Monday, May 16, 2011

Performance Contracting: Now, Who Is the Customer, Again?

Governments provide services and deliver results for customers in two basic ways: through employees, or through contractors.

Aligning and integrating employee performance to advance your organization is a powerful way to “git ‘er done,” and it’s a big focus of our efforts as well. At Weidner, we’re in the middle of presenting a series of webinars on Employee Performance Management; you can check out what we’ve already shared by clicking here, and you can sign up for one of our upcoming sessions by clicking here.

But with all the (deserved) attention to employees, organizations sometimes don’t focus enough on using their contracted vendors to accomplish results as well. Partnering for Results is a suggested way of talking about Performance Based Contracting, and I’ll be talking about that here and in a couple of blog posts to come.

This first piece focuses on being clear about who the customer is – is the customer the vendor, or the people receiving the service? In upcoming posts I’ll share some thoughts about what you want to actually contract for, and how you can build capacity in your organization and in your contractors to get the results you need.

The first of three keys to successful Partnering for Results (code for Performance-Based Contracting):

Be relentlessly clear about the answer to the question, “Who is the customer?”

We are unequivocal about this: the people who receive the services provided through the contract are the customer. Not vendors. Vendors who provide services are not the customer – they are your “performance partners.”

Customers are not held accountable for results, and we do not measure their performance. But vendors should be held accountable, and their performance must be measured. In contracting relationships, staff can develop what I would call a co-dependent relationship with vendors that can soften expectations for performance. Listen, services providers would love for you to treat them like they are the customer!

What’s the big deal about this? Contracts are intended to be an extension of your organization’s efforts to implement your strategic and business plans and achieve key results for your customers. So there is a great deal at stake in managing performance through contracts.

What does it look like when vendors are considered to be the customer?

•Contracts include few, if any, performance requirements.
•Little or no data is collected on the experiences of the people who receive the services.
•Contract or performance reviews are rare to nonexistent.
•Support services for vendors are first priority.
•Contracts tend to be multi-year and extended with little effort by the vendor.
•Performance reports are mostly about how much money is spent.

Not a pretty picture.

By comparison, what does it look like if the people who receive the services are considered the customer?

•Contracts have both output and results measures.
•Data is collected on both types of measures and reported at regular intervals.
•Contract reviews are primarily about performance and are conducted regularly.
•Performance is reviewed frequently.
•Reports connect money to the customer experience.
•Contracts are clearly and directly aligned to support your strategic and business plans.

The Alcohol, Drug and Mental Health (ADAMH) Board in Franklin County, Ohio, has demonstrated best-in-class focus on results for the customer through their efforts to Partner For Results. They contract out, through service providers/vendors, more than 90% of the funding they receive each year. Over a decade ago they made the decision that the individuals and families receiving the services are the customer, not the vendors who provide those services. The impact of that decision has been extraordinary.

Check out our recent webinar in which Susan Lewis Kaylor, Vice President for Performance and Management at ADAMH, shared the story of their focus on results for customers. You can see the presentation file and listen to the webinar audio.

Get clear about who the customer really is, and then you can be clear about what you need your contracts to accomplish – results, or something less. I’ll talk about that next time.

Monday, May 2, 2011

No Surprises

This last post in the Five Rules for the Road on Managing Up is all about dealing with ‘reality as it is’, communicating that reality and managing expectations. Whether your boss is a City Council, a County Commission or the Executive of the organization, except on their Birthday... nobody likes surprises.

As much as anything, creating no surprises is best achieved by dealing with ‘reality as it is’ and communicating that reality. People can respond to reality if they know what it is. Way too often surprises occur because we haven’t told folks above us in the organization the reality of our situation. We are then set up to take reality like a punch. The truth is always best told early.

Our dear friend and long time colleague, Charles Curry, has fun talking about the ‘temporary comfort of ambiguity’. A foggy sense that ‘everything is okay’ actually is comfortable for a while, until reality comes barging in. Apply this to performance. If you don’t know what your performance is, there isn’t much to worry about. Well, actually there is. Sooner or later your customer will tell you about your performance, and at that point it becomes a surprise. A couple of years ago, one of our favorite County Managers was surprised (ambushed may be a better term) at a meeting of business leaders when he was told how poor the county’s performance was in issuing permits on a timely basis. You can imagine that from that point forward, he asked for and received performance reports on the time it was taking the County to issue building permits.

It takes time to communicate what to expect, and it’s worth it. Surprise your boss with an issue or problem and you are almost certain to get a negative response, especially if it is too late to do something about it. This requires us to think ahead, plan ahead, analyze ahead - anticipate and plan for what will actually happen – then communicate as you move forward. If you are the boss in a given situation, you can and should expect the same.

Imagine the surprise of an elected Commission member (not in one of our customer jurisdictions) who was recently told that there was a multi-million dollar problem with the coming year budget, because the operating cost of a new facility was that much more than anticipated. You can imagine the conversation when that information was shared. Really? How did that happen? We knew the staffing levels, the utility costs, etc. How could we have been that far off? All those priorities that were lined up to receive money now won’t. Not good.

Manage the expectations of your bosses away from surprises and expect the same from your direct reports.

Managing Up. We all do it because we all have a boss or several. The question is how we manage up. Because this site is mostly for executives and senior managers, you no doubt have people managing up to you all the time. My advice is to be clear about what you expect. Your chances of getting what you want are that much better.

These Five Rules of the Road have been with me a long time and have served me well. Let me know if they work for you or if you have some other ‘Rules for the Road’ for Managing Up that work for you.

Managing Up – Initiative, Take It! – Never Make Your Boss Ask or Wonder What You are Doing – Manage Expectations Around Deadlines – Never Reverse Delegate – No Surprises

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