practical utility and the extent to which they will be sustainable in the future are not clear.
A Framework Currently Exists for Benchmarks at the Agency Level
While the feasibility of a statewide, centralized benchmarks or performance measure effort in Virginia at this time is questionable, a framework currently exists for adopting these processes on a reduced scale. For example, strategic planning and performance measurement are not entirely new processes to the Commonwealth. Moreover, limiting the scale or scope of any effort could enable Virginia to realize some of the benefits of benchmarking at a substantially lower investment in terms of funding and staff resources.
DPB Performance Measure Pilot Project. In 1993, the General Assembly directed DPB to conduct a performance measure pilot project. The purpose of this project was in part to assess the feasibility of using performance measures on a more formal basis. Twenty-four programs across 21 different agencies participated in the pilot project. Based on the results of the pilot program, DPB concluded that the use of performance measures has potential in Virginia. Moreover, many of the agencies that participated in the pilot project reported that they have continued using the performance measures they developed. Finally, the pilot project identified potential obstacles that should be addressed in order to better sustain a performance measurement or benchmarking process.
Strategic Planning ls Also Being Conducted. Factors important to the success of establishing a benchmarking process include setting a vision, mission, goals, objectives, and strategies. Strategic planning usually incorporates these factors and therefore is an important component of a benchmarking effort. Although centralized statewide planning is not currently in effect in Virginia, DPB recently reported that more than 60 State agencies and higher education institutions conduct some form of strategic planning.
Benchmarks or Performance Measures Have a Role in Virginia
The implementation of benchmarks or performance measures could be a valuable management resource for both agency staff and policy makers. Because benchmarking focuses on improvement through an emphasis on outcomes, managers may be able to utilize benchmarks to ensure programs meet or exceed objectives in a more efficient and cost effective manner.
In addition, benchmarks could also increase citizen awareness of government programs, which could lead to increased accountability. Performance measures that are applicable to more than one agency or program could improve interagency cooperation, resulting in more effective programs and efficient use of resources. Finally, long-term application of benchmarks or performance measures could be used to track agency and program effectiveness overtime. Use of such measures could help to assess the long-term impacts of policy choices and resource allocations.
Because a number of agencies have strategic planning and performance measures processes in place, any benchmarking efforts should be conducted at that level. This would better enable the State to begin a meaningful benchmark process on a smaller, less resource-intensive scale than those processes found in other states. To effect this, DPB should implement the performance measurement and strategic planning process it recommended in 1994.
Best Practice Benchmarking Should Also Be Used by State Agencies
In addition to performance measures, the use of best practice benchmarking could also be utilized by State agencies and programs. Best practice benchmarking is another tool available to agency managers for emulating the best practices of outstanding public and private sector organizations. This process could also enable agency staff to focus on raising the performance and subsequently the efficiency and effectiveness of their agency's operations.
To make the most effective use of initial benchmarking studies, managers should focus on selected programs and functions that many public and private sector organizations have already benchmarked. For example, customer service is one area that both public and private sector organizations have benchmarked extensively. Such an approach should make better use of available resources and enable a core group of staff to gain the knowledge and familiarity necessary to enable best practice benchmarking to be successful statewide.
Additional Measures to Encourage Utilization of Performance Measures and Benchmarking
There are a number of potential benefits attributable to the use of best practice benchmarking and performance measures. Nonetheless, the benefits of these processes may never be fully realized unless agencies and staff are able to consistently develop and administer them. To encourage and support efforts to develop and use these processes, a number of potential resources have been identified.
These resources include development of an on-line network for information related to best practice benchmarking or performance measurement, enhanced and ongoing technical assistance, and creation of an interagency advisory group. An on-line network which could be accessed through the Internet could be developed. This online network could enable individuals and organizations to easily communicate and share information related to benchmarks and performance measures.
The need for on-going technical assistance was also identified by some participants in DPB's performance measure pilot project. The Department of Personnel and Training, with input from DPB, appears to be an appropriate facilitator for this assistance. Finally, development and use of an interagency advisory council could reduce the reliance on DPB for guidance and support while providing the continuity that is critical for these types of processes.