Quattro Punti: Four Steps to Budgeting and Performance Management-Part 1: Start by Creating a Strategic Hierarchy, Setting Targets, and Defining Measures
Juszczak, Thad, The Public Manager
Government agencies often provide essential services that no one else provides. Therefore, the managers who run those agencies need a tool to manage for results, and citizen consumers of those services need one to gauge their performance. The new Obama administration has shown considerable interest in the performance of government agencies, appointing a chief performance officer, who reports directly to the president.A tool for managing and gauging performance is more important than ever.
Fortunately, there is such a tool--budgeting and performance management (B&PM). This article, the first of two on B&PM, introduces the tool and discusses the first half of the process: creating a strategic hierarchy and measures and targets for success. The second article will cover the other half of the process: determining the cost and the means of success.
Earlier versions of B&PM took on bureaucratic-sounding names--budget and performance integration, performance budgeting, strategic budgeting, performance improvement, and results budgeting--but B&PM actually concerns why government organizations exist (and whether they should continue to exist). That is, to render essential services to citizens to ensure their safety, health, and prosperity--their very lives. It concerns planning for government to do what it is supposed to do and then to do it effectively.
The author of this article once drafted fifty steps for developing a performance budget for a federal agency. Although comprehensive, it was not a bestseller. No one wants a fifty-step process for anything, let alone budgeting, so this article distills the fifty steps down to four. Assembling a toy takes more than four steps, so this approach should be doable for anyone. Admittedly, however, "four steps" does not have much panache, so this article uses the Italian quattro punti, which means four points, or steps. Like the Punto, a Fiat supermini, it has a sportier sound.
The article synthesizes existing concepts in a unifying framework. It offers examples (in box form) from agencies currently using their own versions of B&PM to ensure effective programs that serve their constituency.
Those who think of budgets usually think in numbers. However, government organizations exist for a reason, and the organization's budget is a statement of political intentions about that reason. Budgeting used to concern how much money an organization would spend: so much for this category of expense or for that program. B&PM is the evolution of political intention, which now focuses on results. B&PM identifies the results or outcomes to be bought with the budget: improvement in children's health, reduction in homelessness or hunger, increase in defense readiness, or opportunity for activity in national parks. These results are policy options for organizations. The budget should define, for example, how much the organization would improve children's health (the result).The money it spends on labor costs or health programs is only the means to that end.
B&PM can be distilled into these quattro punti (four steps) as a basic process you can use to help your organization achieve results:
1. What are you doing and how?
2. How do you measure success?
3. How much does it cost?
4. How are you going to achieve it?
Primo Punto: What are you doing and how?
A mission statement explains what an organization does or the results it expects to achieve: the reason for its existence. In the late 1990s, at the direction of Con gress, the Internal Revenue Service (IRS) changed its mission statement from "collect the proper amount of tax revenue at the least cost" to "provide America's taxpayers top quality service." Congress wanted the IRS to change what it was doing. The first step in B&PM is to understand what your organization is doing, its mission. …