Friday, July 8, 2011

Performance Contracting: Contracting for Results...or Something Less

This is the second of three posts regarding Performance Contracting. The first post can be accessed by clicking here. Keep an eye out early next week for the last installment.

Speaking events are a great way to connect with people and to find out what is really going on among government leaders. We often ask questions at the beginning of seminars and presentations, mostly to find out about the audience and to get a quick assessment of their progress in Managing for Results.

One of my favorite questions is: Are your contracts performance based?

And a follow-up question for those who indicate their contracts are performance based: Do you contract for outputs, or for results?

Over the years more and more hands have begun to raise in response to the first question – more governments are developing performance based contracts. The answers to the second question, though, are still nearly always “outputs.” Rarely is the answer that governments are contracting for “results.” That means at best most government contracts are contracts for outputs, and few if any are contracting for results to achieve a particular customer experience.

You may have read our statement that:

“If you can think it clearly, you can write it clearly;

If you can write it clearly, then you can measure it;

And if you can measure it, you can get it done”©.

An old friend of mine in Iowa used to also say “you get what you inspect, not what you expect.” So, when contracting for services, what do you measure and what do you inspect, results or something less?

If contracts for service only count or measure how many services (outputs) are delivered or how many people are served, then you may never know what impact you are having on your customers. Remember in the first post on Performance Contracting, we said that customers are the people who receive your services and experience the intended result.

Results are a measure of the experience your customer have as a consequence of receiving your services – % fires contained to the room of origin, % of permits issued within 10 days, % of children in foster care not experiencing abuse, % of road miles plowed (snow) prior to the school bus schedule for those same miles.

If you want results for your customers, outputs alone will not get you there.

If you want results, contracts will need to include clearly stated and measurable results.

If you want results, you will have to monitor and inspect what you measure.

To contract for results, the organization doing the contracting will need to become very clear about three things:

  • Who is the customer?
  • What result are we trying to achieve for this customer?
  • What service or outputs will deliver that result?

Watch for our third and final post in this series, coming soon: How to Contract for Results.

Read the first post in this series by clicking here.

Check out Weidner's recent webinar on Performance Contracting — you can download the presentation by clicking here and listen to the webinar audio by clicking here.

And don’t miss this column – “Performance Contracting: Turning Talk Into Action” – by our friends Katherine Barrett and Richard Greene for the IBM Center for the Business of Government.

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