AUTHORS: LILI MILLAWITHANACHCHI, HIRUNDA KANAHARAARACHCHI, & KIRSTY MARTIN

Effective performance measurement and reporting has always been important, particularly in the public sector to ensure transparency and accountability around the spending of public monies. In recent years the Australian National Audit Office (ANAO) has brought even greater emphasis to the topic, through their pilot program of Performance Statements Audits intended to provide a similar level of assurance over non-financial performance information as is currently provided for financial performance information.

With the pilot program expanding, we have compiled our key tips to support agencies to improve their performance reporting. The following suggestions are consistent with Department of Finance guidance on performance reporting and pick up on key lessons from the ANAO pilot so far, as well as our learnings from working with a range of agencies in strengthening performance measurement.

How does your overall suite of measures look?

Purpose and value

Annual performance statements are intended to reflect the performance of the government as a whole in achieving stated objectives and outcomes. At a more granular level, performance measurement is another tool to help the management of performance against outcomes. Performance reporting should not be seen as a compliance exercise or a means of defending the performance outcomes of an individual team – it can achieve so much more! Investment in the process should reflect these benefits, but it does not have to be complex and over-engineered.

Authoritative source

Meaningful measures have a clear line of sight to the key purpose and activities of the agency. Understanding the ‘logic flow’ from Administrative Arrangements Orders through to legislation or policy and agency purposes and key activities in considering performance measures gives context to the measures. Skipping over this step makes it hard to see the relevance of the measure and to be able to prioritise and select measures.

Balanced suite

Agency performance is multi-dimensional and needs different types of measures to demonstrate different aspects of outcomes delivered. Agencies should step back and consider the relative balance of different types of measures (such as output, efficiency, effectiveness, qualitative, and quantitative) across the suite of performance measures. Are the performance measures mostly focused on output at the expense of reporting on the agency’s efficiency or effectiveness?

Have you designed your measures well?

Know your audience

Stepping back to understand your audience can help to design a simple measure that is tailored to answer the questions they are likely to be asking. You cannot – and should not – try to measure everything. Too many measures get in the way of clearly communicating results. Remember that this is not the only way of communicating with your stakeholders.

Meaningful measures

Performance measures need to be meaningful and representative of the activity performed by the agency. Narrow or superfluous measures limit the ability of the agency to showcase efforts in achieving objectives and outcomes. Measures can be strategic and challenging to achieve. While it can be harder to measure and attribute outcomes, measures that are not fully within your agency’s control can show the ultimate impact of activities it conducts, such as policy development. Performance statements give the opportunity to explain why a target has not been met and the contribution your agency makes to lead to an outcome.

Keep on top of it

It can be all too easy to forget about performance measures after the year-end performance statements are done. But changes happen throughout the year that can impact performance measures, data sources or methodology used. Changes in government, restructures within the agency, and changes to data availability can all create the need to adjust performance measures. If you do not monitor for changes, you might be left with a problem at year’s end.

What do you need to consider in reporting results?

Retrace your steps

Each measure should have a clear, documented rationale behind its selection with details to show the data and methodologies are reliable and verifiable. The methodology for formulating the result, data sources utilised, and quality assurance processes over the data and results all need to be captured. There needs to be enough detail for someone to understand and follow in your footsteps to reach the same outcome. This will help in being ‘audit-ready’ as well as improving the transparency of performance measurement.

The full performance story

The narrative supporting measures in the performance statements allows for you to tell the performance story for the measure. Make the most of this narrative to explain why the measure was selected, any limiting factors, other parties contributing to outcomes and the reasoning behind unexpected or disappointing results. This gives the audience context in considering the measure, target and results.

Cast a wide net on data sources

There is often more data that can be used for performance measurement than is immediately apparent. This can include publicly available data as well as data from other agencies, divisions within your agency or third parties. Agencies may also be able to create a new data set to support a performance measure. The value of this data and performance measure to the agency needs to be considered alongside the cost of creation or collation of the data in determining the right data sources to rely on.