Author: Bradley Johnson, WBD Associate – Federal Financial Management
‘Data-Driven’ is often in the crosshairs of organizational leaders, yet their data related focal points are frequently misplaced on a few end of year (EOY) metrics. While it is easy to overlook the small inputs and outputs that produce EOY metrics, these types of statistics are the foundation of organizational progress. Public sector leaders must be able to track and measure their initiatives’ impact in both the long- and short-term. Outcome Management provides a clear view of complicated programs, breaking out each facet to shed light on the progress toward a variety of outcomes.
What is Outcome Management?
Outcome management enables organizations to define and use specific indicators to continually measure their program’s effectiveness. With this information, managers can better develop budgets, allocate their resources, and improve services, internal operations, and processes.
Outcome Management Origins
Since the mid- to late 1900s, healthcare institutions have widely used outcome management to manage patient care disparities, detect at-risk patients, and advance value-based care. The non-profit sector also took hold of the practice in the late 1900s to measure and evaluate projects’ impact, while tracking the progress of desired outcomes.
In recent years, the public sector has begun adopting outcome management to deliver similar outcome-based performance management. This wave was sparked by the Government Performance and Results Act (GPRA) of 1993, which requires federal agencies to prepare a strategic plan covering a multi-year period and to submit an annual performance plan. However, some public sector entities still hesitate in switching to outcome-based measurement systems, sticking to the simulation of outputs while ignoring outcomes in performance management. Of the many arguments, a key inhibitor to the implementation of outcome-based measurement and performance management is understanding what needs to be done for implementation.
Outcome Management: Design & Development
Outcome management is comprised of ten steps total for conceptualization that are subsequentially divided up into three phases. These phases include design, implementation and sustainment. The ten steps are based on The World Bank’s model to designing, building, and sustaining systems, typically referred to as ‘Monitoring & Evaluation’ systems.
WBD divides these steps into three phases: design & development, building, and sustaining. The design and development phase is conducted before the establishment of the system to lay the system’s foundation. Through piloting, the building and sustaining phases pinpoint an organization’s optimal practices and principles to best utilize outcome management.
Below, we provide an overview of the first five steps in addition to proper practices and guidelines to follow during the implementation of outcome management.
Step 1 – Readiness Assessment: First, the team must develop the analytical framework for rating the organization’s goal monitoring and evaluation. Current incentives, performance assessment duties, and capacity-building requirements are the three main components of the readiness assessment. You will want to discover current incentives for building the system then establish various data collection roles for assessing performance. Lastly, evaluate your organization’s current capabilities, such as technical & managerial skills, technology, fiscal resources, and institutional experience.
Step 2 – Determine Outcomes: Locate the finish line before you begin. Before ascertaining outcomes, WBD recommends identifying and categorizing stakeholders. Learn the stakeholders’ main concerns then recognize existing challenges. Turn the identified problems into mutually exclusive outcomes, setting the stage to develop a plan to achieve these outcomes. Outcomes stretch over a larger period of time than goals do. Once your outcomes are selected, you will identify ‘targets’ as they are short-term marks.
Step 3 – Progress Indicators: These are necessary at all levels, monitoring progress and status with respect to inputs, activities, outputs, outcomes, and goals. Good progress indicators are composed by translating the agreed-upon business outcomes into their respective success measures. Not all indicators have to be quantitative in nature, proxy indicators can be used when it is difficult or impossible to directly measure an indicator. Potential proxy indicators are results of employee surveys over time and the number of innovative design awards/recognitions received.
- Is the indicator –
- A direct reflection of the outcome?
- Precise enough to safeguard objective analysis?
- Required method of data collection is practical and cost-effective?
- Responsive to changes in the outcome, but unaffected by other changes?
- Disaggregated when reporting on the outcome?
Step 4 – Baseline Data: Selecting the baseline data relative to your selected key performance indicators (KPIs) help your organization understand its current state and sets the conditions for which progress to each outcome will be measured. When setting baselines and gathering data: first establish the baseline data then use the indicators’ data to build on top of it. For purposes of consistency, identify and stick to the sources of the indicators’ data. Design, pilot, and compare multiple data collection methods to find the method that best suits your organization.
Step 5 – Select Outcome Results Targets: Determine Target Performance, the progress towards the achievement of outcomes within a specific time frame. Step 5 is the sum of your baseline collected in step four and the desired level of improvement. Now setting targets for outcomes more than 10 years away can be difficult as important inputs and variables to your performance can be volatile and unknown years in the future. When faced with this obstacle, you can develop your targets as a relative change to their progress indicators.
After completing step 5, you have designed and developed the monitoring and evaluation system for outcome-based management. You now know where your organization is at, where you want it to go, a plan for getting there, and how progress will be measured. You have set the foundation to build up and sustain your system, allowing you to carry out outcome-based management. Implementation and execution of outcome-based management include monitoring progress and evaluating results/impacts, reporting and utilizing your findings, and sustaining your system. To learn more about pertinent steps in outcome management, recommended reading includes the Urban Institute’s Key Steps in Outcome Management by Harry Hatry and Linda Lampkin.
Implementing Outcome Management and Utilizing Data in the Public Sector
Federal Programs that have successfully used outcome data found the data ignite improvement initiatives, motivated employees, cost-effectively allocated resources in accordance with priorities, accurately projected budgets, and many more beneficial effects. To gain an in-depth grasp on the use of outcome management in federal programs, recommended reading includes How Federal Programs Use Outcome Information by Harry P. Hatry, Elaine Morley, Shelli B. Rossman, and Joseph S. Wholey at the Urban Institute.
Data is powerful and its quality should be held to high standards, as data disputes can ruin a project’s success. A few mistakes to avoid are outdated data, poor documentation of data collection processes, and a lack of transparency in the chosen indicators. Make your data more useful through disaggregation, consistent and frequent reporting, prompt obtainment of new data, and format your data to be user-friendly and digestible for a variety of audiences. Be fully transparent with agency or program-related related personnel with regards to the development, implementation, and execution of the data and outcome management. A step in the right direction is providing guidebooks or hosting workshops on how the data can be used, linking them to outcomes and management decisions. Hold group meetings with staff after each report to discuss triumphs and difficulties, re-strategizing if necessary. Develop incentives for success and reward groups for the achievement of outcomes. Throughout implementation, use outcome data to identify what worked well and what worked not so well, to aid the enhancement of future activities and approaches.
Federal entities, no matter the size, can reap the benefits of a well-built and attentively managed outcome-based performance management approach and system. To learn more about WBD’s Strategic Advisory services, visit our service line page here.